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.