Pa. slaps high taxes on HQ offices and warehouses, lets factories off easy: report

With corporate headquarters still fleeing Philadelphia  -- Cigna to Connecticut, Destination Maternity to New Jersey, and chemical makers Arkema, Dow Advanced Materials and Sunoco to the Pennsylvania suburbs, to name five publicly-traded companies that have moved their bosses out in the past couple of years -- it's a good time to ask whether Pennsylvania's business tax rates are as unfriendly as critics claim.

Yes -- and no, according to a new report by the Tax Foundation and auditing firm KMPG LLC -- Location Matters: The State Tax Costs of Doing Business. Reviewing firms and facilities 10+ years old (and past the temporary-incentive stage), the report lists Pennsylvania, among the 50 states, as charging the nation's:
  - SECOND-HIGHEST effective state tax rate for corporate headquarters: 23.1%
  - #3 for an independent retail store: 22.9%
  - #5 for a distribution center: 41%
  - #17 for a call center: 22.3%
  - #21 for a research and development facility: 12.5%
But also the: 
  -  FOURTH-LOWEST state tax rate on capital-intensive manufacturers: 4.2%
  - 11th lowest for a labor-intensive manufacturer: 6.6%

In sum: Pennsylvania charges some of the highest taxes to companies based here, warehouses, and local retailers -- but also some of the lowest rates to companies that employ and invest in factory production. (Though the recent Mondelez/Kraft and Hostess bakery closings, and the pending departures of Perfecseal and Amoroso's, all from Philadelphia, each with hundeds of jobs, raise questions about whether we can keep a lot of factory jobs here, either.)

Does that make the Pennsylvania tax code sound old fasihioned? Ready for updating? "It's crucial to address the tax code's unequal treatment," says Tax Foundation Policy Analyst Jared Walczak.

Also, "corporate income taxes are just one part of a business's tax burden. Sales, property, and unemployment insurance taxes can also impose significant burdens on businesses." Also, tax incentives hurt existing firms, and "different firm types experience dramatically different effective tax rates."

That link again: Location Matters: The State Tax Costs of Doing Business