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The Public Policy
America’s Worst Anti-Business Climates
Some of them will surprise you.
Here’s a headline that’s sure not to boost investment and job creation in Pennsylvania: “Wyoming First, Pennsylvania Worst In Business Taxes.”
Unfortunately, it’s a headline that’s easy to remember and it wasn’t published only in the Pittsburgh Business Times or the Philadelphia Inquirer.
It’s a recent headline on the front page of Investor’s Business Daily, read nationally by precisely the people who make the decisions about the location of job-creating capital investments and business expansions.
“An executive looking for a place to locate his company might do well to consider Wyoming,” begins the article. “That state is the most business-friendly in the country, at least when it comes to taxes, according to a new study.”
The study, “Location Matters,” published by the Tax Foundation, states that when all the taxes are factored in, Wyoming’s rate of taxation on businesses is less than half the national average.
“Pennsylvania, meanwhile,” reports Investor’s Business Daily, “wins the double distinction of imposing the heaviest tax burden on its businesses, with an overall effective rate that’s 45% above the national average.”
The five most business-friendly states, ranked from the least burdensome in terms of business taxes, are Wyoming, South Dakota, Georgia, Nevada, and Ohio.
The five least business-friendly states, in order of most burdensome in taxation at the top of the list, are Pennsylvania, Hawaii, West Virginia, Kansas, and Rhode Island.
“This report helps answer an important question for business owners: What will my company pay in taxes if I move into a state?” said Scott Hodge, president of the Tax Foundation. “Up until now, there had been no comprehensive national tax survey that could answer that question.”
The survey considered the combined impact of state taxes on corporate income, sales, property, unemployment, gross receipts, and so on.
Not surprisingly, since we raise taxes on what we want to discourage, a supplement by Investor’s Business Daily to the Tax Foundation study, considering tax rates on both new and existing businesses, found that the states with the lowest taxes on businesses produced more new jobs in the current economic recovery than the states with the highest tax burdens.
“In fact, the five states with the lowest tax rates on both new and existing companies saw jobs climb an average 1.14% since the recession ended in June 2009,” reports Investor’s Business Daily. “In contrast, the five states with the highest business tax rates — Pennsylvania, Massachusetts, Hawaii, Kansas and Rhode Island — had payrolls grow an average of just 0.75%. That’s a 52% difference.”
Additionally, the Tax Foundation study found that all businesses within each state aren’t treated equally, with targeted tax breaks, political preferentialism, and various subsidies creating what Investor’s Business Daily calls a “startling” disparity in tax burdens.
Among them, as reported by Investor’s Business Daily: “Louisiana offers so many incentives for new R&D companies that they face an effective tax rate of -10.5%. But Louisiana doesn’t extend this generosity to new distribution centers, which face a sky-high 50% tax rate. Pennsylvania likewise makes life easy for manufacturers, offering them tax rates as low as 6.1%, among the lowest in the country. But Pennsylvania is most unkind to other types of business, with tax rates that are the highest, or very close to the highest, for every other industry examined by the study.”
Bottom line, the politicians in Pennsylvania, Massachusetts, Hawaii, Kansas and Rhode Island have been the most successful in creating an anti-jobs, anti-business, anti-growth tax system that’s confiscatory, discriminatory, duplicitous and counter-productive, a system that’s directly denying their constituents of jobs and income growth.
About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.
Letter to the Editor View all comments (21) | Leave a comment
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Mike Hawk| 3.6.12 @ 6:41AM
After 8 years of Fast Eddy Spendell and Democrat (and Rendell Republicans) controlled legislatures for a big part of that, I'm not surprised . Thankfully now there is a possibility of reversing the trend here in PA with a Republican Governor instead of a mayor and Legislature being purged of Rendell Republicans. One can only hope.
Bob K.| 3.6.12 @ 2:07PM
It won't happen. When the Republicans decided not to put the same extraction tax on the natural gas industry in the state's Marcellus Gas fields (which every other state puts on the gas industry) they decided that they had done enough.
To hell with the rest of the businesses operating in the state!
Natural gas will save the state's economy!
"But it's alright now. In fact it's a gas!
We're floatin' in gas! It's a gas, gas, gas!
It's all gas!"
Meanwhile Chesapeake Energy, the largest presence in the gas fields has temporarily stopped operations because the price of gas is too low for them to make a profit.
The Republican leadership in PA is controlled by dumb asses!
Mike Hawk| 3.6.12 @ 8:23PM
It ain't over yet. We will throw the dumb asses out. We've been working on it for several years. It doesn't happen overnight. What are you doing to help?? Are you a PA resident?? DO you sit on you ass on election day or are you involved?? If you sit on your butt and bitch you too are a dumb ass.
Bob K.| 3.7.12 @ 8:57AM
Where were you in 2010, Mike? Didn't you hear? I wonder if YOU even live in PA!
We threw the Democrats out in 2010. We took over the Governorship and both houses in the legislature! We sent more Republicans to the House of Representatives than Democrats. We elected a Republican Senator and we did that with the Democrats having a million more registered voters in the state than the Republicans have. You know what that is called? It's called a good start!
Look what the Republicans have done with it. They can't even manage redistricting the state so that it will favor the Republicans.
Do you want to replace these dumb asses with the democrats we threw out in 2010?
