As legislators and the Governor work to coalesce around a spending plan, the PA Chamber is continuing its call to reduce the state’s Corporate Net Income Tax rate – the highest, non-graduated rate in the country. Concurrent with these reforms, legislation is expected to advance in the legislature in coming weeks to provide relief through deducting qualifying equipment purchases from state corporate net income tax liabilities, just as federal tax law provides for under Section 179 (S.B. 349 and H.B. 333). Additionally, legislation is expected for a vote that would authorize small businesses to defer personal income tax liabilities through like-kind exchanges of certain property (S.B. 347).
Making the state’s tax code more competitive is just one leg of the Chamber’s Bringing PA Back initiative, as our members have also identified a need to efficiently build new infrastructure and get through the permitting process faster. In an op-ed published in multiple outlets across the state this past weekend, the PA Chamber’s President and CEO Gene Barr highlighted recent comments of Arkansas Gov. Asa Hutchinson as a catalyst to reforming the state’s tax and regulatory regimes. Gov. Hutchinson, in celebrating his state’s securing of a multi-billion investment into new, highly efficient steel mills in the state, taunted Pennsylvania by noting the sites would be built “before you could even get a permit to start construction in Pennsylvania.”
In response, Barr’s op-ed notes our organization and member’s appreciation for both Gov. Wolf and Republican leadership agreeing reducing the corporate net income tax should be a priority this budget season. The piece notes that “our state is stagnating in population; in fact, the Keystone state is losing out to states in the southeast and sun belt with better economic climates. Despite our significant natural resources, access to markets and world-class universities, too many young people are leaving home for work or to start a business somewhere else. It’s time we take bold steps to turn this state’s fortune around.“
As the PA Chamber has noted in its in advocacy, and in conjunction with the more than 50 local chambers who have signed on to a joint letter calling for meaningful reductions in the rate – and, importantly, without tax policy changes that diminish the impact of reducing the rate – a decrease in the CNI tax rate would increase GDP, boost wages, increase home values, create family sustaining jobs and attract and retain new talent. The letter was signed ahead of a recent poll from Commonwealth Foundation noting 70% of respondents thought the state was headed in the wrong direction, as well as an analysis from the Independent Fiscal Office noting Pennsylvania are migrating to states in the south, many of whom perform much better on their economic competitiveness.