What would this strategy include? Governor Rendell‘s much-touted World Trade PA program has already spent nearly $50 million since 2006. Currently, next year’s budget allocates an additional $10 million to continue the program. Instead of taking the all-too-typical bureaucratic approach of increasing funding to a program that hasn’t proven effective at increasing foreign direct investment (FDI), let’s try a new approach to attracting international business.
Much has been said on the issue of Pennsylvania’s corporate tax rate. Pennsylvania has the second highest state corporate tax rate at 9.99%. This is a fact. This rate may or may not also be the second highest in the world (when combined with a federal corporate tax rate of 35%). Regardless, one study took into account competition between states for FDI, and concluded that a 1% increase in a state’s corporate tax rate decreases FDI by 1%.
Pennsylvania has much to offer international businesses, but we’re shooting ourselves in the foot with our corporate tax rate.