Articles

(May 2003) A 1999 United States Census Bureau analysis of tax collections revealed total tax burdens in Pennsylvania are slightly below national averages.

Property taxes: Pennsylvania’s property tax burden per capita is 9% lower than the national average and ranks 9th of 13 competitor states (see scorecard). Reasons?

• Pennsylvania has no state property tax.
• Pennsylvania does not tax tangible personal property, such as cars.
• Pennsylvania has a wider range of tax options for local governments, including wage taxes.

Sales taxes: Pennsylvania’s sales tax burden is 21% less than the national average, and ranks 11th among 13 competitors - despite having one of the highest state rates (see scorecard). Why?

• A narrow sales tax base. Food, clothing and most services are exempt.
• Only two counties have local sales taxes (Allegheny and Philadelphia). In some states, counties and other local jurisdictions have local option sales taxes.

Income and wage taxes: Pennsylvania’s individual income tax burden is 6% higher than the national average and ranks 9th among the competitor states (see scorecard). Key factors?

• Pennsylvania has a broad state income tax base with few exemptions or deductions - taxing all income except Social Security and pensions.
• Pennsylvania’s local governments and school districts can tax wages, unlike most other states.

Business taxes: Despite reductions, Pennsylvania business taxes are still 23% higher than the national average, and the 4th highest burden among 13 competitor states (see scorecard). Why?

• Pennsylvania has the 3rd highest Corporate Net Income tax rate (9.9%) in the nation.
• Pennsylvania is among only 18 states that tax corporate worth in addition to income via the Capital Stock and Franchise Tax -- and Pennsylvania’s burden is the highest among those 18 states. The current budget proposes to phase-out the tax by 2010.

The bottom line? Because of the many tax options available to local governments, property and sales tax burdens paid by both businesses and individuals are comparatively low, while individual income and wage tax burdens are higher. Business taxes remain well above national averages.

Revised May 2003