TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, May 17, 2018

How To Improve Pennsylvania's Tax System

Pavel A. Yakovlev (Mercatus Center, George Mason), How to Improve Pennsylvania's Tax System:

Pennsylvania ranks near the top in tax burden and near the bottom in business friendliness in the nation. While much good can be said about the state’s at personal income tax rate and relatively low sales tax rate, Pennsylvania’s business taxes are in serious need of reform. The state government took a step in the right direction by phasing out its archaic capital stock and foreign franchise tax, but Pennsylvania’s economy is still being held back by its high corporate income and unemployment insurance taxes. Pennsylvania’s 9.99 percent corporate income tax rate, the second highest in the nation, puts the state at a significant competitive disadvantage while generating less than 7 percent of total tax revenue. A combination of business tax cuts and tax base broadening could make Pennsylvania’s economy grow faster without jeopardizing its public finances.

Figure 3

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Comments

PA's pass-through tax system is in desperate need of some fine-tuning as well. While the nonresident/composite tax rate is great, the goofiness of the forms and tax law is idiotic.

Posted by: Peter | May 18, 2018 6:27:51 AM