Economy




Recent Issues

My Journey to Commonwealth Foundation’s Board

JUNE 30, 2016 | Commentary by JANE LEADER JANECZEK

How did a registered Democrat and the daughter of former Democratic Governor George Leader find a place on Commonwealth Foundation’s Board? 

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?





Recent Blog Posts

PA Manufacturing Withers Under High Tax Load

JULY 6, 2016

As Harrisburg searches for politically acceptable tax hikes to fund a record-breaking budget, Pennsylvania’s attractiveness to manufacturers continues to decline. According to a study reported by the Central Pennsylvania Business Journal, local manufacturers operate under an already onerous tax load.

The report, prepared by Ball State University’s Center for Business and Economic Research in Indiana, graded states on a number of factors, including benefit costs and tax climate. Manufacturing in the commonwealth earned a grade of C- this year, down from a C in 2015.

The study examines factors most likely to be considered by site selection experts for manufacturing and logistics firms, and by the prevailing economic research on growth, according to the researchers.

Michael Hicks, director of the research center, says high taxes are particularly problematic for Pennsylvania manufacturing.

The Keystone State earned a D for worker benefit costs and a D- for tax climate in the study.

“I think it’s fair to state that in Pennsylvania the effective tax rate is rather burdensome,” Hicks said.

Pennsylvania, like many states, offers tax-abatement programs for business, but Hicks noted that they may not help.

“The problem is that most job growth in manufacturing comes from existing companies,” which may not have access to incentives aimed at startups, he said.

With Pennsylvania already bearing the 15th highest state and local tax burden in the nation and the state’s manufacturers withering under its weight, what good reason is there to increase taxes?

None is the answer.

posted by GORDON TOMB | 03:38 PM | Comments

The Taxpayers’ False Choice

JUNE 28, 2016

Governor Wolf and legislative leaders present Pennsylvanians with two options. The first requires taxpayers to fork over hundreds of millions in higher taxes. The second calls for steep cuts to essential government programs. In the words of Wolf, “We’re going to have cuts the likes of which this Commonwealth has not seen in a generation, if ever.” Taxpayers, we are told, must choose between lousy outcomes: higher taxes or painful cuts.

Make no mistake—this is a false choice. A responsible appropriations bill can be crafted that controls spending and holds the line on tax hikes. New revenues are not necessary to balance the budget—especially not $1 billion worth.

Recall that just last year, Wolf claimed Pennsylvania’s $2.3 billion “structural deficit” mandated $4.6 billion in higher taxes. When the dust settled after a 9-month impasse, the legislature balanced the budget without taxes while also boosting funding for education ($250 million in non-pension spending) and human services ($83 million).

The 2015-16 General Fund spent roughly $30.0 billion. The final revenue projection from the Independent Fiscal Office projects 2016-17 revenues of $30.4 billion. If, in other words, lawmakers merely limited spending increases, there would be no need for higher revenues. 

Some argue government programs must assume a “cost-to-carry”—baked-in spending increases from one year to the next. Surely, though, this does not apply to Community and Economic Development programs, which see a $10 million bump under the House budget plan. Or the Department of Conservation and Natural Resources, which would enjoy a $44 million boost. Is there a "cost-to-carry" for House Caucus Operations (R and D), which are set to increase by $16 million? 

The spending plan, as currently written, also assumes another $250 million in non-pension education spending, at a time when school district reserve funds are at all-time highs

Don’t fall victim to the taxpayers’ false choice. By limiting spending increases to $400 million worth of core government functions, lawmakers can protect working families from harmful tax increases. 

posted by JAMES PAUL | 05:00 PM | Comments

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



A Budget of Convenience

July 19

The dust has settled on the 2016-17 budget debate—at least for the moment. Some people hail the agreement as an example of what Harrisburg can accomplish when two parties work together. Others defend it as an improvement over previous budgets and the least bad option under the circumstances. These ...