Pennsylvania Senate pushes corporate tax cut plans



  • The Associated Press


  • Sam Dunklau

Democratic Gov. Tom Wolf delivers his budget speech for the 2022-23 fiscal year during a joint session of the Pennsylvania House and Senate in Harrisburg, Pa., Tuesday, Feb. 8, 2022. (AP Photo/Matt Rourke)

Democratic Gov. Tom Wolf delivers his budget speech for the 2022-23 fiscal year during a joint session of the Pennsylvania House and Senate in Harrisburg, Pa., Tuesday, Feb. 8, 2022. (AP Photo/Matt Rourke)

The Pennsylvania Senate on Wednesday approved two competing plans to cut the state’s net corporate tax rate, though Democrats warned the bills were premature because there was no agreement with Governor Tom Wolf.

The bills passed on an almost partisan basis, 31 to 19, in twin votes in the Republican-controlled chamber. Two Democrats have sided with each Republican senator in voting for the bills.

Sen. Vincent Hughes (D-Montgomery) was among those who voted “no.” He said he supported a lower corporate income tax rate, coupled with other economic stimulus.

“We [Democrats] are ready to have a broader conversation about… the best economic policy: tax cuts, incentives, investment to attract business, workforce development, support for child care, things of that nature said Hughes.

Wolf, a Democrat, said he was optimistic about reaching an agreement with Republican lawmakers on a tax cut plan for corporations that pay the 9.99% tax rate in Pennsylvania, the US. one of the highest in the country.

However, Wolf has yet to agree to such a plan in budget negotiations before the July 1 start of the new fiscal year, according to Democrats. Wolf is aiming for a 2% corporate tax cut by next January, an idea he laid out in the state spending proposal he presented earlier this year.

“[That] would broaden the tax base and ensure a more level playing field between businesses,” spokeswoman Beth Rementer said in an email.

One of the bills approved Wednesday would cut the rate by half a percentage point a year until it hits 6.99%, costing the state just over $1 billion. dollars per year by fiscal year 2026-27, according to Wolf administration estimates.

The other bill would reduce the rate by one percentage point per year to 6.99% in 2025, then to 5.99% if revenue targets are met. This would cost the state about $1.7 billion per year by fiscal year 2026-27.

Sen. Ryan Aument (R-Lancaster), who is sponsoring the measure, said during a floor debate that lawmakers need to do more to encourage businesses to locate in Pennsylvania.

“The first step to achieving these goals is to make the state’s net corporate tax rate competitive with that of our neighboring states,” Aument said.

Four of the five neighboring states that levy corporate taxes have a rate below 10%. New Jersey is the only exception with a corporate tax rate of 11.5%.

The state House of Representatives in April passed another plan that sits in the Senate.

For years, Wolf called for a tax cut, but with structural changes to crack down on tax evasion that the Pennsylvania Chamber of Commerce and Industry opposed. Discussions this year have focused on giving auditors more power to prevent tax evasion or inserting triggers to reduce the rate if certain income thresholds are met.

State bank accounts are now overflowing with $12 billion in reserves and surpluses, boosted by inflation and an economy fueled by federal pandemic grants. This prompted lawmakers to cut taxes.

Over time, corporate tax collections in Pennsylvania have fallen from approximately 20% of all tax collections in fiscal year 1999-2000 to approximately 15% in fiscal year 2020- 21, largely due to the passage by the Legislature of a law that ended a separate tax on corporate assets. Companies paid about $4.3 billion in corporate taxes last fiscal year, according to the state’s Independent Fiscal Office.


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