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PA Chamber Leads Statewide Coalition Urging State Leaders to Support Pro-Growth Tax Policies

HARRISBURG – Today, the Pennsylvania Chamber of Business and Industry led a coalition of statewide associations and chambers of commerce from across the Commonwealth in calling on Governor Josh Shapiro and members of the state legislature to support policies that will further improve the state’s business tax competitiveness.

In a letter, the coalition expressed appreciation for the legislature’s bipartisan efforts last year to advance significant tax reform and emphasized the urgency of building on these successes during the current legislative session, as other states pursue similar efforts to improve their tax structures to attract business investment.

“We appreciate these critical reforms and thank the General Assembly for the overwhelmingly bipartisan support” the letter reads. “At the same time, we know that other states are moving forward as well. We are in perpetual competition to cultivate and showcase an attractive business climate and urge your ongoing support for pro-growth tax policy initiatives that will make the Commonwealth more competitive.”

The coalition encouraged lawmakers to continue supporting pro-growth tax policy initiatives, such as improving the treatment of net operating losses (NOLs) and expediting the corporate net income (CNI) tax rate reduction phasedown, while cautioning policymakers from pursuing “burdensome tax increases or additional requirements” that would jeopardize Pennsylvania’s tax competitiveness.

Full text of the letter is available here.

A Look Ahead for the Week of May 8, 2023

This week, committees in the Pennsylvania Senate will meet to consider proposals that the PA Chamber has identified as top priorities for the current legislative session.

 

Permitting reform

On Monday, the Senate Committee on Intergovernmental Operations will consider S.B. 350 – legislation introduced by Sen. Kristin Phillips-Hill, R-York, that would address several of the business community’s top concerns regarding Pennsylvania’s antiquated permitting process.

The state’s current process has long been criticized as overly burdensome and punitive, often leading to unreasonable delays and uncertainty for permit seekers. This proposed legislation aims to increase transparency throughout the permitting process.

If passed, the bill will require agencies that issue permits to post information about the permits they grant on their website, create an accessible tracking system for applicants to check on the status of their applications, and clearly state the legal authority on which the agencies rely when rejecting a permit application.

The tracking system will include processing time, dates of each permit, completeness review, technical review, elevated review, and an estimated time remaining for each incomplete phase of the permit approval process. Moreover, the bill establishes a timeframe in which permits must be reviewed and issued – or otherwise be “deemed approved.”

These reforms will provide greater transparency and give applicants greater assurance that their request will be processed fairly and expediently by the relevant agency.

On Wednesday, the Senate Environmental Resources and Energy Committee will meet to consider S.B. 198, legislation introduced by Sen. Camera Bartolotta, R-Washington, that aims to streamline the appeal process for permit denials.

For further information on the PA Chamber’s proposed solutions to improve PA’s permitting processes, visit the the On the Hill section of our website.

 

Net Operating Losses (NOLs)

On Tuesday, the Senate Finance Committee will consider S.B. 346 – legislation introduced by Sen. Greg Rothman, R-Cumberland. This bill deals with the treatment of Net Operating Losses in the state Tax Code – i.e., an employer’s ability to deduct past losses from current year’s profits.

Pennsylvania is currently at an economic disadvantage as one of only two states in the nation that does not allow businesses to deduct NOLs consistent with the federal limit. Instead, state law currently caps the proportion of eligible deductions at 40 percent – exactly half the federal rate.

This policy has been widely criticized as a de facto tax on emerging businesses and has been shown to negatively impact our state’s job creators while turning away businesses that might otherwise choose to locate in the Commonwealth. Senate Bill 346 would gradually increase the NOL carryover limit, squaring it with the federal limit of 80 percent over a period of four years.

Improving the treatment of Net Operating Losses remains a top priority for the PA Chamber, as it continues to affect a significant proportion of our membership as well as the Commonwealth’s broader economic prospects.

 

Accelerating the CNI phasedown

The Senate Finance Committee will also consider S.B. 345 – legislation introduced by Senate Majority Whip Ryan Aument, R-Lancaster that seeks to build on last session’s historic, bipartisan reduction of the Corporate Net Income Tax rate.

Prior to the passage of Act 53 last year, Pennsylvania had the second highest CNI in the nation – a huge deterrent for businesses looking to invest in the Keystone State. Thanks to the efforts of bipartisan lawmakers, Pennsylvania’s CNI is currently at 8.99 percent (down from 9.99 percent) and will decrease by 0.5 percent annually over the next eight years until it reaches 4.99 in 2031.

