Economy




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Pennsylvanians Flee from High Taxes

MAY 4, 2016 | Policy Memo by ELIZABETH STELLE

New census figures paint a sobering picture. In 2015 alone, Pennsylvania lost 41,600 residents to other states in net migration. This amounts to one person every 12.5 minutes, nearly the entire population of York. Residents in states with higher state and local tax burdens are more likely to want to move than those in lower-tax states. Below are real-life stories of Pennsylvanians on the move.

We're #1! Pa. Leads Nation in Corporate Welfare

MARCH 2, 2016 | News Release by COMMONWEALTH FOUNDATION

The Wolf administration claims important state spending has been “cut to the bone” and says only tax hikes will prevent more cuts to education and human services. But can a government topping the nation in corporate welfare at $700 million truly be funding the bare minimum?

Wolf's Policies Send Pennsylvanians Packing

FEBRUARY 19, 2016 | Commentary by NATHAN BENEFIELD

Last year, we lost one person to another state every 12.5 minutes—a net migration of 41,600 residents, gone. That’s nearly the entire population of York, Gov. Wolf’s hometown. Ironically, Wolf used his second budget address to double down on the policies that are driving people away.





Recent Blog Posts

Pennsylvania's Economy is Falling Further Behind

JUNE 21, 2016

Pennsylvania's economy isn't looking so hot this summer. The Bureau of Labor Statistics reports:

  • Pennsylvania lost 23,600 jobs in the last two months (nonfarm, payroll jobs).
  • Over the same time frame, the unemployment rate climbed 0.6 percent with 43,900 more individuals officially counted as unemployed. Over a three month span, the unemployment rate rose 0.9 percent, and 60,500 more individuals were unemployed.
  • Pennsylvania now exceeds the national unemployment rate.

Here’s some worse news: Our poor economic performance is part of a long-term trend.

  • Pennsylvania lost 41,600 residents in net moves to other states last yearone person every 12.5 minutes.The Keystone State has lost 295,000 residents with $11.6 billion in annual income since 1992.
  • From 1991 to 2015, Pennsylvania ranked a dismal 46th in job growth, 45th in personal income growth, and 46th in population growth.
  • Pennsylvania currently has the 15th highest state and local tax burden.

This bad news comes at a critical juncture in state budget negotiations. The question for lawmakers: Will raising taxes on families offer good news?

History indicates it won't.

posted by NATHAN BENEFIELD | 03:14 PM | Comments

Shell Cracker Plant Proves Taxes Matter to Job Creators

JUNE 8, 2016

Workers hit by the natural gas slump in western PA received some much needed good news this week. Shell announced they will proceed with building a multibillion dollar chemical "cracker" plant in Beaver County.

Shell probably wouldn’t have picked Pennsylvania without millions in tax incentives, but that isn't proof that corporate welfare works. Rather, it shows business climate and tax rates matter.

As expected, a slew of press releases from Gov. Wolf and other elected officials took credit for the expected jobs, but did you know Pennsylvania lost 17,000 jobs last month? Doubtless no politician is sending out news releases accepting the blame.

Truth is: The majority of Pennsylvania jobs are created by thousands of small businesses that don’t get tax breaks or government subsidies. These businesses continue to suffer under the one of the most most oppressive tax burdens in the nation.

Despite our 9.99 percent corporate income tax, (second highest in the nation) Pennsylvania added 55,000 jobs over the past 12 months, and that was a bad year.

So while we can celebrate that Shell will employ thousands of workers in 18 months, and hundreds of permanent workers, it doesn’t change the fact that Pennsylvania's high taxes to are driving away jobs.

In fact from 2005-2015, states spending the most on corporate welfare saw slower economic growth than states spending the least.

Our state would be better off ending corporate welfare subsidies and using those dollars to lower the tax burden on all businesses. If lawmakers eliminated more than $700 million in corporate welfare (identified here), the corporate income tax could be lowered to 7.2 percent.

Pennsylvania should concentrate on creating a positive business climate for all businesses, not a select few.

posted by NATHAN BENEFIELD, ELIZABETH STELLE | 04:10 PM | Comments

PA Business Climate Isn't Winning any "Miss Congeniality" Contests

MAY 23, 2016

Why would one of Pennsylvania’s largest natural gas producers suddenly switch from selling all non-Pennsylvania assets to purchasing a $3.3 billion Houston company that operates exclusively in Louisiana?

A Dallas Morning News article suggests Pennsylvania’s less than “congenial” business conditions.

Range Resources, which in 2004 drilled the first commercial horizontal well in Pennsylvania’s Marcellus Shale, plans to purchase Memorial Resource Development partly because of regulatory hurdles in Pennsylvania and other Northeastern states.

Energy companies are trying to cope with constant calls for higher taxes, new methane emissions standards, a dramatic overhaul of drilling regulations, and pipeline delays. At the same time, the region is experiencing a severe and prolonged drop in natural gas prices.

The Dallas Morning News reports:

The U.S. gas market is Balkanized," said Subash Chandra, an analyst with Guggenheim Securities. "And the Appalachian Basin is becoming increasingly isolated."

Pipeline projects in Pennsylvania and New England running into regulatory issues over the past year include Northeast Energy Direct, Constitution, Rover and PennEast. In some cases, the delay could be a matter of months; for others, longer.

Keeping the natural gas from getting to market in the Northeast makes retail prices bounce around more and can contribute to shortages in an unusually cold winter. And it pushes some producers to the sidelines for a while.

A couple of the producers with the best cost of production in North America are sitting on their hands for a couple of years," Miller said.

In Pennsylvania, the industry has shed thousands of jobs, and the number of drilling rigs operating in the state is at 2007 (pre-boom) levels. The paper continues:

But in the meantime, the Range purchase of Memorial means Range will have options. It can push development in Louisiana while waiting for more congenial conditions in Pennsylvania.

Reporting on the transaction, Forbes says, “[P]ipeline bottlenecks in the northeast have gotten so bad that Range has been realizing sale prices 66% below market.”

Before punishing the natural gas industry with a severance tax or regulations of questionable value, Pennsylvania politicians should consider congeniality—or common sense.

Unfortunately, a lack of it seems already to have driven one company to invest $3 billion in Louisiana instead of in Pennsylvania.

posted by GORDON TOMB | 01:14 PM | Comments