March 19, 2008
The (Philadelphia) Bulletin on Corporate Taxes
Pennsylvania's Corporate Taxes Uniquely High
By: Bradley Vasoli, The (Philadelphia) Bulletin
Corporate taxes, higher in Pennsylvania than in any other state except Iowa, hinder the state's ability to retain and attract businesses, according to the D.C.-based Tax Foundation's president Scott Hodge.
With a 35-percent federal rate, corporate income taxes in America are already higher than in most other nations with membership in the Organization for Economic Cooperation and Development (OECD). When state corporate taxes factor in, the U.S. has an averaged corporate tax rate of 39.3 percent, the second highest in the world behind Japan with its 39.5 percent combined rate. Pennsylvania's combined state and federal corporate tax rate is 41.5 percent.
"Tax competition is real across the globe, but unfortunately the United States isn't even in the race," Mr. Hodge said at a luncheon at the center-right Commonwealth Foundation.
He noted that jurisdictions often see their businesses relocate to lower-tax states or nations. The telecommunications company Nokia, for instance, moved operations from Germany, which has a combined corporate tax rate of 38.9 percent, to Hungary, which has a mere 20-percent rate.
Among OECD nations, Ireland has the lowest corporate tax rate, 12.5 percent. Since cutting the rate from over 40 percent, many financial corporations, software companies and insurance providers have moved their operations to the Emerald Isle.
"They really are the 'Celtic tiger,'" state House Republican Policy Chairman Mike Turzai (R-Allegheny) said. He argued that if Pennsylvania wants a more business-friendly climate it should reduce its taxes on individuals and employers. [Read the full article.]
