Background Memo: FL Gov. Rick Scott’s visit to Philadelphia today and tomorrow

Date of Press Release: 
February 23, 2015

Keystone Research Center has received several inquiries about Gov. Rick Scott’s visit to Philadelphia this week, and the trip has received a great deal of media attention. This background memo provides Pennsylvania media with some context that may be helpful. If you would like to schedule interviews with KRC or need assistance finding additional information or sources in Florida, please contact Ellen Lyon at 717-255-7156 or Stephen Herzenberg at 717-805-2318.

A Trip Premised on a Misguided Economic Approach and Inaccurate Facts

From a policy perspective, the basic approach to state economic development advanced by Gov. Scott is misguided. Job piracy – recruiting jobs to move from one state to another – is not a major source of job growth. The national subsidy accountability non-profit, Good Jobs First, has used business-census data in a series of studies that prove every state gains nearly all of its new jobs from “growing its own” – the expansion of existing employers and from business start-ups. KRC partnered on one of these studies, funded by the Heinz Endowments, in 2010.

Giving businesses tax breaks and other subsidies to move across state lines, waging “the war between the states,” is a negative sum game that deprives states as a group of the resources they need to invest in the real foundation of good jobs – education, skills, infrastructure and innovation.

Gov. Scott is off base on the facts about Pennsylvania business taxes. He boasts that “Florida's business tax is nearly half of Pennsylvania's, and 70 percent of our businesses already don't have to pay it.” But many Pennsylvania corporations use tax loopholes to lower their taxable income so Pennsylvania’s on-the-books, high income tax rate doesn’t mean much. Moreover, an almost-identical 71 percent of Pennsylvania businesses subject to the corporate net income tax don’t pay anything. A better way to compare business tax burden is to look at all taxes businesses pay. This reveals that Pennsylvania’s business taxes are lower than Florida’s. The Council on State Taxation (COST), an association of large corporations, finds that Florida business taxes are 5.5% of Gross State Product (11th highest) versus 4.6% in Pennsylvania (25th highest) (see Table 5). The business share of all state and local taxes in Florida is 53.3% versus 42.1% in Pennsylvania (see Table 6 in the COST report).

Additional Facts About Gov. Scott, Florida and Florida vs. Pennsylvania

Here is some additional background information related to Gov. Scott and his visit to Pennsylvania.

  • While Florida’s job growth performance has outpaced Pennsylvania’s 50th rank during the past four years, Florida’s December 2014 unemployment rate at 5.6% was higher than Pennsylvania’s 4.8%.
  • Since Gov. Scott took the reins, Florida’s (median) hourly wage has fallen more than a dollar per hour (from $16.89 to $15.82), ranking Florida 49th for wage growth. (Pennsylvania was 33rd in the same period on Gov. Corbett’s watch, falling from $17.48 to $16.95). These figures are the change in inflation-adjusted median wage from 2010 to 2013. (KRC does not yet have state-level figures for wages in 2014.)
  • Florida also has the second most unfair state and local tax system (compared to Pennsylvania’s sixth most unfair), with low-income families in Florida paying seven times the tax rate that the top one percent does. In both states, an unfair tax system makes it hard to raise the revenues needed to invest in the future without burdening middle- and low-income taxpayers.
  • Florida’s K-12 education system is ranked 28th according to Education Week, compared to Pennsylvania’s eighth-place ranking.
  • Florida’s median income is lower than Pennsylvania’s ($46,956 versus $52,548), and Florida’s poverty rate is higher than Pennsylvania’s (16.3% versus 13.3%), according to Census data.