Any company who looks to relocate or expand is going to be concerned with many factors: Markets, availability of labor, acquisition of suitable land, infrastructure and something that sounds almost intangible, a factor known as “Business Climate.” This definition deals with the attitude of local government towards business, the availability of labor, land and other resources as well as things like a good educational system that produces employees among other things. In Pike County, PA our “Business Climate” story is a very good one.
The Tax Foundation looks at factors like Income Taxes, Corporate Taxes, Property Taxes, Unemployment Insurance taxes and Sales Taxes. Each tax rate is weighted, and the resulting index is compared to each other state in the US. A lower number indicates a better 2021 “State Business Tax Climate” standing. See the full report of all the states at: Tax-Foundations-Facts-and-Figures-2021-state-tax-data-resource1.pdf (taxfoundation.org) .
Taxes: based on the 2021 Tax Foundation studies, you will quickly understand why Pennsylvania is a wonderful deal as compared to our two-neighboring states of New Jersey and New York:
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||Business Tax Climate Index from THE TAX FOUNDATION|
Tax Foundation Publication: 2021 Facts & Figures: How does your state compare?
One of the great (free on-line: Tax-Foundations-Facts-and-Figures-2021-state-tax-data-resource1.pdf (taxfoundation.org) ) publications that illustrate the differences in costs among the 50 state is the annual “Facts & Figures” summary prepared by the venerable Tax foundation.
This publication analyzes virtually all taxes imposed in all 50 states and actually ranks them in their annual “Business Tax Climate” studies. The idea is look at typical costs incurred by businesses and develop a weighted index on each state. The index is then ranked in order of the burden the taxes impose on businesses within their state. High tax states like New Jersey and New York rank with the highest numbers #50 and #48 on the list. These are the worst. Since Pike County is bounded by New York and New Jersey one can easily see the difference in tax burdens might be from #27 in Pike County, Pennsylvania.Very interesting reading for anyone who is interested in understanding where are the best states for your business. Clearly, Pike County, Pennsylvania is one of them in the Northeast US.
Property Tax Abatements and Incentives:
In some townships in Pike County, PA there is a program called LERTA which provides a 5-year tax abatement of 90% in Year 1, 80% in year 2, 60% in year 3, 40% in year 4 and 20% in year 5 on improvements to land in specific townships that have adopted the program. The land itself will always pay taxes but the taxes on improvements like buildings and paved areas may be abated.
Commonwealth of Pennsylvania Incentives:
Also, it is possible to receive some incentives for the State of Pennsylvania. Awards are generally made based on the total number of new jobs that will be created, on the amount of investment that will be made by a new company and, on the availability of funds in any given year. Incentives can take the form of direct inducement payments, loans, training funds and tax credits against the company’s tax obligation to the state.
On the signpost outside the Milford Township Offices there is a sign that says “Business and Tourism Friendly.” The county government is administered by three “County Commissioners” and one is the Chairman of the Pike County Economic Development Authority whose mission it is to “encourage, promote and facilitate new economic activity within the county to create new jobs, commerce and business activities.” On the State level, members of the Pennsylvania Senate and House of Representatives jealously guard the state’s Income tax rate at a flat 3.07% to encourage new businesses especially those that are Sub-Chapter “S” and LLC’s which fall under the Personal Income Tax rate schedule. Despite occasional attempts to raise these rates Pennsylvania knows that (unlike their immediate neighbors in New York and New Jersey) keeping these tax rates low is an important part of Pennsylvania’s positive “Business Climate.”
Examples of Government being friendly to business:
Building-to-Ground Lot Coverage:
At the recommendation of the business community, a local township increased its lot coverage from 45% to as high as 75% to help businesses activity and to keep the costs of land at a minimum. Because of this coverage change, an owner of 10 acres of land could go from a maximum of 196,020 sf for building and impervious material (at 45%) all the way up to as high as 326,700 sf of building and impervious blacktop (at 75%). Something like increasing lot coverage is a real tangible advantage of a positive Business Climate. This change is a real manifestation of a township’s commitment to helping business and to creating a “Business Friendly” relationship.