MARCH 1, 2012

Pennsylvania Businesses Face the Highest Taxes

A new study from the Tax Foundation finds that mature Pennsylvania businesses are the highest taxed in the nation. Newly established operations in the commonwealth are the second highest taxed, behind Hawaii.

The study evaluates the impact of corporate income taxes, property taxes, sales taxes, local income taxes, gross receipts taxes, and unemployment compensation taxes. You can click here for the Pennsylvania profile, and read a story on the study in the Pittsburgh Tribune-Review.

The study looks at seven categories of businesses and the effective tax rate on each. The table below identifies the burden, and ranking among the 50 states, for each type of business studied.

posted by NATHAN BENEFIELD | 11:40 AM | 0 comment

NOVEMBER 21, 2011

Right to Work Helps Oklahoma Economy

A new analysis from the Oklahoma Council of Public Affairs shows that since the Sooner State passed a right to work law in 2001—allowing all workers to choose whether or not to join or pay a fee to a union—the state has outpaced the nation in manufacturing job growth. 

At the same time, Oklahoma has become a net winner in state-to-state migration, as more residents moved to Okalahoma from other states than left the state for elsewhere.  This reverses a downward trend Oklahoma had been expericencing prior to 2000.

Naturally, the vast majority of domestic imigrants came from forced unionization states.  Concidentally, Pennsylvania, a forced union, state has been among the biggest losers in state migration for decades.

posted by NATHAN BENEFIELD | 10:30 AM | 0 comment

OCTOBER 28, 2011

PA's High Unemployment Taxes

Pennsylvania employers pay some of the highest unemployment insurance taxes in the nation, according to a new study by the Tax Foundation. Tax rates vary based on the frequency of layoffs. If a company frequently lays off employees, their unemployment insurance taxes will be at or near the maximum rate. But if a company rarely lays off employees, their tax rate will be close to the minimum rate. 

Nationally, Pennsylvania has the highest minimum employer tax rate, which ranges from zero to 2.7 percent. The state's maximum employer tax is the fourth-highest in the nation.

The study also found states raise unemployment taxes on employers during times of high unemployment and lower them during economic booms. This pattern makes it more difficult for businesses to hire when unemployment is high and easier when jobs are plentiful.

posted by ELIZABETH STELLE | 10:46 AM | 0 comment

SEPTEMBER 26, 2011

By the Way, Residents Don't Like High Taxes

Dr. Antony Davies, a member of CF's Council of Scholars, and John Pulito add to the growing body of research showing higher state taxes drive out residents. Their new study, "Tax Rates and Migration," finds lowering "high-income" tax thresholds, high overall state income taxes and high property taxes deplete populations.

Often known as "millionaire taxes," states lower personal income tax thresholds to include more than millionaires in the highest bracket. For instance, anyone in Arizona who makes $150,000 or more a year pays the highest level of income tax, in Ohio it is $200,000. The evidence suggests people tend to leave states that lower "high-income" tax thresholds, the same way they leave states that raise tax rates. Pennsylvania does not have tax thresholds because the state levies a flat 3.07 percent personal income tax, but seven states don't even have a state personal income tax.

However, Pennsylvania is a large offender in the property tax category. Property taxes have skyrocketed, increasing by $2.1 billion, or 26 percent, from 2004 to 2008—exceeding both inflation and student enrollment. The authors find property tax rates have a greater effect on out-migration than high-income tax rates.

For example, a one percentage point increase in the property-tax differential between two states has almost three times the effect on migration as does a one percentage point increase in the difference in high-income tax rates.

High levels of local and state taxation combined with heavy business taxation are a major reason Pennsylvania is losing residents to other states.

posted by ELIZABETH STELLE | 03:00 PM | 0 comment

SEPTEMBER 12, 2011

Brain Drain Strikes Again

Last weekend I attended a dinner party just over the Pennsylvania border in Ohio. Our hosts moved across the state line about a year ago and complained to me about how expensive it was to live in Pennsylvania. Previously, they paid about two percent in local income tax on top of the state income tax. They were also frustrated by the tax treatment of a small business they run on the side. Plus, their favorite premium beer, Kentucky Bourbon Barrel Ale, isn't sold in Pennsylvania.

