The Pennsylvania Manufacturers’ Association

Tom Armstrong, Policy Director

www.pamanufacturers.org

March 2003

THE SILENT KILLER

Pennsylvania Manufacturing Employment 1991-2002

Source: Bureau of Economic Analysis, US Department of Commerce. 2002 preliminary data is from the Bureau of Labor Statistics (February 2003). 2002 employment is seasonally adjusted.

750,000

800,000

850,000

900,000

950,000

1,000,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Pennsylvania Business Taxes

Top Rate Top Rate7.00 mills 12%6.99 mills 10.5%3.00 mills 9.99%2.70 mills 9.975%2.50 mills 9.8%2.50 mills 9.75%2.10 mills 9.5%1.75 mills 9.4%1.50 mills 9%

9%0.75 mills 9%

6.64%

(Tied) New Jersey(Tied) Rhode Island(Tied) West Virginia

Note: Pennsylvania and West Virginia are the only states on both lists.

North Carolina

US AVERAGE (2002)*US AVERAGE (2002)

Highest CNIT RatesIowaNorth DakotaPennsylvania

TennesseeKentuckyAlabama

District of ColumbiaMinnesotaVermontMassachusetts

* Calculated using PA's CSFT rate of 7.24 mills for 2002.

Highest 2002 Business Tax Rates in AmericaHighest CSFT Rates

West VirginiaPennsylvania (2003)LouisianaArkansasMississippi

Alaska

The Silent Killer…

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

Local Spending

Non-GF

State General Fund

Population

Inflation line

Local Gvt. Expenditures

State Non-General Fund

State General Fund

PA Population (in millions)Growth of Inflation: Annual Average 5.1%

$43.6 billion

$19.8 billion

12,281,054

$70.5 billion75

Pennsylvania State & Local GovernmentSpending 1970-2001 in billions65

55

45

35

25

15

(10 mi l l ion)

Average Annual Increases, Total PA State Operating Expenditures vs. Inflation: 1980-2002

0%

1%

2%

3%

4%

5%

6%

7%

8%

Total State Operating Expenditures Inflation

6.7%

3.4%

PA Change in Population Vs. PA Change in Government Employees 1990-2000

Source: US Census Bureau

0%

2%

4%

6%

8%

10%

12%

14%

Population Government Employees

11.7%

3.4%

PA’S SLOW JOB GROWTH

Pennsylvania lagged national growth in almost every occupation.

Pennsylvania is expected to continue this trend…

…unless something changes.

PA Employment Growth by Industry 1990-2000

-20

-10

0

10

20

30

40

50

Services Retail Trade Wholesale Trade Finance, Insurance, &Real Estate

Manufacturing

PA

US

-9.49

-3.35

Source: Bureau of Economic Analysis, US Department of Commerce

Projected PA Employment Growth by Industry 1998-2008

-15

-10

-5

0

5

10

15

20

25

30

35

Services Retail Trade Wholesale Trade Finance, Insurance, & RealEstate

Manufacturing

PAUS

- 5.1%

- 0.5%

Source: PA Center for Workforce Information and

THE SILENT KILLER1. PA’s Poor Economic Performance: Slow

economic growth2. High Government Spending & Taxation:

Killing economic opportunity in PA3. PA’s Slow Job Growth: PA’s working age

population will continue to seek opportunities in other states resulting in PA having stagnant population growth along with the 2nd oldest population behind FL

4. Reverse the Silent Killer: Government spending and taxation needs to be reduced for greater economic opportunity for PA’s job creators and citizens

TOP 10 RECOMMENDATIONS

10.Expand Keystone Opportunity

9. Retain the R&D Tax Credit by Repealing the Sunset Date & Cap

8. Reduce the Corporate Net Income Tax to 5.99%

7. Continue and Accelerate the Phase-Our of the Capital Stock and Franchise

6. Enact a Statute of Repose

TOP 10 RECOMMENDATIONS

5. Unemployment Compensation Reform

4. Place Caps on Non-Economic Damages of $250,000 or Less

3. Employer/Employee Restrictions Relief

2. Reduce and Change State and Local Annual Government Spending Bases on Economic Principles

TOP 10 RECOMMENDATIONS

And, one more needed

economic reform in Pennsylvania:

1. ENACT TAXPAYER PROTECTIONS