How to Improve Pennsylvania's Tax System

17 Pages Posted: 27 Apr 2018

Multiple version iconThere are 2 versions of this paper

Date Written: November 28, 2017

Abstract

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.

Keywords: taxation, equity, efficiency, burden, corporate income tax, Laffer Curve

JEL Classification: H2, H3, O4

Suggested Citation

Yakovlev, Pavel A., How to Improve Pennsylvania's Tax System (November 28, 2017). Available at SSRN: https://ssrn.com/abstract=3169518 or http://dx.doi.org/10.2139/ssrn.3169518

Pavel A. Yakovlev (Contact Author)

Duquesne University ( email )

600 Forbes Avenue
Pittsburgh, PA 15282
United States

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