Corporate tax cut proposed for Pennsylvania

(The Center Square) – A proposed bill could reduce Pennsylvania’s corporate net income tax almost by half but would only happen if tax revenues do not fall.

The bill, SB771, would lower the corporate net income tax from 9.99% to 6.99% by 2024. The text of the legislation states, “If the revenue generated at 6.99% in 2024 equals or exceeds the Independent Fiscal Office revenue projections for the 2024 taxable year at a rate of 9.99%,” then the tax could fall to 5.99%.

The legislation, proposed by Sen. Ryan Aument, R-Lancaster, is part of Aument’s push for “increasing opportunity.”

“The Commonwealth needs to be a place where every resident has the opportunity, and where new residents come, to experience earned success and upward economic mobility. We need to compete for new businesses and industry, and the jobs they create, to do just that,” Aument said in a legislative memo. “Unfortunately, Pennsylvania is consistently ranked amongst the worst states for business, claiming one of the highest corporate net income tax rates in the country, second only to New Jersey.”

“This performance-based mechanism is unique from other proposals because it only reduces the CNI tax to its lowest rate if the economic success of lowering it can be shown through revenue projections,” Aument wrote in a press release. “In other words, the benefits must equal or outweigh the costs of cutting the tax, or else the tax will not be further cut.”

Aument points to research that found lower CNI taxes can boost population, create jobs, drive up home values, and raise wages.

Corporate income taxes attract attention from both the left and the right of the political aisle, with conservatives generally more opposed to them while liberals tend to support them.

“Economists have long understood that corporate income taxes are double taxes, since the same income is taxed once as profit, and once as individual income when distributed as dividends to shareholders,” the Tax Foundation noted. “Contrary to popular misconception, the ultimate burden of corporate income taxes doesn’t fall on corporations, but is instead borne by workers, shareholders and consumers. According to a recent Federal Reserve study, state corporate taxes hurt entrepreneurship.”

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