Senate Bill 345 would accelerate this phasedown, including an immediate drop to 7.99 percent and a full percentage-point reduction each year until it reaches 4.99 percent in 2026, five years sooner than the timeline established by the enactment of Act 53.

The PA Chamber understands that a more competitive business tax code will help attract greater investment in our state while conferring several “downstream” benefits including greater GDP, higher wages, and increased home values. Together, these benefits will enable Pennsylvania employers to create more family-sustaining jobs while helping them recruit and retain talent.

ICYMI: PA Chamber Co-Hosts Tele-Town Hall with U.S. Chamber Leaders

Discussion highlighted state and federal efforts to combat inflation and rising costs

 

In case you missed it, Pennsylvania Chamber of Business and Industry President and CEO Luke Bernstein, U.S. Chamber of Commerce President and CEO Suzanne Clark and Executive Vice President Neil Bradley, and thousands of concerned citizens from across Pennsylvania discussed key economic issues during a tele-town hall on Tuesday night.

Bernstein and the U.S. Chamber leaders answered live questions from callers and highlighted Chamber-supported policies at the state and federal level to support job creators and their workforce.

“The PA Chamber represents businesses of all sizes, in every industry, across Pennsylvania. Yet, rising costs, supply chain issues, and the labor shortage are impacting nearly every business, regardless of size or location. We heard from many Pennsylvanians tonight who told us how inflation is taking away opportunity from their families and leaving them further behind. These concerns, which remain top of mind for Pennsylvanians, underscore the need for policies that will help bring down costs,” Bernstein said.

Callers’ questions focused on how to combat the rising costs of everything from gas to groceries.

Bernstein highlighted the PA Chamber’s efforts to address inflation, including advocating for utilizing Pennsylvania’s vast natural resources to bring down costs, enacting permitting reforms to move goods to market more quickly, and promoting the Commonwealth’s unrivaled educational institutions to address labor concerns.

“Everyone is feeling the effects of higher prices. To bring costs down and insulate against global markets shifts, we need an all-of-the-above energy strategy,” Bernstein said. “Pennsylvania is home to oil and natural gas, coal, wind, solar, nuclear, and hydroelectric energy. Expanding the use of Pennsylvania’s diverse natural resources, both domestically and abroad, will not only help drive down energy costs, a key driver of inflation, but it will also support good-paying Pennsylvania jobs and cement our state as a global leader in energy production and innovation.”

Bernstein added, “Pennsylvania is home to world-class educational and research institutions. While we need to encourage students to pursue four-year degrees so that we can continue driving innovation, we also need to eliminate the stigma around career and technical education. Students often graduate from these schools with little debt and the training necessary to fill in-demand jobs. A comprehensive workforce strategy will help us address the labor shortage, bridge the skills gap, and encourage our kids and grandkids to stay in Pennsylvania with good paying jobs.”

Bernstein also explained how the Pennsylvania Chamber’s recent success in enacting historic business tax reform will lead to greater investment and growth in Pennsylvania.

“In our most recent state budget, we worked in a bipartisan fashion with Republican majorities in the General Assembly and a Democrat governor, to cut our Corporate Net Income tax in half—from 9.99 percent, the second highest in the nation, to 4.99 percent by 2031,” Bernstein said. “This was the most monumental tax reform in Pennsylvania in three decades and sends a strong signal to companies to invest and grow here.”

Clark spoke about national economic challenges, including taxes, regulations, and surging crime, and the Chambers’ collective efforts to work with elected officials to address these concerns.

“Businesses today are operating in a uniquely challenging environment,” Clark said. “Many of the pressing headwinds confronting them have not existed in the modern economic era. Inflation is at a 40-year high. These continued price increases for everyday necessities put enormous pressure on business budgets, and on family budgets. Food prices have risen 11.4 percent annually. That’s the largest annual increase since 1979. Not to mention prices at the gas pump, and in our energy bills.

“This is not sustainable,” Clark added. “These are real problems that Pennsylvanians and all Americans are facing. We know that new higher taxes and more energy regulation are not the answer. In fact, they just make the problems worse. We are deeply alarmed by the surge in crime and retail theft here in Pennsylvania and across the country. We know that customers won’t patronize businesses when they don’t feel safe. Business won’t open or stay in communities where the threat of crime is high, and corporations will not invest in cities where lawlessness is left unchecked. These issues have to be addressed by our elected officials immediately. Amid these challenges and many more, the U.S. Chamber of Commerce and the Pennsylvania Chamber are fighting for you and businesses across the state to get this economy working again.”