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A Project of The Annenberg Public Policy Center

Tom Corbett’s Tall Story

Pennsylvania Gov. Tom Corbett compares his record on taxes and jobs with that of Democratic challenger Tom Wolf in a new TV ad called “Toy Story.” It should be called “Tall Story” for its multiple deceptions:

  • The ad says “our taxes went through the roof” when Wolf was the “state’s top tax collector.” In fact, no broad-based taxes were raised during Wolf’s 18 months in office.
  • The ad then claims “higher taxes led to 152,000 PA workers losing their jobs.” But by the preferred measure, the net job loss was actually 40,400 during Wolf’s brief tenure — which included 11 months of a nationwide recession caused by a financial crisis, not by state tax policy.
  • The ad displays this on the screen: “PA unemployment now WELL BELOW the national average.” But it was even further below the national average when Corbett took office in January 2011. The advantage has slipped during his tenure.
  • The ad says Corbett created “150,000 new jobs,” a big exaggeration. Corbett is counting only private sector jobs, a fact the ad doesn’t mention. Pennsylvania’s net job gain is only 94,000 during Corbett’s tenure after factoring in a steep decline in government jobs.

Corbett, a Republican, is expected to have a close race this fall, and Wolf, who has a wide lead in the polls, is considered his likely opponent. In this ad, which started airing statewide on May 2, Corbett focuses on taxes and the economy. There are multiple claims, as we said, so we’ll take them in order.

Wolf and Taxes

The ad opens with the announcer saying, “Tom Wolf’s record on jobs is a car wreck. While Wolf served in Harrisburg as the state’s top tax collector, our taxes went through the roof.” The ad is referring to Wolf’s brief time as secretary of the Department of Revenue under Democratic Gov. Ed Rendell.

Rendell was governor for eight years, from January 2003 to January 2011, but Wolf served as his revenue secretary for only about 18 months. The Senate confirmed his appointment on April 25, 2007, and his resignation took effect on Nov. 30, 2008. As the ad says, his job was essentially the state’s top tax collector. He did not have the authority to propose or enact tax hikes — just collect them. The department’s website describes its mission this way:

The Department of Revenue’s mission is to fairly, efficiently and accurately administer the tax laws and other revenue programs of the commonwealth to fund necessary government services. In addition to tax collection, the department administers the Property Tax/Rent Rebate Program, researches and develops revenue projections for the state budget and oversees the Pennsylvania Lottery, which generates funds for programs that benefit older Pennsylvanians.

What did Wolf do in 18 months to make taxes go “through the roof”? The ad displays text that says: “Wolf fought for a sales tax INCREASE.” He did support Rendell’s proposal to raise the state sales tax 1 percentage point in the governor’s 2007-08 budget. But Rendell dropped the sales tax proposal in the face of legislative opposition and signed a budget that year that did not raise taxes. Republican legislative leaders in Harrisburg “were pleased about defeating seven tax increases proposed by the governor” and praised the budget as a “bipartisan effort,” according to the Philadelphia Inquirer.

So, the sales tax proposal could not have possibly increased taxes or destroyed jobs (which is the claim that follows).

Wolf was the state’s top tax collector during only one other fiscal year budget — the 2008-09 budget, which was approved in early July 2008 — four months before he announced his resignation. That budget did not raise taxes, either. There was one other major tax proposal during that time, but Rendell dropped that, too. Rendell sought to tax oil company profits to help fund transportation improvements, but, as the Inquirer reported, that plan failed to get legislative support. In the end, the Inquirer said the transportation bill signed by Rendell raised the Pennsylvania Turnpike tolls and diverted money from other existing sources.

Rendell did raise income and cigarette taxes and impose a gross receipts tax on phone manufacturers and providers in his 2003-04 budget — four years before Wolf took office. The Democratic governor tried unsuccessfully to raise the income tax again in 2009 after Wolf left office. No broad-based taxes were raised when Wolf was in office. That’s not to say he deserves any credit for holding the line on taxes, any more than he would be responsible for taxes going up.

For its claim of taxes going “through the roof,” the Corbett campaign cites a study by the pro-business Tax Foundation that shows Pennsylvania had the 10th highest state and local tax burden in the country in 2008 when Wolf was the revenue secretary. The foundation takes the total amount of state and local taxes paid by the residents and divides that by the state’s total income to arrive at the state’s “tax burden.” The Corbett campaign says the tax burden — at 10.7 percent — was “the highest in PA history.” But the study only goes back to 1977, so it hardly covers the history of a state where the U.S. Constitution was signed. And it ends in 2011, which was Corbett’s first year in office. The state was ranked 10th nationally when Wolf left office and 10th again after Corbett’s first year.