Bill Hussein O'Stalin| 3.6.12 @ 6:41AM
Here's a link to the IBD article:
http://news.investors.com/arti.....campaign=1
Petronius| 3.6.12 @ 8:28AM
What the states take from business is one thing. Look at what individual politicians and municipalities will do to business to score points in the press or salve their egos. Christie ran Sarco Foundry out of his state and into PA because they forge 1911A1 frames and he hates guns. My city government despises large firms and indulges it's whims for clubs and boutiques, so this town resembles Oakland CA. Anti business attitudes of the populace is the biggest reason for lack of major commerce. The petty hatred of "the Man" and the covetous belief that corporate profits belong to "the workers" over and above their compensation packages is #1 everywhere. Mr Forbes will tell you. Capital goes where it's welcome and stays where it is well treated. And the urban slug who robs his employer by indolence and theft because he is "owed" will never understand or admit it. They'd rather dance on the graves of the Eastern Airlines of the world than help them grow for the next generation to continue. Maybe when they have buried the last private business and force all their neighbors to suffer they will learn that emotional vindication does not pay the bills. We will end up like Europe where the only prosperous businesses are the luxury marques that are admired because they make their revenues here and in the eastern hemisphere. It's O K with Joe Sixpack that athletes wear Rolexes so long as the people he know cannot, simply because quarterbacks are not bosses. Welcome to the sand box.
Martin Owens| 3.6.12 @ 12:36PM
I can't think why California isn't higher on the anti-business list. God knows they try hard enough.
RJ| 3.6.12 @ 4:00PM
As a Californian, my thoughts exactly. I was also surprised to see Kansas is in the top five of business taxes. When it comes to being anti-business, anti-property rights and anti-wealth, California is no Johnny one-note.
Stan Redmond| 3.7.12 @ 2:51PM
Kansas enjoys raping the aviation companies in Wichita. The legislature knows they can't relocate and the major aircraft companies are under constant threat from the unions who do the democrats' bidding.
RJ| 3.7.12 @ 3:43PM
Thanks. I am sorry to hear about it. It seems that politicians always exploit the private sector whenever a vulnerability appears.
Daniel| 3.6.12 @ 1:47PM
But surely there is more to a "pro-business" atmosphere than taxation? I am in the pharmaceutical industry and the largest pharma companies in the world have large manufacturing and research facilities in states such as New Jersey, Massachusetts, Pennsylvania and Rhode Island while states such as Montana, Wyoming and Idaho are barren of manufacturing jobs (in spite of having a well-educated and motivated workforce). I would love it if my company opened a new plant out west, but for the time being I'm stuck in Jersey.
TrueBlue | 3.6.12 @ 7:02PM
Problem with opening any new factory is that the EPA and other envirohippie groups get involved in the process, producing onerous legal fees and making the entire thing take far longer than it should just to break ground.
Mike Hawk| 3.6.12 @ 8:13PM
Three refineries in the Phluffy area just shut down. Reason: EPA and local gummint stupidity. They were unprofitable. Foreign refiners have bought the equipment and it is being dimantled for shipment. The storage tanks will remain to hold imported product from a refining Company in India that is constructing a giant new one.
Daniel| 3.7.12 @ 10:38AM
Correct, Mike. I remember back in the 1990s when Micron wanted to build a new manufacturing plant in Montana but it was blocked by anti-development environmentalists and the company just up and moved to Boise instead. The motto back home was, and still is, "Keep Montana Green" (and unemployed).
Tenn Slim| 3.6.12 @ 5:25PM
Perhaps a colleateral study showing the Leftist Socialistic Politicians/Office Holders in the top 5 worst states, would be educational.
Semper Fi
Mike Hawk| 3.6.12 @ 8:18PM
There is hope here in PA. We threw out Fast Eddy Spendell and his Philadelphia hacks and Republicans hold the legislature and Governor's offices. Now if the R's will act like responsible elected officials we have a chance. We also elected Pat Toomey last time. We now have to unload Bob (with one'o') Casey and replace him with Sam Rohrer. Lots of work to be done and it will take some time.
Pat| 3.6.12 @ 7:36PM
Thankfully you can still pack Mama and the kids into the Studebaker and leave. Michigan is a case in point – they had the nation’s highest unemployment rate just a couple years ago but no longer. Some claim the improvement was due to Obama’s bailout of the auto industry but hundreds of thousands of jobs weren’t created through the Obama/UAW love child. Michiganders simply packed up and left the state, some went south, some went to the Dakotas, some went farther west but mostly they just left to seek greener pastures.
The official unemployment rate dropped because the unemployed left the state. And, despite the unions and the Democrats, native Michiganders do prefer living there – it’s a wonderful state packed with natural beauty but not a state that’s kind to business. As long as we are free to migrate, let the legislative greed flow in your former domicile, it’s a self-defeating greed in the long run and eventually the voters willl come to their senses – or they leave.
POST American| 3.7.12 @ 3:02AM
---Great piece!
Meanwhile, still patiently waiting for that
FIRST piece profiling the figure of leading
Princeton capstone EUGENIST -er-- we
meant 'BYE---O---Ethicist' Peter Singer's
case for selective extermintion of children
up to age three for everything from
'genetic challenges' ---to 'stress' on the
parents.
AGAIN ----LOSE your love affair with
FEAR ---and START taking on these
MONSTERS-----------------NOW!
"We are living in a psychopathic system
---designed, managed, directed, owned and
run -------by PSYCHOPATHS."