April 11, 2019, Harrisburg, Pa.—Tax Day may be April 15th, but Americans will be working one more day before they’ve earned enough to pay their national, state, and local tax bills. With Tax Freedom Day falling on April 16th this year, Pennsylvanians should recognize that our tax structure has not kept up with the demands of a 21st-century economy.
In fact, Pennsylvania levies 34 different taxes on citizens from the state level. Add local taxes, and the total quickly increases to more than 40. As a result, the median Pennsylvania family pays nearly 14 percent—or more than $8,000—of their income in state and local taxes. That’s more than every state besides Connecticut and Illinois.
(Chart: Americans Spend more on Taxes than Food, Clothing, & Housing)
“For too long, policy makers have relied on new or increased taxes to patch Pennsylvania’s fiscal potholes,” said Commonwealth Foundation Vice President & COO Nathan Benefield. “Now, our complicated tax system is suppressing what could otherwise be a nation-leading economy.”
Stymied by burdensome taxes, Pennsylvania has ranked 46th in job growth and 45th in income growth since 1991. Consequently, IRS data confirms that from 1992 to 2016 Pennsylvania lost 329,000 residents—with $15.3 billion in annual income—to other states as people sought opportunity elsewhere.
(Chart: Migration In and Out of Pennsylvania)
“Pennsylvania needs a path to tax relief,” explained Benefield. “By lowering our Corporate Net Income Tax from 9.99 percent—the third-highest in the nation—and creating a simpler, more transparent tax code, we will encourage job growth, reduce outmigration, and empower Pennsylvania families.”
(Chart: Top State Marginal Income Tax Rates)
For more information on proposals for tax reform in Pennsylvania read Commonwealth Foundation’s Policy Memo “Pennsylvania’s Path to Tax Relief.” For a comprehensive examination of Pennsylvania’s current tax structure read Tax Foundation’s and PA Chamber’s co-written “A 21st Century Tax Code For the Commonwealth.”
Commonwealth Foundation experts are available for comment. Please contact Michael Torres at 850-619-2737 or [email protected] to schedule an interview.
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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.