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The Keystone State’s Economy Overview
With an overall GSP of $803 billion in 2018, Pennsylvania placed 6th in the nation. This state would have boasted the 16th biggest GDP in the world if it were a nation. With a per-capita GSP of $50,665, PA had the 22nd highest GSP in 2016. In PA, there were 301,484 businesses in 2016 that generated over 5,354,963 jobs. Pennsylvania's urban manufacturing hubs include Scranton-Wilkes-Barre, Philadelphia, Erie, Allentown-Bethlehem-Easton, and Pittsburgh. The economy of Pennsylvania is shaped by the fact that a sizable portion of the state is rural.
There are fifty Fortune-500 businesses headquartered in Pennsylvania, including 6 companies in Philly and 8 companies in Pittsburgh. H.J. Heinz is one of such companies with operations in Pittsburgh. Philadelphia's Fortune-500 corporations are located in the suburban areas, much like King of Prussia. The largest train manufacturer in the nation, GE Transportation, is based in Erie. Walmart, like the rest of the nation, is Pennsylvania's largest private employer, followed by PA University. The YorkWater Company is based in Pennsylvania (one of the first American utility companies owned by investors).
How Other States' Tax Codes Compare to Pennsylvania
Pennsylvania has a flat individual income tax rate of 3.07%. Additionally, some governments levy municipal income taxes. Pennsylvania allows municipal gross receipts taxes and has a corporate income tax rate of 9.99%.
Pennsylvania has a state sales tax of 6.00%, a local maximum of 2.00%, and an average of 6.34% for both state and local taxes. According to the Tax Foundation's 2022 State Business Tax Climate Index, Pennsylvania's tax structure is ranked 29th nationally.
Main Tax Revenue Sources in Pennsylvania
Personal Income Tax
2017-2018 - $13,398,954,874
2018-2019 - $14,095,521,769
2019-2020 - $12,835,482,000
2020-2021 - $16,283,765,087
2021-2022 - $18,125,871,118
Revenue from personal income taxes increased significantly over the past five years with a small hiccup in 2019, which wasn’t the best year for Pennsylvania’s economy across the board, yet the state bounced back rather quickly. In June 2022, personal income tax receipts came to $1.6 billion, which was $179.8 million higher than expected. PIT collections overall for the fiscal year have already outperformed forecasts by $2.4 billion, or 14.9%.
Corporate Net Income Taxes
2017-2018 - $2,879,023,804
2018-2019 - $3,397,542,863
2019-2020 - $2,827,211,927
2020-2021 - $4,424,350,740
2021-2022 - $5,323,493,518
As you can see, during the last five years, corporate net income taxes nearly doubled, which speaks volumes about the industry's development. It appears that the government will cut the tax rate to increase corporate growth and make the market even more competitive.
Gaming Taxes
2017-2018 - $123,058,758
2018-2019 - $131,672,870
2019-2020 - $143,022,017
2020-2021 - $241,833,709
2021-2022 - $307,857,135
Pennsylvania's casino business quickly recovered from the pandemic era. The Allegheny Institute for Public Policy's most recent research indicates that the industry's overall earnings were $3.2 billion in 2018 and are projected to reach $5 billion by the end of 2022. As you can see, it wasn’t as heavily impacted in 2019, and even the pandemic didn’t hinder the growth of this thriving market despite the fact that all the brick-and-mortar casinos were closed for the entire year. The online gaming market grew at a very fast rate and allowed the industry to not only survive but thrive.
The year 2022 saw significant growth in Pennsylvania's gaming market. According to Allegheny Institute executive director Frank Gamrat, the company might generate $2 billion in tax revenue for the Commonwealth.
Taxes for ED-Sales Use/Hotel OCC Taxes, Pen & Int
2017-2018 - $10,381,359,667
2018-2019 - $11,099,647,971
2019-2020 - $10,818,954,231
2020-2021 - $12,837,234,892
2021-2022 - $13 915 269 599
Over the previous five years, this source of tax revenue increased at a reasonable rate (by around 30% since 2017) with a small hiccup in 2019. The tax rate is 6%. 1% is added up to the existing 6% if items are purchased or used in Allegheny County.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes
