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Radical Tax Hikes Will Accelerate PA’s Outmigration

Pennsylvania Gov. Josh Shapiro (CHARLY TRIBALLEAU/AFP via Getty Images)

Nathan Benefield is the Chief Policy Officer of the Commonwealth Foundation, Pennsylvania’s free-market think tank.

Gov. Josh Shapiro keeps repeating the claim that Pennsylvania is the only growing state in the Northeast. But that’s not true.

Residents continue to leave Pennsylvania for greener pastures. New data from the Internal Revenue Service shows that Pennsylvania lost 15,000 residents on net to other states in 2023. Those residents took with them $2.3 billion in annual income.

This outmigration spans all age groups, but it is especially pronounced among working-age professionals and higher-income earners. These are the very people who drive economic growth. And they are leaving for more-competitive states, such as Florida, Texas, and the Carolinas.

To be sure, Pennsylvania is doing better than some of our neighbors, especially New York and New Jersey, and far better than California, which lost almost $12 billion in income to other states.

You’d think that lawmakers would want to imitate the states that are gaining residents and avoid the policies that are driving people away.

But it’s the opposite.

Shapiro and House Democrats are copying the worst policies from the very states they claim to outperform. While Americans are moving from high-tax, high-regulation states to their low-tax, low-regulation counterparts, Shapiro and House Democrats are moving Pennsylvania in the wrong direction.

House Democrats are advancing policies that make it more expensive to hire, invest, and build in Pennsylvania. They recently passed legislation to “regulate” data centers, including enacting onerous fees and imposing energy mandates so restrictive that they would effectively block any data center investment anywhere in Pennsylvania.

At the same time, they are pushing new mandates on employers. A statewide minimum wage hike will raise labor costs for small businesses already operating on thin margins. Mandatory, government-dictated paid leave also adds significant costs and unnecessary bureaucracy to struggling businesses.

These policies may energize political allies and union leaders, but they are unaffordable for small businesses and working families. The result is fewer jobs, lower wages, and fewer opportunities.

Ironically, the argument for these policies is that some of our neighboring states are experimenting with them. But these are also the very same states that Shapiro claims that we are outperforming. You can’t have it both ways.

It gets worse. Not satisfied with the new and increased taxes in the governor’s proposed budget, a group of progressive activists and Democrat lawmakers recently gathered in the Capitol rotunda to demand even higher taxes, claiming the Commonwealth is “leaving billions on the table” by not taxing Pennsylvanians enough.

Translation: They want to take more money out of your wallet.

Their proposals are extreme and unaffordable. They include raising income taxes on small business owners and investors, increasing corporate taxes, and imposing a new tax on digital advertising.

There are even new proposals for a severance tax on natural gas, on top of Pennsylvania’s impact tax, even as consumers are irate over high energy costs.

Some lawmakers are even pushing a constitutional amendment to impose a “millionaires’ tax,” the same kind of radical policy that has driven wealth out of states like California, Illinois, and Washington. Others are floating proposals to tax wealth itself.

This radical agenda would send the message that Pennsylvania is closed for business. To prevent Pennsylvania from becoming California, we need policies to make it more affordable and attractive to live and invest here.

That starts with lowering the tax burden on work and investment, not raising it. It means continuing to reduce business taxes, rejecting new energy taxes, and unleashing Pennsylvania’s natural gas industry to create jobs and lower costs.

It means cutting red tape and reforming a regulatory system with more than 164,000 restrictions that drive up costs and delay investment.

It means expanding educational choice, so families have real options and employers can attract talent. And it means reforming welfare programs to prioritize work and reduce waste, ensuring resources go to those who truly need them.

States that are gaining people and income are doing these things. Pennsylvania can, too.

This article was originally published by RealClearPennsylvania and made available via RealClearWire.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of The Daily Signal.

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