Chambers of Commerce ask the General Assembly to impose a “significant” reduction in corporation tax

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Pennsylvania business leaders continued this week to push for a lower net corporate income tax (CNI) to be included in upcoming negotiations on the new state budget.

The Pennsylvania Chamber of Commerce and Industry was joined by 45 local chambers across the state in a May 24 letter urging the General Assembly to stay focused on the idea of ​​reducing the CNI tax rate of its 9.99% current, one of the highest rates in the nation, as a way to encourage businesses to invest in Pennsylvania.

“Pennsylvania’s excessively high CNI has historically hurt investment, driving billions of dollars in lost revenue and driving businesses and job opportunities to other states,” the House Speaker said. AP, Gene Barr, who added that the reduction would be a “critical step towards improving the overall competitiveness of the Commonwealth.

Reducing the tax isn’t a particularly controversial idea in Harrisburg this year.

The House this month passed a bill on a 195-8 vote that would lower the rate to 8.99% next year with provisions for a further cut of one percentage point by 2025 if State revenues are sufficient. The bill, which is being considered by the Senate, also includes an increase in allowable net operating losses that businesses can deduct to 45% with a path to a 50% tax deduction down the road. Republicans control both houses of the state legislature.

Democratic Gov. Tom Wolf’s proposed budget includes an immediate cut to 7.99% with provisions for further cuts over a 5-year period. In a statement earlier this month, Wolf hailed the raising of a record $6.5 billion in General Fund revenue in April and said he wanted to use the windfall for investments at scale. of the state, including “reforms” of the CNI tax to improve the competitiveness of the state.

“Despite what you may hear from tax alarmists, Pennsylvania’s financial future has never looked brighter,” Wolf said. “We have a lot of money to work with for the 2022-23 budget, and I want to use it to take the pressure off Pennsylvania families.”

However, having consensus in a state capitol can lead to a loss of focus and could potentially spur Pennsylvania lawmakers to less drastically cut a revenue stream, which the combined chambers warned of in their letter to leaders. legislative. “We ask that you help move our economy in the right direction by supporting a substantial reduction in the CNI without demanding objectionable tax policy changes that would diminish the benefits of a rate cut, such as the surrender of tax authority almost unlimited subjective to our Department of Revenue,” he said.

The letter also assured lawmakers that a lower CNI alone would produce a wide range of statewide benefits by attracting businesses to Pennsylvania, which would cause a ripple effect that would increase employment. , wages and home values ​​as well as overall condition. GDP.

Pennsylvania, however, will remain at a disadvantage in attracting new industry to the state if the intention to reduce the CNI tax, which has not happened since 1995, collapses during budget negotiations, or if the bill of the Senate is stagnating.

Matt Smith, president of the Greater Pittsburgh Chamber of Commerce, said, “Ohio is proactively announcing that it has a zero percent corporate income tax rate. In order to be competitive and put Southwestern Pennsylvania on the radar of site selectors and job makers, we must dramatically reduce our CNI tax rate without delay.

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