Rendell is Still Governor, I’m Still Fact-Checking

Gov. Rendell, being bored because he can’t campaign for re-election, held another press conference, probably his four thousandth this month, to discuss the Tax Foundation’s new Business Tax Climate Index, which Katrina blogged on yesterday.

During his press conference, Rendell claimed Pennsylvania’s ranking was worth celebrating, because our neighboring states are worse, and PA is really better than the Tax Foundation indicates. As reported by PLS:

The governor noted the study was based on Pennsylvania’s statutory 9.99% corporate net income tax rate, which very few business actually pay. Most, he said, are classified as Subchapter S corporations and adhere to the personal income tax rate of 3.07%. In aggregate Governor Rendell said this makes the state’s effective business tax rate 5%, which would have put Pennsylvania in the top fifteen states overall.

If Rendell had read the study, or even our blog on the study, he’d realize this is wrong. The Tax Foundation analysis looks at all business taxes, not just the corporate net income tax. In fact, their rankings give higher weighting to the personal income tax, which the Commonwealth scores well on (with a low and flat rate). Indeed, Pennsylvania rankings on the other four categories are worse than our overall rating of 26th:

  • Corporate Taxes: 38
  • Individual Income Tax: 14
  • Sales Tax: 28
  • Property Tax: 44
  • Unemployment Insurance Tax: 42

Rendell also used the fact that PA moved up in the index—because Pennsylvania didn’t raise taxes this year, while other states did—to claim we should raise taxes, namely a new tax on natural gas. Kind of ironic to celebrate low taxes and call for high taxes at the same press conference, isn’t it?

On the amusing side, he gives the Tax Foundation high props, and admits numbers from his administration aren’t always accurate: “These aren’t my numbers. They’re accurate.”