But more important, as we noted earlier, Wolf cannot propose or enact tax law — unlike Rendell or Corbett. Wolf collected tax revenues.

Wolf and Jobs

The Corbett ad builds on its faulty premise about taxes by claiming “higher taxes led to 152,000 PA workers losing their jobs.” As we’ve already said, Wolf did not have the authority to raise taxes. And, as we’ll get to shortly, the 152,000 figure is inflated.

But more important, the campaign pins all the job losses on higher taxes and ignores a deep recession that started in December 2007 and ended in June 2009 — encompassing most of Wolf’s time in Harrisburg. The Financial Crisis Inquiry Commission, created by Congress to determine the cause of the financial crisis, said in a 633-page report that “it was the collapse of the housing bubble — fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages — that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008.”

As for the 152,000 figure, the Corbett campaign cites the BLS’ Local Area Unemployment Statistics program, which is based on the Current Population Survey. That survey, commonly known as the household survey, provides monthly figures for the number of unemployed persons in Pennsylvania. But the household survey is the smaller of two employment surveys (about 60,000 households nationwide), and it is not commonly used to measure net job gains or losses.

Instead, the BLS uses the Current Employment Statistics program, which is based on payroll surveys at 144,000 establishments and government agencies at 554,000 work sites nationwide. For example, BLS announced on May 2 that the nation gained 288,000 total jobs in April, based on the so-called establishment survey. (In fact, the Corbett campaign itself uses the CES program when the ad later touts job gains on Corbett’s watch. For more details about the difference between the two surveys, please see our March 25 item “How Many ‘Lost Jobs’ in Illinois?“)

By the common measure of job losses or gains, Pennsylvania lost 40,400 total nonfarm jobs from May 2007 to November 2008.

So, the claim that “higher taxes led to 152,000 PA workers losing their jobs” is wrong on two counts. The number is inflated, and it does not account for job losses caused by other factors, especially the national financial crisis that triggered a recession.

Corbett and the PA Unemployment Rate

The ad switches gears and begins to tout Corbett’s job creation record. It claims Corbett “cleaned up Wolf’s mess.” Although an opinion, it is based on claims about lost jobs and higher taxes that are demonstrably false.

The ad is largely accurate when the announcer says: “PA’s unemployment rate dramatically fell” under Corbett. The state’s unemployment rate as of March was 6 percent, so it has dropped 2.1 percentage points during Corbett’s tenure. We’ll let voters decide if it has fallen “dramatically,” but it is a significant drop.

However, the ad goes too far when it displays this on the screen: “PA unemployment now WELL BELOW the national average.” It has gone down, but it was “well below the national average” when Corbett took office.

Here are the facts: Corbett took office on Jan. 18, 2011. At the time, the national unemployment rate was 9.1 percent, and the state rate was a full percentage point lower at 8.1 percent. Now? The state’s rate was 0.7 percentage points lower in March, so the state’s advantage actually has slipped under Corbett. (In fairness, the ad came out the same day that the BLS lowered the national unemployment rate to 6.3 percent, and an apples-to-apples comparison would be to use the March unemployment rate for both. And that’s what we did. In March, the national unemployment rate was 6.7 percent and the state rate was 6.0 percent.)

So, for the Corbett campaign to say that the state unemployment rate is “now WELL BELOW the national average” is misleading. It already was “well below,” and, under Corbett, it is not as far below the national average as it was before he took office.

Corbett and Jobs

Finally, the ad claims that Corbett created “150,000 new jobs.” We wrote about a similar claim in March, when the campaign released a radio ad that said Corbett “created 150,000 new private sector jobs.” But the TV ad drops the descriptive adjective “private sector” and simply says he has created 150,000 new jobs, and that’s wrong.

Pennsylvania has added 94,000 total jobs from January 2011 until March, the most recent BLS data. Pennsylvania had 5,664,900 total nonfarm jobs in January 2011, when Corbett took office, and as of March it had 5,758,900.

In a May 1 press release announcing the TV ad, the Corbett campaign notes in the sources section that the 150,000 figure is referring to “total private sector employment” — which would exclude government jobs, such as teachers, firefighters and police. The ad itself, however, doesn’t make that distinction, leaving viewers with the false impression that Pennsylvania has added 150,000 jobs, when it actually has added only 94,000.

The only workers directly under Corbett’s control are state workers and, during his tenure, Pennsylvania has shed 5,400 state jobs. In all, there has been a loss of 52,100 federal, state and local government jobs since January 2011. But the ad ignores them and exaggerates the job gains by more than a third.

— Eugene Kiely