Business leaders: Rendell's $4.5B tax hike will cost 24,000 jobs

Somebody should tell Gov. Ed Rendell there's a recession going on.

With tens of thousands of Pennsylvania residents out of work and businesses closing their doors every day, the last thing the state needs to do is raise taxes on workers and small business owners.

That's the message a group of business leaders want to send to Gov. Rendell and the Pennsylvania Legislature as state officials get closer to the state's annual budget deadline.

The National Federation of Independent Business/Pennsylvania, the Pennsylvania Business Council, the Pennsylvania Chamber of Business and Industry, and the Pennsylvania Manufacturers' Association issued a joint statement warning that a 16-percent increase in the state's personal income tax would result in the loss of 24,000 jobs.

And that's the short-term consequences, warn business leaders. Higher taxes will worsen the Commonwealth's budget and financial problems, and extend them deeper into the future, the business coalition says.

Gov. Rendell's tax hike also would reduce Pennsylvanians' disposable income by an estimated $1 billion, the group estimates.

Along with the personal income tax increase, Rendell also wants to impose new taxes on tobacco and the fledgling natural gas industry, the business leaders said. There is also a movement in the Legislature to allow counties to raise the state sales tax.

"When you tax something, you get less of it," NFIB state director Kevin Shivers said in a written statement. "The decline in sales tax revenues and income tax collections are a stark reminder that consumers are afraid to spend because they are worried about their jobs and economic uncertainty. Proposing new taxes now would have a chilling effect on Pennsylvania's economy."

More from Shivers:

"Pennsylvania businesses already are being asked to pay $400 million in new payroll taxes to help pay down the $1 billion deficit in the state's unemployment fund. Raising the state income tax -- which is THE business tax for most small businesses -- would be especially harmful in the current climate and impede our ability to recover. Business will be forced to adapt to such dramatic losses in revenue by postponing new hiring, equipment purchases and upgrades; reducing work hours for current employees; and unfortunately cutting jobs."