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Governor’s tax study assessment warrants closer look
October 29, 2010
Harrisburg, PA – The Pennsylvania Chamber of Business and Industry said Gov. Ed Rendell’s spin on a new Tax Foundation study ignores significant problem areas; attempts to rewrite the administration’s tax policy history and misrepresents what reforms are needed to encourage economic growth. Pennsylvania ranked 26th in the Tax Foundation’s national business tax climate study, which assessed states’ corporate, individual income, sales, unemployment insurance, and residential and commercial property taxes. The state moved up one spot from last year’s 27th position. But as Rendell pointed out at a news conference this week, the ranking doesn’t tell the whole story. “Pennsylvania’s position in this particular study is helped by its good showing in the areas of individual income and sales taxes compared to other states, as well as by the continued phase out of the Capital Stock and Franchise tax implemented under the Ridge/Schweiker administration,” PA Chamber Vice President Gene Barr said. However, in the areas of corporate, unemployment insurance, and property taxes, the state fares much worse, ranking 38th, 42nd and 44th respectively. “These are dismal ratings in some key competitiveness areas,” Barr noted. Additionally, Barr said the Commonwealth improved slightly this year because of the poor performance of other states while legislative leaders here wisely held the line on tax increases in the 2010-11 state budget, despite the administration’s and its supporters’ considerable push for higher taxes to support greater government spending. “The administration deserves credit for agreeing to modest improvements with regard to the treatment of Net Operating Losses and moving closer to a Single Sales Factor, as well as for continuing the Capital Stock and Franchise tax phase-out, albeit with some interruption,” Barr said. “But over the past eight years, the governor sought a host of taxes that would have been detrimental to business growth and job creation, as well as to individual taxpayers.” During his tenure, the governor advocated for taxes on companies that provide health care; taxes on companies that don’t provide health care; increased Personal Income and cigarette taxes; new taxes on cigars and smokeless tobacco; taxes on industrial and household waste; taxes on oil company gross profits; taxes on wireless service; taxes on electricity and natural gas; and higher corporate taxes through the implementation of combined reporting, a complex tax reporting system that would result in a tax increase for many companies, including those that don’t have Delaware holding companies. Ironically, the administration attempted to make Pennsylvania’s competitive sales tax less so by expanding the base to include business professional services; while labor-backed groups like the Pennsylvania Budget and Policy Center actually sought changes to the PIT – another area in which the state performs well against other states – that would have resulted in higher taxes for many Pennsylvanians. “The reality is that the tax policy the administration sought over the years does not match up with the governor’s rhetoric from his recent news conference that he has helped make Pennsylvania competitive,” Barr said, pointing out that the Commonwealth consistently lags the nation in economic performance. “Job creators look forward to working with the new administration to make measurable progress in improving all aspects of the state’s business climate.”CONTACT: Lesley Smith, communications executive, PA Chamber of Business and Industry, 717 720-5446. ### The Pennsylvania Chamber of Business and Industry is the state’s largest broad-based business association, with its members comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business™. More information is available on the PA Chamber’s website at www.pachamber.org. |
| Copyright © 2006 Pennsylvania Chamber of Business and Industry |