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The chairman of the PA Chamber’s Tax Executive Work Group took a stand for businesses across the state with a plea to the state House Finance Committee to make necessary improvements to the current business tax structure in order for Pennsylvania to remain competitive in a recovering economy.

At an informational hearing on Thursday, April 14, Tom Bowen, an attorney with PA Chamber Investor member company Stevens & Lee, PC, presented critical testimony to the legislative panel in which he pointed out problems with the current business tax structure, and provided suggestions on how to make improvements.

Bowen said the economic boom of the 1990s allowed Pennsylvania’s competitors to significantly reduce their tax burdens while our rates remain some of the highest in the nation. This has led to an exodus of business development and job creation to neighboring states, and is a barrier to companies being able to headquarter operations in Pennsylvania.

Bowen produced a list of the other tax dilemmas facing Pennsylvania’s business climate. With the nation’s highest effective Corporate Net Income tax rate; a cap on Net Operating Losses; the delay of the phase-out of the Capital Stock and Franchise Tax; and a current law that confuses the privilege of doing business in certain local taxing jurisdictions (the PA Chamber is working with lawmakers on a solution), Bowen stressed that Pennsylvania can’t afford to wait for changes to laws that keep the Commonwealth from growing jobs and capital.

Speaking on behalf of the PA Chamber’s thousands of statewide member businesses, Bowen presented achievable solutions for legislative consideration. Chief among the solutions is a reduction in the CNI rate.

“While a reduction of just one percentage point to 8.99 percent would improve Pennsylvania’s ranking by eight places, the Commonwealth still would remain well above the national average of 6.80 percent,” Bowen told lawmakers. He added that a fully market-based apportionment would help companies that have significant investments of property and payroll in Pennsylvania.

Bowen also promoted a continued move toward a CSFT phase-out, which was promised in 2000 and has been delayed three times in order to add to the state’s General Fund. He stressed that even businesses with an operating loss are subject to this tax, in addition to an income tax.

Bowen said the continuation of the original 10-year phase-out would re-inject stability and predictability for Pennsylvania businesses.  

In addition to Bowen’s testimony, the House Finance Committee heard from various private stakeholders on the need for business tax reform. They included the Pennsylvania Society of Public Accountants, the Pennsylvania Institute of Certified Public Accountants, the National Federation of Small Businesses, and the Pennsylvania Bankers Association.

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.