The PA Chamber of Commerce was joined by local lawmakers and business leaders at the Lehigh Valley Economic Development Corp. headquarters in Bethlehem Thursday to highlight the benefits of business tax reform in the 2022-2023 budget.
PA Chamber President and CEO Luke Bernstein spoke during a press conference following a roundtable discussion with the group.
“For far too long, Pennsylvania has had the second-highest Corporate Net Income tax rate in the country, which has been a giant stop sign for companies considering moving and investing here,” he said.
In the new budget the Corporate Net Income Tax, which is currently 9.99 % will be reduced to 8.99% on Jan. 1, 2023, with automatic, annual .50 percentage point reductions until the rate reaches 4.99% in 2031.
The change will make Pennsylvania the eighth lowest CNI tax in the country.
Bernstein said one of the best parts of the change was its strong bipartisan support.
Mike Schlossberg, D-Lehigh, said as a progressive Democrat, he was very proud of his yes vote on the measure.
“Taxes aren’t bad,” he clarified. “We need them to survive. They’re the price we pay for civilization. But there’s nothing positive or progressive about having the second highest Corporate Net Income Tax in the country.”
He said by making the cuts, he expects to see future gains as companies invest that savings back into their business and more companies are drawn to Pennsylvania because of the more competitive tax rate.
Christopher Kuhn, CFO of Olympus of the Americas in Center Valley, said the tax reduction will benefit local operations.
“We will be able to more aggressively grow our business with both organic and inorganic investments in Pennsylvania,” Kuhn said.
Don Cunningham, president and CEO of the LVEDC said the lowered rate will help his organization in its mission to recruit new business to the Lehigh Valley.
“The CNI tax has been a disadvantage for our companies here in the Lehigh Valley and certainly on our work to draw businesses into the region,” he said. “This is a huge game changer.”
Bernstein noted that the higher CNI rate has cost Pennsylvania business in the past.
He pointed to Intel Corp., which was considering moving to Pennsylvania, but chose to locate in Ohio instead, which is a state with no CNI tax.
He said he hopes the tax reduction is just the first step in tax reform efforts to help make Pennsylvania more competitive.
State Rep. Ryan Mackenzie, R-Berks/Lehigh, agreed that more tax reform is needed.
“This reduction in Corporate Net Income Tax helps both large and small businesses,” he said. “This will bring meaningful changes for small businesses, but it’s just the first step with more steps moving forward.”