State Business Taxes Policy


Few issues draw as much attention as state business taxes for companies seeking to locate or expand operations. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, and the long-term health of a state’s economy. Taxes on business have been found to be the most harmful to economic growth. If taxes take a larger portion of revenue, that cost is passed along to either consumers (through higher prices), employees (through lower wages or fewer jobs), or shareholders (through lower dividends or share value), or some combination of the above. Thus, a state with lower tax costs will be more attractive to business investment and more likely to experience economic growth.


While positive changes to the Commonwealth’s business taxes occurred over the last few years, other states in the US have made more significant improvements to their tax structure. As a result, the Commonwealth’s tax structure, which includes the highest effective corporate net income tax rate in the country, continues to impede our competitiveness.


The Chamber supports a thorough review and analysis of the current tax structure that includes dynamic econometric modeling. The process for review should be well-balanced in its representation of the business community and designed to make changes to the tax structure that are based on the principles of competitiveness, predictability, fairness and simplicity.


The Chamber supports specific tax changes that encourage companies to locate and expand in Pennsylvania, including:

  • Reduction of the Corporate Net Income (CNI) Tax rate;
  • Elimination of the net operating loss cap;
  • Administrative reforms that promote timely, efficient and independent tax dispute resolution;
  • Prohibition of contingent fee agreements for the collection of taxes and for unclaimed property audits.

Similarly, the Chamber opposes tax policy options that hinder a company’s ability to compete in today’s global market. Specifically, the Chamber opposes:

  • Unreasonable treatment of out of state companies;
  • Corporate taxable nexus of instate and out of state transactions based solely on economic activity;
  • Increases in the tax burden on pass-through entities;
  • Mandatory Unitary Combined reporting;
  • Throw back/throw out rules;
  • Changes that exacerbate tax pyramiding in the imposition of a sales and use or some other consumption tax;
  • Adoption of a new or expanded gross receipts or business receipts tax;
  • Reinstitution of the Capital Stock and Franchise Tax or adoption of a net worth tax;
  • Broad, subjective Department of Revenue powers;
  • Increases in the tax burden on targeted industries.