HARRISBURG, Pa. (Erie News Now) – Monday, Governor Tom Wolf joined business leaders and members of the General Assembly to celebrate the state’s corporate net income tax (CNIT) reduction, which will take effect Jan 2023.
Wolf has been pushing for a reduction to the 9.99 percent tax rate for years. Lawmakers were able to get it done in this year’s budget, Wolf’s last as governor.
“The first year, it goes down by 100 basis points from 9.99 to 8.99 percent, and then every year thereafter, by 50 basis points a year till it gets down to 4.99 percent. It’s three quarters of a billion-dollar reduction,” said Gov. Wolf.
Reducing the CNIT, currently the second highest in the country, has not only been a goal for the Wolf Administration, but also for business leaders.
“We have languished for years because of an uncompetitive tax climate that hurt our investment and growth potential,” said Luke Bernstein, CEO and President of the PA Chamber of Business and Industry. “But we’re now on the precipice of changing that, thanks to the enactment of this monumental tax reform that was bipartisan and these reforms that were signed as a part of this year’s state budget agreement,” he added.
Bernstein says simplifying the tax code and reducing Pennsylvania’s nearly ten percent CNIT, is key for attracting businesses and good paying jobs.
“The lower rate sends a strong signal to investors and job creators that Pennsylvania is once again open for business,” said Bernstein. “This tax-reform package takes a holistic, global approach to improving the state’s tax structure with overarching goals of simplifying the tax code, making Pennsylvania more competitive with other states, and benefiting all businesses,” he added. “We’re here to celebrate a new chapter here in the Commonwealth.”
By 2031, Pennsylvania is on track to have one of the lowest corporate net income tax rates in the country, if other states keep their current rates.
“Based on current state corporate tax rates, this will take us to the eighth-lowest rate upon fully enacted,” said Bernstein.
Bernstein says the state is now equipped with all the tools necessary to create a thriving economy and a strong future.
“World class educational institutions, a prime geographic location, a strong work ethic from the best workers in the country, and vast natural resources,” said Bernstein.
Lawmakers from both parties are celebrating the reduction and say Pennsylvania can now live up to its nickname.
“Seeing Pennsylvania return to being the keystone state of our nation. I believe this moves us in that direction,” said Rep. Stan Saylor (R-York), Chair of the House Appropriations Committee.
State Representative Greg Rothman (R-Cumberland) is very optimistic that the reduction will actually increase revenue.
“By cutting the tax rates, we’re going to create more revenue, which means we can provide more services to the citizens of the commonwealth,” said Rothman.
“Working with staff in the Department of Revenue and the House Democratic Appropriations Committee, I am hopeful that the plan for reducing the CNIT will encourage new businesses and manufacturers to open shop in Pennsylvania, creating good jobs and boosting local economies,” said Rep. Mary Jo Daley (D-Montgomery).
Lawmakers agree now is the best time to move forward with the reduction, especially given the state’s current surplus.
“We have around $10-11 billion right now in surplus,” said Gov. Wolf.
The CNIT will reduce starting in Jan 2023, from 9.99 percent to 8.99 percent.