PIKE COUNTY, PA - Most Pennsylvanians say taxes are too high - at least what they pay. But their opinions may vary when they consider the relative tax burdens o­n business, their neighbors, and themselves.

Actually, many factors – from personal beliefs to perceptions often built o­n limited information – help form opinions about who pays what and which taxes are worse than others. o­ne fact-based way to consider tax burden is to ask, “How do we compare?”

The U.S. Bureau of the Census has compiled data from 2004 that allows state-to-state tax burden comparisons. To account for the different size of each state, tax collections are divided by personal income, a broad measure of the size of a state’s economy. Comparisons include state and local taxes because some states use local tax sources to provide the same services others provide at the state level.

Therefore, the measure used for this comparison is state and local taxes per $1,000 of personal income.

So how does Pennsylvania compare?

Pennsylvania ranks 24th, in the middle of the pack. Pennsylvania’s taxes per $1,000 of personal income ($108.21) is 2% ($2.18) below the average of the 50 states and the District of Columbia (DC). This rank is a significant change from past years. It’s less favorable and moving toward the national average. Pennsylvania’s state and local taxes have been rising faster than income. (The Bureau of the Census didn’t compile data for 2001 and 2003.)

Here are points to ponder, based o­n 2004 data:

• Pennsylvania ranks 19th in personal income taxes ($26.12 per $1,000 of personal income), 11% higher than the U.S. average. Although Pennsylvania’s state personal income tax rate is o­ne of the lowest in the nation, Pennsylvania is average in taxes relative to personal income because the personal income tax base is broader than most states’ personal income tax base (few exemptions and deductions). Also, Pennsylvania is o­ne of o­nly a handful of states in which many local governments impose a local income (or wage) tax.
  

• Pennsylvania ranks 8th in combined corporate income taxes relative to statewide personal income. Pennsylvania’s $4.25 per $1,000 of personal income is 28.8% above the U.S. average. This tax category includes o­nly corporate income taxes and not additional taxes paid by business, such as capital stock and franchise tax, property taxes, sales and excise taxes, and business and occupation taxes. Therefore, this tax measure doesn’t indicate Pennsylvania’s ranking based o­n all state and local taxes imposed o­n businesses.

  
  

• Many states levy general sales taxes at the state and local level. Pennsylvania’s overall sales tax burden is relatively low compared to the other states and DC. Pennsylvania’s 40th highest ranking of $20.17 is 24.6% below the average. This low rank likely is due to the narrowness of Pennsylvania’s tax base – the items and services subject to tax rather than the combined state and local tax rate. Pennsylvania also has fewer local governments levying a sales tax than many other states.

  
  

• Businesses and households pay property taxes in Pennsylvania at the same rate and use the same tax base. Pennsylvania’s 28th highest ranking of $31.71 per $1,000 of personal income is 8.8% below the average of the 50 states and DC. Factors influencing this comparative ranking? The type of property subject to the tax varies from state to state. And the percentage of market value included in the tax base and in the local property tax rates applied to the base varies significantly. Also, as noted, Pennsylvania allows local governments to impose a local tax o­n personal income that reduces the dependence o­n local property taxes.