Here’s a question for Allegheny County Chief Executive Dan
Onorato and members of the Allegheny County Council: How does the
Pittsburgh metro region stack up against the rest of the nation in
population growth?
The answer is we’re dead last — in the cellar — except for
post-Katrina New Orleans.
Between 2000 and 2006, while the U. S. population was expanding
by 18 million, the population of the seven-county Pittsburgh metro
area dropped by 58,585. Take away the hurricane and that’s the
nation’s largest decline in metro population — the worst record in
the country in attracting new people or keeping the ones we
have.
And within this seven-county decline, Allegheny County leads the
pack in driving people away, accounting for 96.4 percent of the
population drop — a net loss of 56,457 people out of the 58,585
total.
Now, here’s the second question for members of the Allegheny
County Council as members get ready to vote on Onorato’s proposal
to raise the tax on car rentals and impose a new 10 percent drink
tax: Does anyone understand why Macy’s is busier during a sale, or
how McDonald’s, with low prices, can make a profit of more than $1
billion per quarter?
The answer is that prices matter. In a competitive environment,
Macy’s won’t maintain its customer base if its merchandise is
overpriced. Its customer population will drop.
The same is true for Pennsylvania and Allegheny County. Just as
stores compete for customers, states and counties compete with
every other state and county for business — and, more and more,
compete with every part of the globe in what’s now an increasingly
integrated global economy.
And just as prices matter to consumers, taxes matter to
businesses. For consumers, the cost of shopping in overpriced
stores is a lower standard of living. For companies, the price of
locating in a region that is overtaxed (and overregulated and
overly litigious) is higher operating costs and a less competitive
market position.
Imagine for a minute that you’re the vice president for site
location with a major company and searching for the best place for
a new factory or corporate headquarters. With a quick check of the
“2008 State Business Tax Climate Index,” published by the Tax
Foundation, you’d find the following:
* Pennsylvania is at the top in taxation of corporate income,
ranking 49th out of the 50 states in this measure of the business
climate (i.e., “Iowa’s 12 percent corporate income-tax rate
qualifies as the worst ranking among the states, followed by
Pennsylvania’s 9.99 percent rate”).
* Pennsylvania ranks 49th among the 50 states with the nation’s
second-highest capital stock tax (only West Virginia is higher) —
a tax on intangible personal property, e.g., bonds, trademarks,
etc.
* Impacting the cost of transportation, Pennsylvania’s 32.3
cents-per-gallon tax on gasoline is the fourth highest in the
nation (only New York, Washington state and Wisconsin are
higher).
* With its 39.2 cents-per-gallon tax on diesel fuel,
Pennsylvania has the highest per-gallon tax in the nation, ranking
50th among the 50 states.
* With the country’s fourth-highest rate of overall taxation on
property, Pennsylvania ranks 47th among the 50 states, down from
its 42nd position in last year’s ranking. In the same way,
Pennsylvania’s ranking got worse over the past year compared with
other states both in terms of sales tax rates and the cost of
unemployment insurance.
In short, we’re at the bottom and becoming even less
competitive.
Still, to update his research, a vice president of site location
might want to check the most recent events to see if we’re at least
moving in the right direction. What he’d find is a projected $965
million-per-year hike on the state level in additional road tolls
and Dan Onorato’s proposal to increase drink taxes in Allegheny
County by an estimated $35 million per year.
With just these two changes, that’s an additional $1 billion
each year transferred out of the private sector into the
less-efficient public sector, the exact opposite of what we should
be doing in this region in order to encourage economic development.
It’s like Poland, 1970.
“In the past decade,” says Dan Onorato, “Allegheny County has
undergone a dramatic renaissance.” He’s wrong, and now he’s asking
that we dig ourselves into an even deeper hole.
