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 consumer (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.
The Chamber supports a consistent and 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 with the goal of continually enhancing Pennsylvania’s competitive standing and adhering to the principles of sound tax policy – that, to the greatest extent possible, taxes should be simple, transparent, predictable, neutral, stable, and align with federal law where appropriate, and that the best tax structure is one with a broad base and low rates.
The Chamber supports specific tax changes that encourage companies to locate and expand in Pennsylvania, including:
- Continued Reduction of the Corporate Net Income (CNI) Tax rate;
- Improving the treatment of and ultimately eliminating 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; and
- Reform of the bulk sale provisions to make them more efficient, workable and fair.
Similarly, the Chamber opposes tax policy options that hinder a company’s ability to compete in today’s global market. Specifically, the Chamber opposes:
- Mandatory Unitary Combined reporting;
- Sourcing methods that negatively impact in-state businesses;
- Unreasonable treatment of out-of-state companies;
- Increases in the tax burden on pass-through entities;
- 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;
- Unreasonable increases in the tax burden on targeted industries or transactions.
Revised by the Policy Committee. Approved by the Board of Directors on August 4, 2022