Pinsley's So Called Wealth Tax Under Fire

Blogger's Note: Below is an op-ed written by Lehigh County Comm'r Ron Beitler (Independent), Lehigh County Comm'r Antonio Pineda (Republican) and Phil Armstrong, former Lehigh County Exec, Democrat. 

Lehigh County Controller Mark Pinsley has proposed recycling an antiquated county intangible personal property tax by branding it a “wealth tax.” Once levied by counties in Pennsylvania, it disappeared 25 years ago for many reasons: legal challenges, administrative problems and broad acknowledgement that it was bad policy.

Most concerning, the current label of a “wealth tax” is a sales pitch. Political marketing. It makes the proposal sound narrow, targeted and aimed only at billionaires. That is not accurate.

This is not a tax exclusively on the ultra wealthy or the “Elon Musks” of the world. Plain and simple, it's a tax on personal financial assets. It hits common savings tools and certain small business ownership interests. Stocks, bonds, mutual funds and non-retirement brokerage accounts are all specifically named in the Controller’s report. The enabling law also raises unresolved questions about other useful family, retirement and estate planning tools, including custodial brokerage accounts, 529 college accounts and private mortgages held as assets. These are all tools working families, seniors, parents saving for their children and small business owners use to make responsible plans for their futures. As presented, this tax has no minimum income threshold. And adding one later may only deepen the legal problem because the 1913 law does not clearly give the County the authority to create one.

This is all part of the central problem. The public is being sold a narrow tax on extreme wealth, but the actual proposal reaches everyone. Repeating a misleading label does not change what the tax actually does nor does it change who it hurts.

This is not a Republican, Democratic or Independent concern. That is why the three of us, from different political backgrounds, agree on this point: Lehigh County should not revive a legally risky tax on savings, common investment tools and small businesses.

While some might dance around what this really is, others are more direct, describing this kind of saving as “hoarding wealth.” We strongly disagree. For generations of Lehigh Valley families, including people who worked hard their entire lives at places like Mack, Bethlehem Steel and other local employers, saving was not "hoarding wealth". These were not millionaires hiding money. They were working families taking responsibility for their futures, supporting children, driving modest cars, fixing what they could and planning ahead so they would not have to depend on the government later. That is basic financial discipline. We should encourage it, not punish it.

At a time when credit card debt is near record highs, younger folks struggle to save or invest, family sustaining jobs are harder to find, and basic costs keep rising, the answer is not to punish folks who manage to save. We should want people to work, save, invest and build security, not tax the same dollars a second or even third time because they planned responsibly.

The proposal also hits small businesses at exactly the wrong time.

Supporters claim owner-operated small businesses would be excluded, but Mr. Pinsley’s own report admits very common small business structures are actually the source of the majority of revenue. These are not exotic structures used only by the wealthy. They are common ways small businesses, especially family businesses, are organized.

Small business owners routinely work 50, 60 or more hours a week under pressures most never see: payroll, rent, insurance, utilities, supplies, repairs, maintenance, taxes, compliance, permitting, staffing and constant uncertainty.

For most small business “wealth” is not cash sitting in a bank account. It's tied up in equipment, inventory, buildings, debt, invoices and the business itself. On paper, a business owner may look successful. But in reality, many are fighting every month to make payroll, cover bills and keep the doors open, yet still find time and resources to sponsor youth teams, support fundraisers, and donate to fire companies, schools, churches, nonprofits and community events. This is exactly the wrong environment to pile another tax on small business owners and could force them to either cut back on their community support, or not grow their business.

The legal risk is also serious.

If this tax were clearly legal and clean, the county would not need outside tax counsel, as recommended by the Controller in his report, to find a constitutional workaround. This alone should raise alarms. This sounds less like confidence in the law and more like shopping for a legal theory to support the outcome they want. Passing a constitutionally suspect tax does not just invite a lawsuit. It would send taxpayers the bill.

Lehigh County should focus on controlling costs, delivering core services and encouraging economic growth.

This is not a bold new idea. It's a recycled bad idea that every county that once had it walked away from. Taxing savings discourages saving. Taxing investment discourages investment. Taxing small business ownership discourages growth, expansion, and job creation.

Do not be fooled. This proposal is not a so-called wealth tax. It is an asset tax. A broad tax on common savings tools and small businesses that punishes responsible behavior, creates huge legal risk and adds another burden at exactly the wrong time. Lehigh County should reject it clearly, publicly and permanently.

Commissioner Ron W. Beitler, Independent

Commissioner Antonio Pineda, Republican

Phil Armstrong, former Lehigh County Executive, Democrat