Path to a Prosperous Pennsylvania

Press Conference 
Hosted by: AFP Pennsylvania
January 24, 2017

Remarks by: Carl A. Marrara

Pennsylvania Manufacturers’ Association

Vice President, Government Affairs

At the beginning of the twentieth century, if all the states were separated into individual economies, Pennsylvania would have been the third largest economy in the world. The economic output of Pennsylvania was unmatched – we were truly a world superpower, a leader amongst nations, not states; producing the worlds iron and steel that built iconic structures such as the Brooklyn Bridge, the Chrysler Tower, even the locks of the panama canal. We powered the industrial up swell of the entire United States first through our thriving timber industry, then our vast coal production, and the discovery of oil in our commonwealth changed the economy of the world forever.

But today, our economy is growing, but we have not been a leader amongst nations in decades and quite honestly, we are falling far behind our competitor states too. One paramount reason is our highest-in-the-nation flat-rate corporate net income tax rate of 9.99 percent.  In the recent publication by the tax foundation titled, “location matters,” Pennsylvania ranked 49th for mature corporate headquarters and 48th for new headquarters. Simply put, a 9.99 percent tax – the highest flat rate in the united states - is entirely too high.

Thank you for being here today, and thank you to our friends and partners at Americans for prosperity for holding this event today and allowing me to address this burdensome, counter-productive, and job-killing tax that is our 9.99 percent corporate net income tax. We at the Pennsylvania manufacturers’ association represent those in our commonwealth that make things – everything from steel pipe to chocolate bars – helicopters to crayons – small but iconic lighters to massive earth moving machines. We want to make more of what the world demands right here, but a 9.99 percent corporate net income tax stands squarely in the way.

To put this into even greater perspective, the United States has the highest overall corporate taxes of any developed nation. If we then look at the states as individual countries, Pennsylvania has the highest flat corporate tax rate in the entire world. Why would a business choose to locate within the borders of our commonwealth when that burden is so high?

These are the companies that employ you, your family, your neighbors, maybe someday your children, or your grandchildren – companies that provide salaries, benefits, and retirement. These are the companies that support your local theatre, art gallery, stadiums, parks, medical clinics, and humanitarian aid projects.

Don’t be fooled – just because a corporate tax rate is lowered does not mean that less tax revenue will be collected, in fact it’s quite the opposite. The best economic development isn’t done through a tax credit. In fact, a tax credit in an admission that your tax system in broken and not competitive. States like North Carolina, Colorado, and Utah have worked to drastically reduce their corporate tax burden and these states are seeing tremendous growth. Businesses are flocking to these locations – the businesses themselves pay taxes; but so do all the employees. The citizens that move to those locations are looking for new and better opportunities, they buy goods, they contract services – this is how an economy ought to grow. These states are thriving and seeing inward migration while Pennsylvania year-after-year sees more and more young people leaving to seek opportunity, employment, and prosperity elsewhere.

It’s sound fiscal policy that we are talking about today that allows for competitive tax policy. Let’s be a leader amongst nations again, let’s lower the corporate net income tax, let’s get back on the selection surveys of the worlds top companies, and let’s not be afraid of the prosperity that can be realized in our commonwealth.