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.
