At the beginning of October, Kiplinger released its list of the most and least tax-friendly states in the United States. Pennsylvania fell into the least tax-friendly bracket. Of the bottom ten, the Commonwealth ranks seventh.
If you are wondering why we score so poorly, Kiplinger has a detailed breakdown of all of the taxes that we are paying. Among the items where Pennsylvania’s taxes are above average, we find the expected mentions of property taxes and taxes on gasoline and diesel fuel. Kiplinger also singles out our exorbitant tax rate on cellular phone services, which comes in at 16.27 percent when state and local taxes are combined.
In the wake of this report, a taxpayer may hope that the Governor and General Assembly might come together and explore ways to decrease the tax burden on Pennsylvanians. That is not what happened. Instead, Governor Wolf, through a legally questionable executive order, announced that his administration was going to make energy more expensive for consumers.
In fairness, Wolf didn’t frame the issue that way. Rather, he announced that Pennsylvania would be joining the Regional Greenhouse Gas Initiative (RGGI). The RGGI is a “cap-and-trade” scheme that would tax carbon emissions. The Governor has an unhealthy proclivity for undertaking questionable environmental projects. For a refresher, see this article on the Pennsylvania Climate Action Plan.
It is worth noting that Pennsylvania’s energy-related carbon dioxide emissions dropped by more than 22 percent from 2005 to 2016. The drop is due in large part to the free market. Thanks to low-cost natural gas, electricity producers are building more plants that use that as a fuel source. They are switching from less efficient coal plants to cleaner natural gas. Consumers have seen lower electricity bills as an added bonus.
Joining RGGI would likely be the final nail in the coffin for coal-fired electricity generation in Pennsylvania and would drastically reduce the number of new natural gas power plants built. Governor Wolf’s decision to join this cap-and-trade scheme will add one more item to the already lengthy list of reasons why the Commonwealth is among the least tax-friendly in the nation and make it that much harder for Pennsylvania’s economy to grow.