Pennsylvania Budget and Policy Center: Who Pays For An Increase in the PIT to 4% on Income From Wealth

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Legislators are currently working to find the revenues necessary to fund the appropriations bill that passed the House and Senate this week. They are finding it difficult to agree on a proposal that raises genuine, recurring revenues in a way that does not make our already inequitable tax system more unfair.

One constitutional way to raise recurring revenues while making our tax system fairer would be to tax income from wealth (dividends, business profits, capital gains and a few other categories) at a higher rate than income from wages and interests. This briefing paper examines the impact on individual taxpayers (tax incidence) and the geographic distribution of revenue generated from a May proposal by lawmakers to raise $788 million with a higher personal income tax (PIT) on the income earned from wealth.

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