Press Releases

For Immediate Release
September 5, 2018

For more information, contact
Tricia Harris, tharris@pachamber.org | 717.720.5447

PA Chamber: Study Shows State’s Tax Structure a Barrier to Growth

New Tax Foundation report identifies policy solutions to improve the state’s Tax Code, economic competitiveness

A new study unveiled today by the Pennsylvania Chamber of Business and Industry highlights the uncompetitive nature of the Commonwealth’s Tax Code.  The report, “Pennsylvania: A 21st Century Tax Code for the Commonwealth” – which was authored by the Tax Foundation and funded via a grant by the PA Chamber – delves into how the Commonwealth’s tax structure compares to other states and provides a menu of policy options to improve Pennsylvania’s overall competitiveness.      

“Pennsylvania’s tax structure leaves a lot to be desired,” said PA Chamber Vice President of Government Affairs Sam Denisco.  “For too long, our state’s uncompetitive tax structure has caused the Commonwealth to lag behind other states – missing out on economic opportunity and growth.  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.  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.”

One of the key findings of 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.  This overreliance on corporate taxes can make the Commonwealth’s budgeting process more difficult due to the volatile nature of the corporate income tax.  Notably, according to the Tax Foundation, compared to other states, Pennsylvania ranks 4th in terms of corporate income tax collections, while the state’s corporate income tax structure ranks 7th worst in the nation.  

As part of its analysis, the Tax Foundation proposes three differing reform proposals, varying in degrees of aggressiveness, to simplify and improve the Commonwealth’s Tax Code and increase the state’s overall competitiveness.  These proposals incorporate changes to the various taxes imposed by the state, including reducing Pennsylvania’s Corporate Net Income Tax rate – which at 9.99 percent is the highest in the nation – along with other changes to the sales and personal income taxes. 

“Pennsylvania’s tax code has not kept up with the times,” said Tax Foundation Senior Policy Analyst Jared Walczak.  “It no longer captures the way we live, work, or shop, and it’s been weighed down with needless complexities over time.  We’re in a competitive moment, where states are responding to changing incentives under federal tax reform and working to make their tax codes more reflective of today’s economy. There’s a real opportunity to build a tax system for a diversified economy and to position the Commonwealth as a destination for investment, entrepreneurs, and talented individuals in the years ahead.”
A full copy of the study is available online.

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The Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its statewide membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of BusinessTM.