New tax reform lauded in Lancaster for improving state’s competitiveness

Cris Collingwood//August 9, 2022

New tax reform lauded in Lancaster for improving state’s competitiveness

Cris Collingwood//August 9, 2022

The state’s recently enacted state tax reform package was lauded by the Pennsylvania Chamber and state and local officials in Lancaster today. 

Luke Bernstein

The PA Chamber welcomed members of the Lancaster state legislative delegation, representatives from the Wolf administration and state and local business leaders for a business roundtable and press conference at the Lancaster Chamber of Commerce that focused on how the reform will improve Pennsylvania’s competitiveness and chart a new course for the commonwealth’s economy. 

 “We’re here as proof that with bipartisan collaboration and a strong partnership between the public and private sector, we can accomplish great things for the commonwealth,” PA Chamber President and CEO Luke Bernstein said. “This tax reform package is an important first step in driving Pennsylvania’s competitiveness in a forward direction and showing the world that we’re open for business.” 

 Heather Valudes, president and CEO of the Lancaster Chamber said the reforms to Pennsylvania’s tax code are a major step in making the commonwealth more competitive. 

Heather Valudes

 “We know Lancaster County is a wonderful place to live – with a more competitive tax code, our region will also be an even better place to start a business,” she said. “We are pleased to have worked with the Lancaster County legislative delegation, the governor’s office and state business leaders to make these much-needed reforms a reality.” 

The tax reform package – which was enacted as part of the 2022-23 budget agreement – includes a reduction to the state’s Corporate Net Income Tax rate from 9.99 percent to 4.99 percent – cutting it in half over the course of nine years.   

Based on current state corporate tax rates, once the law is fully implemented, Pennsylvania will go from imposing one of the nation’s highest CNIT tax rates, to the 8th lowest in the country.  

“It is more important than ever to make sure our job creators have an environment to thrive and push back on the impacts of inflation,” said Rep. Bryan Cutler, Speaker of the House (R-100). “As we heard from leaders in Lancaster County today, the steps this budget takes are just the beginning, and I look forward to continuing to work to turn the tide of inflation to help Pennsylvanians in all corners of the commonwealth.” 

The benefits of a more competitive business tax code go far beyond improving the state’s business climate. Studies have shown that decreasing the CNIT leads to increased GDP, higher wages and increased home values, all of which create family sustaining jobs and attract and retain new talent, the Pennsylvania Chamber said. 

The tax package also includes relief for small businesses that the Pennsylvania Chamber has long sought for its members, affording businesses the opportunity to defer personal income tax liabilities through “like-kind exchanges” of certain property.  

This provision allows employers to invest in the job-creating assets businesses need to stay competitive. Previously, Pennsylvania was the only state in the country that did not offer this type of deferral.  

An additional component of the package aligns the state Tax Code with federal tax law by allowing small businesses to deduct qualifying equipment purchases from personal income tax liabilities, just as federal tax law provides for under Section 179. This change makes it easier for employers to buy equipment and invest, which in turn promotes job growth. 

“Small businesses are the backbone of our economy and we’re pleased that this tax reform package includes significant measures to incentivize investment by small businesses in the state,” said Lisa Riggs, president of the Economic Development Company of Lancaster County. “Our team works hard every day to expand opportunity in our region, and these reforms give us a greater ability to make that happen.”