Pittsburgh Tribune-Review
What if you owned your own small business in Pennsylvania? Maybe a bakery or book shop or a repair service that has been in your family for generations. You would likely be concerned about the state’s economy and its impact on your family and livelihood.
The good news is that Gov. Tom Corbett’s tax reform plan could help business owners like you throughout Pennsylvania, but we have to make it a higher priority if it will ever become a reality.
Corbett has proposed a multi-pronged reform centered on reducing the corporate income tax from 9.99 to 6.99 percent and eliminating a double tax on business income assets. A new analysis sponsored by the Harrisburg-based Commonwealth Foundation and the Beacon Hill Institute in Massachusetts demonstrates exactly how the governor’s tax reform plan will allow Pennsylvania to prosper.
If the reforms pass this year, we estimate that the state would see more than $1 billion in additional investment by 2018. The biggest benefit that the state stands to reap is increased investment through savings and capital gains expenditures.
We estimate that more than 1,200 additional private-sector jobs would be created by 2018 as a direct result of these tax reforms. Here in Pennsylvania, with a 7.6 percent unemployment rate, every bit counts. And as investment grows in future years, job growth would also take off.
Increased employment and investment also leads to wider consumer benefits. Based on our projections, real disposable income would grow by $460 million as a result of business tax reform.
This is a real stimulus. It would allow businesses to invest more, in turn creating additional jobs and generating more income for the working Pennsylvanians who have suffered in recent years. It’s nothing like the federal “stimulus,” where taxpayer money was simply redistributed from one sector of the economy to another without actually creating any long-term gain.
Realizing significant growth in personal income, business investment and job creation would revitalize Pennsylvania’s economy. That’s why Pennsylvania isn’t alone in traveling the road to tax reform.
This year, Louisiana, Nebraska, Kansas and North Carolina have all considered comprehensive tax reform. And in years past, six other states, ranging from Washington to Texas to Ohio, have also taken steps to limit onerous corporate income taxes.
For decades, Pennsylvania has lagged the nation in job and income growth. The Keystone State ranks among the 10 worst states for businesses, according to a survey of business leaders by CEO Magazine, and 39th in state competitiveness, according to the Beacon Hill Institute.
Tax policy doesn’t exist in a vacuum: Residents continue to flee Pennsylvania for greener pastures. According to IRS data, Pennsylvania netted a loss of more than 77,000 taxpayers to interstate moves from 2000 to 2010.
Due to lower than expected revenue reports for the state this year, some lawmakers are calling for higher taxes to fund their spending demands. But the reality is our state needs tax relief to fuel economic growth.
Gov. Corbett’s plan moves Pennsylvania in the right direction — and if anything, lawmakers should look to accelerate his tax reductions. By lowering the state’s onerous tax burden, lawmakers can encourage job growth and business investment, giving Pennsylvania a competitive edge over its neighbors and delivering prosperity to its citizens.