Governor Tom Wolf wants to bring back the job-killing “tech tax.”
In more detail, this proposal – included in his 2017-2018 budget – would eliminate the sales and use tax exemptions in place for computer services and other industries, extending the 6 percent state rate and various local rates to data processing, hosting, and related services; custom computer programming services; computer system design services; and computer facilities management services.
Gov. Wolf’s proposed “tech tax” would not only put Pennsylvania in the same outlier category as the four states that currently tax such services, it would also make the Keystone State’s the most burdensome. Estimated to bring in about $349 million each year, the Governor Wolf’s “tech tax” would inflict a great deal of harm on taxpayers, consumers, and the state economy.
Pennsylvania has become a hub for technology businesses thanks, in large part, to its repeal of a similar “tech tax” six years ago through bipartisan effort. The Pittsburgh Technology Council found that 302,535 individuals in southwestern Pennsylvania are employed in the tech industry, making up 24 percent of the area’s workforce. But bringing back the “tech tax,” however, would put this sector of Pennsylvania’s economy at risk.
If the “tech tax” were brought back, businesses in Pennsylvania may be forced to offset the associated compliance costs by cutting wages, laying off employees or even moving to other states (Relocation is not hard for tech companies because they often have mobile business models). In that vein, the “tech tax” would also push business owners and selectors looking for a new place to launch or expand their operations away from Pennsylvania, as it suggests that lawmakers in the state care more about new ways to burden them with taxes than actually helping them grow.
Along with chilling business growth and investment, the “tech tax” would have more immediate negative consequences in store for the people of Pennsylvania, as business would likely push at least part of the financial burden onto consumers.
Gov. Wolf’s tech tax would stifle a vibrant part of Pennsylvania’s economy. Overall, the tax would be detrimental to the people and businesses of Pennsylvania. If the legislators really care about their constituents they will reject this tech tax and prove that Pennsylvania is both pro-business and pro-growth.