The PA Chamber unveiled a new study last week, “Pennsylvania: A 21st Century Tax Code for the Commonwealth,” that presents a comparative analysis of the state’s tax structure with other states and provides a menu of policy options to improve Pennsylvania’s tax system and overall competitiveness.
Compiled by the Tax Foundation and funded via a grant from the PA Chamber, the report shows that Pennsylvania relies more heavily on corporate taxes as a revenue source than most other states. According to the U.S. Census Bureau, 4.7 percent of Pennsylvania’s state and local tax collections come from the corporate income tax, while the national average is 3.7 percent. The heavy reliance on volatile corporate taxes can make the state’s budget process more difficult. The report ranks Pennsylvania 4th among the states in terms of corporate income tax collections, while the state’s corporate income tax structure ranks 7th worst in the nation.
During a media call that was held last week to share some of the report’s key findings and recommendations, PA Chamber Government Affairs Vice President Sam Denisco expressed optimism that elected officials will have an appetite in the upcoming legislative session to adopt some of these much-needed, long-overdue recommendations. While Denisco acknowledged that strides have been made in recent years to boost the state’s competitiveness, he said that a reduction in Pennsylvania’s 9.99 percent Corporate Net Income Tax rate and a full elimination of the cap on Net Operating Losses would significantly improve the state’s opportunities to attract investment and create jobs.
The report has since been highlighted in stories in the Central Penn Business Journal, Capitolwire and the Pittsburgh Business Times.
“In order to compete in today’s global economy, we need to take a page out of the federal government’s book and take a hard look at the shortcomings within the state’s Tax Code,” Denisco said in a press release. “This study provides an unbiased analysis of where Pennsylvania ranks compared to other states and offers solutions to streamline and simplify the Tax Code, while at the same time growing the state’s economy.”