HARRISBURG – The PA Chamber of Business and Industry, The Chamber of Commerce for Greater Philadelphia, and The Greater Pittsburgh Chamber of Commerce, an affiliate of the Allegheny Conference, today commended members of the Pennsylvania State Senate Finance Committee for approving legislation (SB 771) to reduce the state’s Corporate Net Income Tax rate, the highest non-graduated rate in the country. We believe an initial material reduction to at least 7.99% will signal to businesses and investors that the Commonwealth of Pennsylvania is truly “open for business”. The business community has long advocated for such a reduction to improve the state’s overall competitiveness.
As regions everywhere look to recover and thrive in a post-pandemic world, innovative companies across sectors are making large scale investments. Despite our highly skilled workforce, world-class universities and other innovation strengths, Pennsylvania, with the highest flat Corporate Net Income tax rate, is not positioned to vie for these deals. Major investments are going to other states, including neighboring states, which will benefit from the tax revenue and associated quality of life improvements. SB 771 would move us in a positive direction. For Pennsylvania to be nationally and globally competitive, we must have a pro-growth tax plan that attracts new companies to locate here and encourages those already here to expand their operations.
Additionally, studies have shown that reducing the rate correlates to increased population, higher wages, and increased home values. In fact, the 23 states with the lowest Corporate Net Income tax rates experienced significant growth in typical home value compared to the 23 states with the highest rates.
President and CEO of the Pennsylvania Chamber of Business and Industry Gene Barr said, “Pennsylvania has too many attributes to consistently lose out to other states for investment and job growth, but that’s been the case for too long due in large part to excessively high CNI. If reduced to a more competitive level, we can focus on enacting the polices that will jumpstart our economic recovery, train and retain a globally competitive 21st century workforce.”
Matt Smith, president of the Greater Pittsburgh Chamber of Commerce added, “It is no secret that PA’s 9.99% rate, the highest flat rate in the nation, is a flashing red light for business investment, hindering economic growth and overall state tax revenue. In fact, states that neighbor the Pittsburgh region are heavily marketing their more competitive state business tax environment which discourages business investments here. Pennsylvania’s very high rate also prevents the Commonwealth from consideration for the large-scale investments that are vital for our future economic.”
“High corporate net income taxes slows employment growth, reduces wages, and is a barrier to attracting new enterprises,” said Rob Wonderling, president and CEO of the Chamber of Commerce for Greater Philadelphia. “We urge members of the General Assembly to pass meaningful tax reform legislation this session and prioritize policies that promote economic growth.”
As the 2022 budget discussions continue, the three chambers urge lawmakers to include this much-needed reduction in the Corporate Net Income tax rate and pass legislation to advance a pro-growth agenda for Pennsylvania.