My friends are among the many taxpayers (more than 1,500 on net since 2000) to leave the Keystone State for the Buckeye State. By moving just 20 minutes west they now pay no local income tax and lower property taxes, and they can buy all the Kentucky Bourbon Barrel Ale they want. My friends are a real-life examples of Pennsylvania's brain drain, where higher taxes and regulation persuaded a young family to take its income and entrepreneurial spirit out-of-state.

For more on local income taxes, check out the Tax Foundation's new fiscal facts. In Ohio, 593 municipalities and 181 school districts levy local income taxes. In contrast, 2,469 municipalities and 469 school districts levy local income taxes in Pennsylvania.

posted by ELIZABETH STELLE | 01:34 PM | 0 comment

SEPTEMBER 2, 2011

Pennsylvania Lost $5 Billion in Annual Income from Residents Movin' Out

When it comes to interstate migration, Pennsylvania is among the biggest losers of residents and the income they earn, according to a Tax Foundation map using IRS data. Between 1999 to 2009, Pennsylvania lost $4.9 billion in net annual income from residents who moved to states, most with lower taxes, less regulation and greater job growth.

posted by KATRINA CURRIE | 02:22 PM | 2 comments

AUGUST 26, 2011

Scorecard: Toomey Scores, Casey Fumbles for Pa.

Yesterday, Heritage Action released its legislative scorecard for all members of the 112th U.S. Congress. The scorecard can be searched by name, state or even zip code. Current rankings are based on 30 key votes and five co-sponsorship scores in the House, and 19 key votes and four co-sponsorships in the Senate.

Overall, 13 Senators and 27 Representatives received scores above 85 percent. The vast majority of Pennsylvania's representatives didn't make the cut. Only one out of the 21 members of the Keystone State's delegation scored above 85 percent.

The starkest contrast comes in the Senate where Senator Casey has a score of zero percent and Senator Toomey 87 percent. All of Pennsylvania's House members fall somewhere in between with Rep. Joe Pitts coming in first at 83 percent.

You can see Pennsylvania's complete rankings here.

posted by ELIZABETH STELLE | 04:50 PM | 0 comment

AUGUST 15, 2011

Pennsylvania's Cost of Government Day

By the calculation of Americans for Tax Reform, Pennsylvania just reached its Cost of Government Day. That is, it took the average Keystone worker until Aug. 15, or 227 days, to earn enough to pay his share of federal, state and local government spending and meet the costs of regulation. That puts Pennsylvania in a dismal 40th place among U.S. states, and three days later than the national average.

The average American worker has to labor 103 days to cover federal spending, 44.2 days to cover state and local spending, and 77 days to cover regulatory costs. And even more disheartening: for more than 20 years, until 2008, the national Cost of Government Day fell before July 21. For the last three years, the day came in August—thanks in large part to federal bailout packages such as the $821 billion American Recovery and Reinvestment Act of 2009. Cost of Government Day could fall later in coming years—meaning it will take even longer for Americans to pay off government spending—as measures such as PPACA swing into full effect.

posted by PRIYA ABRAHAM | 04:52 PM | 0 comment

JULY 7, 2011

Pennsylvania's Economic Outlook Among Nation's Worst

The annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index ranked Pennsylvania among the least economically promising states. Since 2008, Pennsylvania's economic outlook has dropped from 36th to 43rd place.

The commonwealth's tax policies were a major contributor to its rankings (1 is best):

• 35^th Top Marginal Personal Income Tax Rate
• 49^th Top Marginal Corporate Income Tax Rate
• 27^th Property Tax Burden
• 50^th Estate/Inheritance Tax Levied
• 42^nd Recent Legislature Tax Changes
• 35^th Number of Tax or Expenditure Limits
• 42^nd Remaining Tax Burden

In addition, Pennsylvania tied for last place in labor competitiveness, largely because Pennsylvania is not a Right-to-Work state.

Antony Davies, Associate Professor of Economics at Duquesne University and a member of the CF Council of Scholars, warns of the consequences that excessive government taxation and regulation have on the economy. "The harder state governments make it, both in taxes and in regulations for entrepreneurs... the more likely they're going to be to throw up their hands and say it's easier to work for somebody else. Every time an entrepreneur does that, we lose jobs."

Making Pennsylvania a "rich state" that attracts job creators will require a paradigm shift where government focuses on delivering core services through streamlined regulations and taxes.

posted by JONATHAN HUMMA | 00:27 PM | 0 comment