STATE TAXES

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. However, pro-growth tax policy encourages economic expansion which will increase tax revenue and mitigate the structural deficit for the Commonwealth.

We are in constant competition with other states and must pursue a tax code that positions Pennsylvania to be among the top choices for business investment. Taxes are a cost that 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. Conversely, a state with continued high tax rates and unfavorable tax policies will deter growth and investment, driving opportunities to other states.

The Chamber supports a consistent and thorough review and analysis of the current tax structure that includes dynamic economic modeling, which accounts for the broader economic impacts of tax policy changes. The process for review should be well-balanced in its representation of the business community with the goal of continually enhancing Pennsylvania’s competitive standing and adhering tot he principles of sound tax policy that, to the greatest extent possible, taxes should be simple, transparent, predictable, neutral, stable, and align with federal law where appropriate, and that the best tax structure is one with a broad base and low rates.

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

• Continued reduction of the Corporate Net Income (CNI) Tax rate;
• Continued increases in, and ultimate elimination of, the Net Operating Loss (NOL) cap and improved treatment of existing NOLs, including extending the carry-forward limitations;
• 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; and
• Reform of the bulk sale provisions to make them more efficient, workable and fair;
• Simplifying the sales tax collection and remittance process, including the elimination of the accelerated sales tax pre-payment requirement;
• Expanding the ability of corporations and small businesses to expense eligible equipment and property in the year the investment was made;
• Increasing the vendor discount in sales tax collection.

Similarly, the Chamber opposes tax policy options that hinder  to compete in today’s global market. Specifically, the Chamber opposes in no particular order:

• Mandatory Unitary Combined reporting;
• Sourcing methods that negatively impact in-state businesses;
• Unreasonable treatment of out-of-state companies;
• Increases in the tax burden on pass-through entities;
• 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 or transactions.

Approved by the Board of Directors on August 8, 2025.