Could Pennsylvania become more attractive to out-of-state business and industry sooner than later?
If state senators Ryan Aument (R-Lancaster) and Greg Rothman (R-Cumberland/Dauphin/Perry) can rally the troops, it could become a reality.
The pair of south-central Pennsylvania lawmakers are proposing legislation to accelerate the reduction of the Commonwealth’s Corporate Net Income Tax (CNIT) rate.
As part of the 2022-23 state budget, a tax reform package was instituted that called for a reduction in the CNIT from 9.99 percent to 4.99 percent over a nine-year period, concluding in 2031.
The agreement on incremental CNIT rate reductions was possible in part due to a nearly $6 billion budget surplus for the 2022 fiscal year, in addition to $2.1 billion in federal COVID-19 relief funds allocated to the state by the American Rescue Plan Act.
In their co-sponsorship memoranda, the pair said “While we applaud this historic change, we believe Pennsylvania should not have to wait a decade to experience the full benefits of the lower rate.”
This rate affects domestic and foreign corporations or the privilege of doing business; carrying on activities; having capital or property employed or used in Pennsylvania; or owning property in Pennsylvania.
Aument and Rothman’s proposal is to accelerate the timetable for the reduction. Initially, the rate would drop immediately to 7.99% and then be reduced by a single percentage point each year until 2026 when the 4.99% goal is attained. This would be five years earlier than what was enacted in Act 53.
“The agreement on incremental CNIT rate reductions was possible in part due to a nearly $6 billion budget surplus for the 2022 fiscal year, in addition to $2.1 billion in federal COVID-19 relief funds allocated to the state by the American Rescue Plan Act.”
“The benefits of a more competitive business tax code go far beyond improving the state’s business climate,” they said. ” Studies have shown that decreasing the CNIT leads to increased GDP, higher wages and increased home values, all of which create family sustaining jobs and attract and retain new talent.”