HARRISBURG Parties debate: Income tax or sales tax?

How much should Pennsylvanians be taxed?
HARRISBURG (AP) -- The administration of Democratic Gov. Ed Rendell seems close to persuading the Republican-controlled Legislature to raise taxes this year to fund expensive new education programs and help revenues keep pace with expenses.
They'll have battles to fight before they do so, including over how much to give those new programs and how high to raise taxes.
Another of their major philosophical differences is whether the extra money would come out of Pennsylvanians' pockets on payday or at the cash register.
In the end, the money will be spent like any other dollar, but the difference between which tax is raised could affect who bears the brunt of that tax increase.
Democrats favor the personal income tax, which right now enforces a flat levy of 2.8 percent on the wages, investment income and capital gains of most Pennsylvanians. To Democrats, it is the fairest way to raise money, demanding the same percentage from everyone, according to one's earnings.
Poorest get exemptions
Although the income tax is a flat tax, they view it as a "progressive" tax -- or a tax that weighs less heavily on the less wealthy -- because of exemptions on the poorest wage-earners and retirement income.
For instance, families of four with less than $31,000 in income are not taxed, and neither is Social Security and most pension income.
The income tax is unpopular with some Republicans because it taxes an individual's production, instead of their consumption. GOP legislative leaders Rep. Sam Smith and Sen. David J. Brightbill and their aides have talked instead about increasing the revenue gathered from taxes on sales and services.
For instance, they have discussed new taxes on alcohol and cell phone receipts, or broadening the sales tax to include more food and clothing items while lowering its 6 percent levy.
"The problem is that the personal income tax hits your pocketbook every single week," said Erik Arneson, Brightbill's chief of staff. "If you don't want to pay the [proposed] tax on alcoholic beverages when you're out to dinner, you don't have to" order alcohol.
Rendell's budget secretary, Michael Masch, contended that the state has more slack to raise its income taxes and remain competitive with surrounding states, while it has less of that cushion with its sales taxes.
Different constituencies
But there's more to it than that, one analyst says: Each party's argument on taxes tailors to its perceived constituency.
"It's strictly a partisan-motivated argument," said Mike Young, a retired professor of public affairs at Pennsylvania State University's Harrisburg campus who runs an opinion research polling firm.
In general, Republicans perceive their constituents to have higher incomes while Democrats perceive their constituents to have lower incomes, Young said. Using that argument, Republicans would favor sales taxes, which take a smaller percentage of a wealthy person's income, he said.
And Democrats would favor the income tax because it doesn't spare the sometimes lucrative investment income and capital gains that wealthier citizens tend to earn.
"It's a question of proportion," Young said.
The income tax tends to be the most unpopular of taxes, Young said. In other words, voters would be less likely to exact retribution on a politician who supported a sales tax increase.