Last week, the Tax Foundation published its 2024 State Business Tax Climate Index report which saw Pennsylvania improve over last year in both its overall tax competitiveness and corporate tax rankings, while still ranking in the bottom half of states.
Pennsylvania ranked 31st for overall tax competitiveness, based on a model that examined the taxes each state levies on individual income, sales, corporate income, property, and unemployment insurance. In its report, the Tax Foundation explicitly noted that last year’s CNI reduction “helped Pennsylvania improve from 33rd to 31st [place] overall and from 42nd to 41st on the corporate tax component.”
PA Chamber President & CEO Luke Bernstein made the following statement in response:
“Last year’s historic, bipartisan tax reforms sent a clear signal to the rest of the nation: Pennsylvania wants to be more competitive. By phasing down our Corporate Net Income (CNI) tax, our state is poised to go from the second-highest tax rate in the entire country to the eighth-lowest by 2031. We are already seeing the benefits, as the Tax Foundation has moved Pennsylvania up two spots in its competitiveness rankings.
“However, this report makes it clear that these reforms are not occurring in a vacuum. Several other states, many of which are already ranked higher than Pennsylvania, are pursuing additional pro-growth reforms that are attracting new investment and driving economic growth. These other states are not letting off the gas pedal, and neither should we.
“Now is the time for lawmakers to seize this generational opportunity before us to positively reshape our economic future. Accelerating the CNI phasedown and improving the treatment of Net Operating Losses (NOLs) are absolutely critical to propel Pennsylvania to the forefront of business competitiveness. The good news is that there is bipartisan support for both measures in the PA House and Senate.
“At the same time, we must remain vigilant against anti-growth policies like combined reporting that threaten to undermine our competitiveness and would subject Pennsylvania employers to what the Council on State Taxation (COST) predicted would be the most punitive and aggressive business tax environment in the United States.
“Passing an expedited CNI and increasing the cap on NOLs without combined reporting requirements would set Pennsylvania on a competitive path that would rival not only other states, but other nations. These reforms would set the stage for a new era of economic investment and growth.”
For more information on the PA Chamber’s tax reform priorities, please click here.