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1 Scott A. Hodge, Pennsylvania's Tax System--Not Weak Economy--Responsible for Job Losses and Out-Migration 1 (2009)

handle is hein.taxfoundation/ffcabxz0001 and id is 1 raw text is: FOUNDATION December 2, 2009 No. 201 FISCAL FACT Pennsylvania's Tax System--Not Weak Economy--Responsible for Job Losses and Out-Migration By Scott A. Hodge This week, President Obama will cap off the White House forum on jobs and the economy with a trip to Allentown, Pennsylvania. There he will focus attention on the challenges workers are facing during these tough economic times. Alas, the President will be misinterpreting the miseries on display in Allentown. The real lesson should be that bad tax policy can cripple a state's economy, and no amount of federal stimulus money can undo the damage. Pennsylvania's job losses did not start with the most recent recession. Indeed, the out-migration of taxpayers began more than 15 years ago in large measure because Pennsylvania's tax system is unremittingly hostile to business. Tax Burden: Taxes consume 11.2 percent of the state's income, which gives Pennsylvania the 11 th highest state and local tax burden in the nation. Business Tax Climate: Pennsylvania ranks 27th on the Tax Foundation's 2010 State Business Tax Climate Index which measures the business-friendliness of each state's tax system. Of the five major components of this index, Pennsylvania's corporate system ranks 37th and its property/wealth tax system ranks 42nd. The only bright spot in the state's tax climate is its individual income tax system which ranks 13th overall. Corporate Tax Rates: Pennsylvania's 9.99 percent corporate tax rate is the second-highest statutory rate among the 50 states; only Iowa's 12 percent rate is higher. However, when federal deductibility is accounted for, Pennsylvania's rate is the highest in the nation. If Pennsylvania were a nation, it would have the highest overall corporate tax rate in the world at 41.5 percent (federal plus state, accounting for the state-local deduction). Scott Hodge is President of the Tax Foundation.