Pennsylvania House passes pro-growth corporate tax cut

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The Pennsylvania House on April 26 voted 195-8 on a bipartisan basis to approve legislation that would cut the Commonwealth’s Corporate Net Income Tax (CNIT) to spur state-wide job and economic growth. The bill now advances to the Pennsylvania Senate for consideration.

“Today’s historic vote shows that Pennsylvania is open for business,” State Speaker of the House Bryan Cutler (R-Lancaster) said Tuesday. “This is a crucial step in ensuring we can attract and retain job creators of all sizes, growing family-sustaining careers across Pennsylvania.”

According to Pennsylvania House Republicans, the state has the second-highest corporate income tax rate in the nation with New Jersey’s ranking first. With neighboring states ranging from 6 percent to 7.25 percent, the Commonwealth is essentially eliminated from the list of states where companies are looking to relocate or expand, they said.

“Pennsylvania has too many attributes to consistently lose out to other states for investment and job growth, but that’s been the case for too long due in large part to excessively high CNIT,” President and CEO of the Pennsylvania Chamber of Business and Industry Gene Barr said earlier this month. “If reduced to a more competitive level, we can focus on enacting the policies that will jumpstart our economic recovery, train and retain a globally competitive 21st century workforce.”

If enacted, an amendment to House Bill 1960 would reduce Pennsylvania’s CNIT from 9.99 percent to 8.99 percent starting Jan. 1, 2023, and lower taxes for more than 93,000 businesses across the state.

Additionally, HB 1960 would continue to cut the CNIT rate by .5 percent annually for the next two years if the Commonwealth has a General Fund budget surplus of more than $500 million, according to lawmakers.

“This is strong pro-growth legislation that will provide good jobs for Pennsylvanians and stand up for taxpayers and Pennsylvania families,” said House Majority Leader Kerry Benninghoff (R-Centre/Mifflin).  “This is legislation that, while just a start, will strengthen our communities, help stop our brain drain and bring investment into our state.”

Benninghoff said the House Republican Caucus is focused on passing legislation to make Pennsylvania the Envy of the East by ramping up its economy to drive investment, create family-sustaining jobs and grow communities.

The concepts in HB 1960, he said, have bipartisan support and are seen as being “critically necessary” to change the perception that Pennsylvania is not open to receiving additional investment.

“For many years, our state has been burdened by carrying the title of having the second-highest CNIT in the country,” Cutler explained. “This distinction has kept countless industries, companies and employers from investing and expanding in Pennsylvania. This bill levels the playing field as we compete to attract employers and industries to our Commonwealth.”

“We will never stop working to increase investment in Pennsylvania and grow our economy and there is more to come,” said Benninghoff.

For instance, as the state grows its economy and jobs, lawmakers “must also look to reduce the tax burden on our citizens, especially those who are working and experiencing record inflation,” Cutler said.

Toward that goal, the PA House also on Tuesday unanimously advanced legislation offered by Pennsylvania Rep. Jesse Topper (R-Bedford/Franklin/Fulton) to provide relief from prepaying Sales and Use Taxes to the state.

“Pennsylvania’s antiquated pay-in-advance tax collection scheme only serves to make the state tax code even more difficult for businesses,” Topper said. “This bill would give them some relief at a time when they need it most.”

Under the current system, Pennsylvania business owners must estimate each month how much Sales and Use Tax they think they may collect.

If enacted, HB 2277 would end Pennsylvania’s Accelerated Sales Tax (AST) prepayments, which are based on estimated sales tax collections, and business owners instead would remit to the state only the sales tax they actually collect, according to the bill.

“Though business owners base their estimates off the previous year’s collections, the estimates aren’t always accurate, forcing them to make an additional payment at the end of a tax period if they underestimated the amount of sales tax they actually collected,” Topper said. “This is a confusing practice that can easily be fixed by removing this odd prepayment requirement.”

HB 2277 also has advanced to the state Senate for consideration.