It can’t be easy being a business owner in Pennsylvania. Combined with the federal tax rate, Pennsylvania businesses pay the second highest tax rate on their profits in the entire industrialized world.
Adding insult to injury for small business owners is the state’s Capital Stock and Franchise Tax (CSFT): a double tax that discourages business investment and kills jobs.
The tax is levied year in and year out, whether the business makes a profit or loss. This makes Pennsylvania a uniquely unattractive place to open a business or expand an existing one.
With 49 other options to choose from—most of which do not have a CSFT and nearly all of which have a lower corporate tax rate—Pennsylvania is losing business investment, jobs, and economic growth because of this punitive tax policy.
Governors from Ridge to Rendell to Corbett have recognized the self-defeating nature of the tax and promised to eliminate it. But the CSFT, like the Energizer Bunny, just keeps going and going and going. The tax’s end date was first set in 2000, but then delayed in 2002, put off a bit in 2003, and shifted into the future in 2009. Then in 2011 a hard and fast date for the CSFT phase-out of January 1, 2014, was chiseled in stone.
Can you guess where this is headed?
Desperate for revenue, the legislature is taking a long and hard look at keeping the tax around by phasing-out the CSFT phase-out. This would be a loss for the state’s small business owners, job seekers, and the economy at large and keep us at a competitive disadvantage compared to our neighbors.
It’s past time to keep our promise to Pennsylvania’s job creators and end this harmful tax on a tax.