Act 53, the law implementing the annual phased reduction of Pennsylvania’s Corporate Net Income Tax, was the most significant state tax reform in a generation. And while Act 53 improved Pennsylvania’s competitiveness by leaps and bounds, putting us on the path to a 4.99 percent CNI by 2031 (the nation’s eighth-lowest CNI rate), we must continue to advance policies to improve Pennsylvania’s competitiveness with other states and enhance our ability to attract and keep businesses here.
PA Chamber Government Affairs Neal Lesher seized the opportunity to recommend pro-growth tax reforms to lawmakers at a recent hearing before the state House GOP Policy Committee. In his testimony, Lesher cited a recent WalletHub study that ranked Pennsylvania as the fifth worst state in the nation to find a job, along with several other independent analyses that placed us in the bottom third of states for key economic indicators.
Our Action Plan
To reverse this trend, the PA Chamber is urging lawmakers to continue the CNI phase down – and even accelerate the planned path to 4.99 percent. Since Act 53 was signed into law in 2022, 10 other states have reduced their CNI, increasing the urgency for the Commonwealth to stay ahead of the curve to remain competitive.
Additionally, and for the direct benefit of small businesses, Lesher said that Pennsylvania must improve its treatment of Net Operating Losses, as we are one of only two states in the country with stricter rules than the federal government when it comes to the portion of taxable losses that can be carried forward. Pennsylvania currently caps losses at 40 percent. The PA Chamber is advocating to uncap losses or bring state law in line with the federal rules of 80 percent.
“We think that’s a common-sense policy that puts us in line with other states,” Lesher said, in addition to further advocating for repealing the accelerated sales tax requirement and allowing for the full expensing of equipment investments. Together, these commonsense tax reforms will improve the bottom line for small businesses across our communities, driving more entrepreneurial investment, creating jobs, and enhancing the state’s business climate now and for future generations.
Nothing “Fair” About the “Fair Share Tax Plan”
While the PA Chamber uses objective, data-driven advocacy to make the case for pro-growth tax reform, the best advocates are business owners. In a recent video interview, we simply asked West Chester small businesses their thoughts on the so-called “Fair Share Tax Plan” that was recently unveiled by a group of lawmakers in Harrisburg. Their responses – which range from higher costs, increased labor challenges, and outright closures – should alarm any elected official who claims to care about the vitality of their local economies. See for yourself – click here to watch the video.