At a glance: The governor’s budget would take the state’s corporate net income tax from its current rate of 9.99% to 7.99%, effective Jan.1 2023, with further single percentage point reductions in 2026 and 2027.
What it means: Pennsylvania is trying to shed the stigma associated with having the second-highest tax on corporate profits in the nation, a condition that business leaders have argued has repeatedly kept the state out of the discussion for many of the biggest corporate site selection projects in the last generation.
Taking the rate to 7.99 percent would, nominally at least, take Pennsylvania’s rate out of the top 10 highest.
The catch here is in a proposed companion piece that changes some of the rules surrounding the tax that would leave, according to the administration’s estimates, about 5 percent of all filers paying more and – at current rates – increase overall collections by about 23 percent. With the rate cut, however, the administration projects a net cut of about $80 million to the business sector in year one.
Wolf argues that this move can be afforded right now due to current-year revenue surpluses and a rebuilt cash reserve in the state’s general fund. Business leaders love the headline, but say the key to their support for this initiative lies in the details.Author: Charles ThompsonPublication: Penn Livehttps://www.pennlive.com/news/2022/02/gov-tom-wolfs-2022-pa-budget-proposal-calls-for-cuts-in-key-business-tax.html