Mailbag: Is Pennsylvania Taxed Too Little?

In response to a blog post on Pennsylvania’s bleak budget future, a reader took issue with the claim that Pennsylvania has the 10th highest state and local tax burden in the nation. The reader disputed the claim by pointing out that Pennsylvania has one of the lowest state personal income tax rates in the country. While this is true, it doesn’t provide the full picture of the tax burden placed on working Pennsylvanians.

Below is just a partial list of the taxes Pennsylvanians must pay (Special thanks to the Tax Foundation for compiling state comparisons):

• The state personal income tax rate is 3.07%, which is the 8th lowest rate in the nation. This tax doesn’t include local school and municipal income taxes, which vary. You can look up your local tax rate here.
• Pennsylvania’s corporate income tax is the 2nd highest in the country at 9.99%. (This is in addition to the federal corporate tax rate of 39.1%, making Pennsylvania effectively the 2nd highest corporate tax rate in the industrialized world.)
• Pennsylvania has a 6% sales tax rate, the 16th highest rate, with additional local sales tax rates in Philadelphia and Pittsburgh.
• Our gasoline tax rate is the 15th highest in the nation, and it may climb even higher in the near future.
• Pennsylvania’s state and local governments collected approximately $1,261 per person in property taxes, ranking us 27th highest nationally.
• We have the 8th highest rate in the country in taxes on wireless service.
• In total, Pennsylvania taxpayers paid $4,183 per person in state and local taxes, or 10.2% of income ranking us 10th out of 50 states in total tax burden.

When looking at all the taxes Pennsylvanians pay, its impossible to say we live in a low-tax state. It’s also pretty clear low-tax states have greater job and income growth than high tax states.