Pennsylvania Isn't Competitive--What Can We Do About It?

What can we do it change it? We’ve mapped out four of the biggest obstacles to economic growth and how to reverse them.

1. Regulatory reform. Pennsylvania has so many regulations on the books that business need to devote enormous resources to complying with them. This includes the tedious permitting process, which has driven many businesses out of the state for greener (and more efficient) permitting pastures. Then there are the state’s power-hungry, overreaching departments, which seem to exist to nickel and dime law-abiding Pennsylvanians. The worst actors are the Department of Environmental Protection, PennDOT, and the Pennsylvania Liquor Control Board. The scope of these bureaucratic departments must be cut, permitting should be corrected with solutions like “deem-approved” permitting, and regulations that block innovation should be repealed. Fewer regulations equal a more competitive Pennsylvania.
2. Tax environment. We’ve heard for some time that Pennsylvania’s very high corporate net income tax would be reduced dramatically. That has not happened. Our fuel tax ranks in the top 10 in the nation, hitting most consumers on a daily basis. Travelers must endure steep turnpike tolls. Our estate tax levies penalties on those transferring property after a loved one dies, and our income tax ranks 13th-worst in the country. Include the aggressive impact fees and taxes on natural gas extraction, and you have a tax climate that stifles both private enterprise and family formation.
3. Net Operating Loss Reform. To attract entrepreneurs to our state, we have to make it sensible for them to start a business. Many new businesses lose money in their first year or two. One innovative way to assist entrepreneurs is letting startup companies offset tax payments by “carrying forward” losses from their formative years or unexpectedly bad years.  More favorable tax rules would help us attract young innovators who want a safe haven to get their companies up and running.
4. Workforce. We often hear about shortages in certain industries, but little is done about it. Pennsylvania is still among the hardest states for teachers to get certified in. On average, it takes the typical teacher nearly six years to get into the classroom. Similar barriers exist with nurses and healthcare workers when it comes to crossing state lines to work here. We need to make it easier, for example, for Marylanders to cross the Mason–Dixon line to work in our hospitals. When there’s a shortage, adjustments must be made with licensing and reciprocity rules to attract talent.