Other State Taxes

Pennsylvania’s corporate taxes and tax rate continue to put the Commonwealth at a competitive disadvantage. Comprehensive reforms of and reductions in business taxes are necessary to stimulate economic development. Specifically, the PA Chamber supports eliminating the cap on Net Operating Losses, reducing the Corporate Net Income tax rate and bringing uniformity and clarity to Pennsylvania’s tax structure.

State Tax Reforms Needed to Help Boost PA’s Competitiveness in the Global Marketplace

Despite its prime location, abundant natural resources and diversified workforce, Pennsylvania’s uncompetitive and overly complicated Tax Code has put the state at a disadvantage for private sector investment and job growth. 

In the PA Chamber’s 28th Economic Survey, employers from throughout the Commonwealth cited ongoing concerns about the state’s tax structure as one of the top barriers to growth in the state.  In fact, when asked about the issues that should top business advocates and lawmakers’ “to-do” lists, the survey of 650 employers said that cutting business taxes should be a top priority. 

The uncompetitive nature of the Commonwealth’s Tax Code was also highlighted in a recent study, “Pennsylvania: A 21st Century Tax code for the Commonwealth,” – which was authored by the Tax Foundation and funded via a grant by the PA Chamber.  One of the key findings of the report shows that Pennsylvania relies more heavily on corporate taxes as a revenue source than most other states.  According to the Tax Foundation, when compared to other states, Pennsylvania ranks 4th in terms of corporate income tax collections; and the state’s corporate income tax structure ranks 7th worst in the nation.

That’s why the PA Chamber is advocating for our elected officials to take a page out of the federal government’s book and enact comprehensive tax reforms at the state level.    At the top of our members’ tax reform priority list is reducing Pennsylvania’s 9.99 percent Corporate Net Income tax rate - the No. 1 red flag for would-be investors. Pennsylvania is also among the only states to cap Net Operating Loss Carryforwards, and the PA Chamber is calling for the total elimination of that cap.

On behalf of our broad-based membership, we continue to advocate that federal tax reforms be mirrored at the state level; while pushing for comprehensive tax policy changes that are needed to make Pennsylvania stand out as a world-renowned economic leader. Our line of communication is always open, so please feel free to contact us any time with your comments and suggestions on how Pennsylvania could become a more inviting home to companies of all sizes.

PA Chamber:  Study Shows State’s Tax Structure a Barrier to Growth

PA Chamber: Study Shows State’s Tax Structure a Barrier to Growth

Sep 5, 2018 | Tricia Harris

A new study unveiled today by the Pennsylvania Chamber of Business and Industry highlights the uncompetitive nature of the Commonwealth’s Tax Code.  The report, “Pennsylvania: A 21st Century Tax Code for the Commonwealth” – which was authored by the Tax Foundation and funded via a grant by the PA Chamber – delves into how the Commonwealth’s tax structure compares to other states and provides a menu of policy options to improve Pennsylvania’s overall competitiveness.      

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Few issues draw as much attention as state business taxes for companies seeking to locate or expand operations. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, and the long-term health of a state’s economy. Taxes on business have been found to be the most harmful to economic growth. If taxes take a larger portion of revenue, that cost is passed along to either consumers (through higher prices), employees (through lower wages or fewer jobs), or shareholders (through lower dividends or share value), or some combination of the above. Thus, a state with lower tax costs will be more attractive to business investment and more likely to experience economic growth.

While positive changes to the Commonwealth’s business taxes occurred over the last few years, other states in the US have made more significant improvements to their tax structure. As a result, the Commonwealth’s tax structure, which includes the highest effective corporate net income tax rate in the country, continues to impede our competitiveness.

The Chamber supports a thorough review and analysis of the current tax structure that includes dynamic econometric modeling. The process for review should be well-balanced in its representation of the business community and designed to make changes to the tax structure that are based on the principles of competitiveness, predictability, fairness and simplicity.

The Chamber supports specific tax changes that encourage companies to locate and expand in Pennsylvania, including:

  • Reduction of the Corporate Net Income (CNI) Tax rate;
  • Elimination of the net operating loss cap;
  • Administrative reforms that promote timely, efficient and independent tax dispute resolution.
  • Prohibition of contingent fee agreements for the collection of taxes and for unclaimed property audits.

Similarly, the Chamber opposes tax policy options that hinder a company’s ability to compete in today’s global market. Specifically, the Chamber opposes:

  • Unreasonable treatment of out of state companies;
  • Corporate taxable nexus of instate and out of state transactions based solely on economic activity;
  • Increases in the tax burden on pass-through entities;
  • Mandatory Unitary Combined reporting;
  • Throw back/throw out rules;
  • Changes that exacerbate tax pyramiding in the imposition of a sales and use or some other consumption tax;
  • Adoption of a new or expanded gross receipts or business receipts tax;
  • Reinstitution of the Capital Stock and Franchise Tax or adoption of a net worth tax;
  • Broad, subjective Department of Revenue powers;
  • Increases in the tax burden on targeted industries.