The Pennsylvania Senate agreed twice on Wednesday that the Keystone State’s corporate tax rate is too high.
The Senate approved a pair of competing bills that aim to reduce taxes for corporations in the Commonwealth from 9.99 percent – one of the highest rates in the country.
SB 771, sponsored by Sen. Ryan Aument (R-Lancaster), calls for a reduction in the tax rate by one percentage point each year for the next three. If the Commonwealth generates revenue in 2024 that matches or exceeds the Independent Fiscal Office (IFO) revenue projection for 2024 at the 9.99% rate, the rate would drop further to 5.99% in 2025.
“Not only is the state’s inability to retain residents or attract new ones costing us political influence in Washington, it also separates families as younger generations pursue jobs in other states with greater promise of upward mobility,” Aument said. “Reducing our state’s CNI (Corporate Net Income) tax would directly address our ongoing issues with outbound migration while also providing real, tangible benefits to Commonwealth residents.”
Pennsylvania has lost at least one Congressional seat in all of the last 10 censuses, beginning in 1930.
SB 447, sponsored by Michele Brooks (R-Mercer), would reduce the CNI from its current rate by 0.5 percent every year over a period of six years until it reaches 6.99%, in which it will remain thereafter.
“As the Keystone State, Pennsylvania is blessed with a prime location and an abundance of natural resources. Unfortunately, those assets cannot outweigh the fact that Pennsylvania has the third highest Corporate Net Income Tax Rate in the nation,” Brooks said. “At 9.99 percent, this high tax rate erodes the attractiveness of our state to the job-creators of today and tomorrow. It’s why many businesses are taking their headquarters and jobs out of state, and why so many talented young people are packing up and leaving for greener pastures and greater job opportunities.”
Both SB 771 and 447 were passed by a 31-19 count in the Senate. Democrats Lisa Boscola (D-Northampton) and Marty Flynn (D-Lackawanna), along with John Yudichak (I-Luzerne), joined 28 Republicans in support of both bills.
Both bills now move to the House of Representatives for consideration.
Gov. Tom Wolf has not indicated whether he would sign either bill should it come to his desk. With the state coffers filled with $12 billion in reserves and surpluses, lawmakers have incentive to cut taxes and Wolf could want to make a deal.