Pennsylvania's Unique Tax Environment
When someone says the word tax or any related form of the word, it makes people cringe. This cringe is for a good purpose. Almost everything we purchase is taxed somehow. Most of those people do not even understand all of the specific taxes that are being taken out of their checks. When comparing between different states, Pennsylvania has some unique features to its taxation system. To begin, it has a personal income tax, adopted in 1971, which is levied at a rate of 2.8%. Business taxes include a corporate net income tax of 9.99%, capital stock and franchise taxes, and taxes on public utilities, insurance premiums, and financial institutions (Braybrooks, et al., 2011). Pennsylvania's 6% sales and use tax exempts essential items like clothing, groceries, and medicines. Local sales taxes are limited to 1%. The state has an inheritance tax and has taken action to disconnect its estate tax from the federal tax exemption, which is scheduled to expire in 2007. Gift and death taxes account for a comparatively substantial part of state tax collections: 6.2% in 2001 and 3.44% in 2002. Other taxes include various license fees and stamp taxes. Most property taxes are collected by local government, which collects about 40% of all state and local revenues (Braybrooks, et al., 2011).
Another relatively unique feature of Pennsylvania is its exemption on taxation of all federal, military and in-state pensions as well as all Social Security benefits from income tax. Pennsylvania is also unique in that it exempts all retirement income, even IRA and 401(k) distributions. Furthermore, though many states impose state corporate income taxes at rates above the national average of 6.6%, Pennsylvania is one of the highest. Iowa, for example, imposes the highest corporate tax rate of 12%, followed by Pennsylvania's 9.99% rate and Minnesota's 9.8% rate. When added to the federal rate, these states tax their businesses at rates far in excess of all other states (CBO, 2011). When analyzing taxation, it is critical for any student or professional to fully understand the unique local and state regulations which can have significant impact on client's reporting needs and after-taxes income.
References
Braybrooks, M., Ruiz, J. And Accetta, E. 2011. State Government Tax Collections Summary Report: 2010. United States Census Bureau. Accessed: 13 Feb 2012. URL: http://www.census.gov/prod/2011pubs/g10-stc.pdf
Congressional Budget Office. 2011. Options for Changing the Tax Treatment of Charitable Giving. Accessed: 13 Feb 2012. URL: http://cbo.gov/ftpdocs/121xx/doc12167/CharitableContributions.pdf
Flat Tax over the Current Tax Policy The focus of this paper is to demonstrate effectiveness of flat tax over the current tax rate. Presently, the U.S. government employs progressively tax law as the current tax policy. Under the current tax policy, the government increases taxes with increase in income. Analysis of the current tax policy reveals that the tax system is very complicated to understand because corporate organizations face multiple
Market-Based Management Principles Vision The foremost principle of market-based management is vision. The vision helps determine strategies the organization implements in creating long-term value in market and customer management. The success of a company in the market lies in institutionalization of strategies that create value (Block, Wood, & Barnett II 2002). Vision, provides guidelines for the company on how to create sustained value and adaptability in the dynamic market. Vision outlines strategies a
global tax treaties, UN model and OECD model with the view of analyzing their consideration towards rights to capital and tax income. By throwing light on differences and similarities among the models, the fundamental logic of each of them is explained. The article explains the prospecting policies of consideration when tax treaties are to be signed. It is because there is strong need to enforce a flexible but more
Financial Analysis of Bestwish Limited Company Overview Bestwish Limited produces extensive range of quality products such as gift dressing, greetings cards, and plush merchandise of more than 50,000 stocks. The production of different categories of products involve between 2 and 15 processes. The company produces standardized products and custom designed products ordered from customers on contract basis. However, Bestwish Limited is facing challenges to control the costs because of varying production process,
Internal Control and Accounting Analysis of ABC Limited: Analysis of Weaknesses and Recommendations The report was prepared to cover the requirements of the AAT ICAS unit. The AAT ICAS refers to an Internal Control and Accounting System where the report serves as investigation of the weakness area of the business control and makes the recommendation to fix this problem. The following report reviews the restaurant business particular in payroll area. The
The common guiding principles of economics provide little direction. As a consequence, U.S. international tax policy is a clutter of rules with a diversity of political and economic reasons. It is frequently described as a concession that strikes a balance. Policy leans toward tightening foreign tax rules and putting foreign income on equal footing with U.S. income when it is thought that foreign investment hurts the U.S. economy. Then
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now