Taxes

Cost of Government, Labor and Operations:

There are many advantages of doing businesses in Pennsylvania and Pike County, in particular.   They are typically represented in the following categories as compared to New York and New Jersey. Much of this source data comes from The Tax Foundation publication called, “2017 Facts & Figures; How does your State Compare?

 2017 “Business Climate” map of the 50 US States. Note Pennsylvania Ranks # 24 while our closest neighbors rank # 49 and # 50!

Business Climate
The attached map is based on an analysis that goes into the Business Climate Studies. It is not a single category but a variety of items that make up the core of some expenses for a typical business. Items like Corporate Taxes, Individual Income Taxes, Sales Taxes, Unemployment Insurance Tax and Property Tax are the measures of “Business Climate” as weighed, calculated and reported by the prestigious Tax Foundation every year. However, there is more in this report beyond what is in the “Business Climate” report. We will discuss sites, acquisition costs, labor costs, energy costs, financing, incentives (both state and local) and a variety of other items that will be of interest to you when you consider siting your business. We in Pike County are eager to discuss the total picture with you!

Personal income Taxes:

Personal Income Taxes in Pennsylvania is a simple flat 3.07% of taxable income. In other states like New York, the top tax rate is 8.82%; in New Jersey the top rate is 8.97%. This is why for Sub-Chapter “S” corporations and LLC’s where income is treated as “ordinary income” Pennsylvania’s low, flat rate is very appealing.

Actual State Individual Tax Collections per Capita:

While rates are one thing, how much do people actually pay in each state? In order to fully understand tax collections and compare “Apples to Apples” the per Capita method is again used. You will note that the State Individual Income Tax per Capita amount in Pennsylvania is $897 while the same measure in New York is $2,208 and $1,479 in New Jersey. Remember this is for State Individual Income Tax collections.

State and Local Revenue per Capita:

Annually the Tax Foundation presents a comprehensive analysis of each state and the taxes it charges. From those tables one can readily determine the differences in tax obligations charged by each state. One of the important tables is the “State and Local Revenue per Capita.” This measure includes all state and local taxes such as Income Tax, Property Tax, School Taxes and all others. The left, the sum of LOCAL and STATE taxes (per capita) in Pennsylvania is only 62.4% of what a New Yorker pays. The per Capita charge for LOCAL and STATE taxes are $13,672 in New York and $8,534 in Pennsylvania. This is a savings of $5,138 per person!! The data is from the 2017 Facts & figures. How does your state compare? publication from the Tax Foundation.

Labor Costs:

Another quantifiable advantage in Pennsylvania is the relative cost of Labor. Based on studies done by the Bureau of Labor Statistics, the relative cost of labor in Pike County is less expensive than the State of Pennsylvania and the United States overall. For example, average wages in New York are about 16% more than Pennsylvania and New Jersey is about 20% more; in Pike County the wages are about half the state average in NY.

Average Weekly wage in Pike County, I Quarter of 2016 was $607 per week. Source Pennsylvania Department of Labor and Industry September 26, 2016.

weekly-wages

 

State and Local Sales Tax Rates:

Sales Taxes are a major source of revenues for the states and local municipalities. Some states rely more on one form of taxing than another depending on specific situations. However, sales taxes are often borne by businesses and are therefore part of the mix of costs some businesses bear. The following table will illustrate the costs calculated in the states of Pennsylvania, New York and New Jersey.

sales-tax

Energy Rates:

Energy rates always fluctuate (delivery and energy costs). However, for those who are seriously considering Pike County, we will do an analysis for your company. Provide us with your current energy bill and we will do the analysis to determine how much you save.

A recent analysis done between Orange & Rockland Utilities in New York State and Pennsylvania Power and Light (PPL) in western Pike County showed that a customer paid $3,009.80 for his electric and delivery charges (for 29 days beginning on August 11, 2016) in Orange County, NY. We took the same bill and asked PPL how much the same amount of energy and delivery costs would be and the answer was $1,557.82.

It should be noted that there are three energy companies that serve Pike County: Corning Natural Gas Corporation (Gas and Electricity), Med Ed and PP&L.

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 on the basis of 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. For a job to be counted as a new job in Pennsylvania the employee must be paid $10.88/hour. Incentives can take the form of direct inducement payments, loans, training funds and tax credits against the company’s tax obligation to the state.