Two New State Business Climate Rankings

The Tax Foundation released their updated State Business Tax Climate Index for FY 2010. In the latest rendition, Pennsylvania ranks 27th overall. Broken down by category the Keystone State ranks 37th on corporate taxes, 13th on individual income taxes, 29th on sale taxes, 41st on unemployment insurance, and 42nd on property taxes.

Governor Rendell is likely to cite this as a very positive mark for the state, because all our neighbors New York, New Jersey, Ohio, and Maryland all rank among the bottom six, and West Virginia (37th) isn’t too much better. Only Delaware (8th) has a hospitable business tax climate. But there’s not a couple reasons not to be too happy:

1. More than half of all states have a better business tax climate.
2. The ranking doesn’t include all of the tax hikes included in the budget “deal”. Most important is the retroactive increase and delaying the phase out in the Capital Stock and Franchise Tax. The Tax Foundation report actually praises the phase out as a reason Pennsylvania’s climate will improve.

Forbes also release its “Best States for Business” rankings this week, grading Pennsylvania as the 33rd best. Of their categories, the one the state does particularly well on is “Quality of Life” (7th).