Chief Executive Group released its annual Best/Worst States for Business report, bestowing another undesirable state ranking on Pennsylvania.
The commonwealth ranked 39th out of the 50 states, dropping seven spots since 2010. This decline continues Pennsylvania's five year slump from 27th to its present rank.
Business leaders grading the states expressed concerns of excessive taxation and regulation. Also among top concerns were environmental regulations and labor laws preventing businesses from deciding terms of hiring and employee compensation.
Here are some more facts about Pennsylvania's business climate and taxes:
- Pennsylvania's 9.99 percent tax rate is the 2nd highest of the 50 states, behind only Iowa.
- Combined with the federal rate, Pennsylvania has the second highest corporate tax rate in the world. (In fact, Japan recently cut its corporate tax rate by 5 percent, so the U.S. federal rate is the highest. Pennsylvania's rate is on top of that).
- The Capital Stock and Franchise Tax is also among the highest in the nation, and only 10 states impose both a corporate income tax and a capital stock tax.
- Studies show that higher state corporate income tax rates result in lower wages for workers.
- Pennsylvania offers about $750 million per year in grants, loans, and tax breaks to attract or retain businesses, ranking the Commonwealth as the 2nd highest state in amount of economic development incentives. This of course involves picking favorites in the economy, while imposing higher taxes on all other businesses.
- The Tax Foundation ranks PA 26th in "State Business Tax Climate"—the state scores well on individidual income tax (flat rate, relatively low), but poorly on corporate taxes, unemployment insurance taxes and property taxes.
- PA ranks near the bottom of the nation in long-term economic growth, lost jobs during Gov. Rendell's tenure and, notably, lost a Congressional seat in this cycle of redistricting.
For ideas on how to improve Pennsylvania's economy, check out CF's 80 Ideas for a Prosperous Pennsylvania.