Lawmakers in Pennsylvania are extending the state’s sales tax to include digital purchases, such as Netflix subscriptions and iTunes Store purchases.
The new “Netflix tax” took effect in August, as lawmakers attempt to find ways to pay for a 5 percent year-over-year increase in government spending.
James Paul, a senior policy analyst with the Commonwealth Institute, says lawmakers are unplugged from fiscal reality.
‘Double Down on Tax Increases’
“The key takeaway here is that this is the result of state government deciding that, instead of cutting back on spending, they are going to double down on tax increases,” Paul said. “Right now, the legislature is looking at this backwards. It makes a lot more sense to take a look at how much money you have to spend, and then prioritize accordingly.”
Instead of binging on popular Netflix shows such as Stranger Things, Paul says lawmakers are binging on over-spending.
“In Harrisburg, and in Pennsylvania as a whole, the state government has a spending addiction and its residents, taxpayers, and working families that are now being forced to pay more in order to pay for that addiction,” Paul said.
Patrick Gleason, director of state affairs with Americans for Tax Reform, says Pennsylvania lawmakers should copy the successful policies of other states, such as North Carolina.
“[In] the same month in which Pennsylvania approved this budget—which funds the spending increase with another round of tax increases on individuals, families, and employers—in North Carolina they just passed another budget that keeps spending in check,” Gleason said. “North Carolina is moving the opposite of Pennsylvania, they’ve kept spending growth lower than population and inflation, they’ve passed three income tax cuts in the last four years, and they’ve kept spending in check. Unlike Pennsylvania, their economy is growing faster than the national average.”
Cause and Effect
Gleason says lawmakers need to understand the link between economic stagnation and hiking taxes.
“The faster-growing states around the nation are all doing the opposite of what Pennsylvania is doing, and it’s unfortunate that Republican lawmakers, instead of using their majority to address the challenges they’re facing, they just allowed tax increases instead of reforming government,” Gleason said. “Now, the same challenges will be facing lawmakers next year.”