York County News

Pennsylvania's economy faces significant challenges, as recent assessments rank the state poorly in job prospects and economic performance. WalletHub placed Pennsylvania as the fifth worst state for employment, while U.S. News and World Report, SimplifyLLC, and the Tax Foundation consistently ranked it in the bottom third nationwide. The Kauffman Foundation identified Pennsylvania as having the lowest rate of new entrepreneurs among all states.

Reports from Axios and the Bureau of Labor Statistics indicate high rates of outbound migration, highlighting a troubling trend of businesses and individuals leaving the state. Business optimism has also declined to its lowest level since 2012.

In response to these issues, Representatives Robert Leadbeter, Zach Mako, and Tom Jones hosted the House Republican Policy Committee to gather feedback from local businesses. They found that Pennsylvania's tax structure is seen as burdensome and punitive. Key areas for reform include Corporate Net Income (CNI) tax, Net Operating Losses (NOL), and accelerated sales tax.

Act 53 of 2022 was passed by Pennsylvania's General Assembly to address the high CNI tax rate, reducing it gradually from 9.99% to 4.99% by 2031. However, there is a call for faster action. Research suggests that lowering CNI taxes can lead to increased investment, GDP growth, higher wages, improved property values, and more jobs.

North Carolina serves as an example of successful tax reform; their CNI reduction improved their ranking in the Tax Foundation's Business Tax Climate significantly.

House Bill 1447 aims to accelerate Pennsylvania’s CNI reduction process to enhance competitiveness.

The treatment of NOLs is another area of concern. Pennsylvania caps NOL deductions below the federal limit of 80%, unlike most other states which align with federal rules or have no cap at all. This impacts start-ups and cyclical industries like manufacturing disproportionately.

The so-called 'Pennsylvania Startup Penalty' affects small businesses that cannot use NOLs against personal income tax like corporations do against CNI. House Bill 701 seeks to address this issue.

Another proposal involves repealing the accelerated sales tax requirement through House Bill 1404. Currently, businesses collecting over $25,000 in sales tax must make monthly pre-payments based on projected collections.

Representatives argue that immediate reforms are needed to reverse economic decline and prevent further business departures from Pennsylvania.

"We cannot afford to wait while our businesses struggle," they emphasize regarding fostering opportunities for jobs and entrepreneurship in Pennsylvania.