Pennsylvania’s Business Climate is a Gamble for Entrepreneurs

60, 61, 29, 45! While these might sound like Powerball numbers, they are actually state rankings that highlight just how lucky businesses in Pennsylvania aren’t. Across different measurements of the state’s business climate, Pennsylvania consistently underperforms. If we want to grow small businesses and the number of family-sustaining jobs, Pennsylvania should look to these indexes to identify areas for improvement, not least of which is taxation and overspending.

Taxes were a consistent factor across all the indexes including the first-ever Doing Business in North America from the Center for the Study of Economic Liberty. Pennsylvania’s Pittsburgh and Philadelphia come in at 60th and 61st out of 115 cities across the U.S., Canada, and Mexico. 


Chart: Ease of Doing Business Rankings

For businesses in Pa., it is no surprise that high tax rates dragged down our State Business Tax Climate ranking from the Tax Foundation. The commonwealth came in at 29th. Once again, the state’s third-highest corporate tax rate was a major factor. 

Pennsylvania’s worst ranking was in WalletHub’s Best States to Start a Business where it came in at 45th. Overall business environment and business costs—which include taxes—contributed to the poor showing. 

These rankings send a clear message: Pennsylvania isn’t open for business. Fixing this means addressing a wide range of shortcomings, including soaring spending leading to higher taxes—like the proposed tax increases in four of the last five years.

The state’s own Independent Fiscal Office (IFO) concluded that while a reduction in the CNIT would reduce revenues, it would also drive businesses to the state. This means that lawmakers need to look at both spending guardrails—via the Taxpayer Protection Act—and tax reductions to improve the state’s overall business climate. Ultimately a good business climate creates a thriving economy, and a thriving economy means more winning for Pennsylvanians.