Tuesday, June 27, 2006

Everybody's Cutting Corporate Taxes to Be Competitive for Job Growth - Except Us

The Wall St. Journal reported last week that Germany was planning to cut its corporate tax rate from nearly 39% to just under 30% in an effort to make the country more attractive for investors. The article reported that the nominal corporate tax rate is believed to be "not internationally competitive" and to be turning companies away from Germany and toward low-tax countries like Ireland and Slovakia, which have become magnets for foreign investment in recent years.

The Journal noted that the Netherlands is cutting its tax in stages down to 30% next year from 34.5% two years ago, and that Austria cut its rate from 34% to 25% last year.

If those rates sound high, look at the chart provided by the Journal which shows that the nominal rate in the U.S. is even higher.

And within the United States, Pennsylvania has a 9.99% corporate net income tax rate -- the second highest rate in the country and the highest rate of any major state.

So not only is Pennsylvania not competitive on taxes nationally, it's not competitive internationally, either. No wonder the state's job growth rate has been in the bottom 10-15 states over the past fifteen years.

The new state budget is due this Friday. Will the Governor and the General Assembly use a mere 5% of the $700 million surplus in order to make business taxes more competitive and help grow businesses and jobs?


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