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Wolf, Republicans find common ground on slashing Pa. corporate tax

As part of his final budget address, Governor Tom Wolf proposed to cut Pennsylvania's corporate net income tax up to five percent.

HARRISBURG, Pa. — Amid the partisan back-and-forth which typically comes in the wake of one of Governor Tom Wolf's annual state budget presentations, there was one area where Democrats and Republicans seemed to find common ground.

"I think our corporate tax rate is too high," the second-term governor said mid-way through his speech. "This year I'm again calling for a reduction."

Whether that happens remains to be seen, though it did receive rare, mostly positive reviews from the Republican-controlled legislature.

The corporate net income tax is the rate placed on large companies and corporates to operate within the commonwealth. Pennsylvania's current rate of 9.99 percent is second highest in the nation behind New Jersey's 11.5 percent.

Reducing the corporate tax, if not eliminating altogether, has been something Gene Barr, President of the Pennsylvania Chamber of Business and Industry, has pushed for years.

"It's unacceptable," Barr said of the tax. "It creates the uniderstanding we're not as good as we should be. That we're not performing at the extent as we need to be."

Republicans have long argued the current corporate rate is keeping large corporate headquarters, like Amazon, away from Pennsylvania.

"If we can make Pennsylvania a more attractive place to put businesses here, I'm all for having that conversation," said State Rep. Torren Ecker (R-Cumberland, Adams).

Wolf's proposal would cut the current rate from 9.99 to 7.99 beginning January 1, 2023. After that it would reduce by single percentage points in 2026 and 2027, with the possibility of cutting it as low as 4.99 percent no earlier than 2028.

"We don't know when the next pandemic is going to be, whether it's in 100 years or whenever, but I think we ought to plan as if it's going to be five," Barr said. "How do we translate the people coming here to study to keeping them here for jobs? Which means, how do we attract that investment?"

Governor Wolf's budget proposal is merely an outline; a starting point for the Republican-majority to work with. The legislature is hosting hearings until mid-March to discuss the budget. Republicans will then put together their own state budget in the weeks after. 

Whether the GOP budget will have include the corporate tax deduction remains to be seen. In fact, some top House Republicans believe the governor's proposal is disingenuous. 

"It's funny, that in an election year, he proposes a tax cut," said State Rep. Stan Saylor (R-York), chairman of the House's powerful Appropriations Committee. "I would say it's more electioneering from him than it is reality."

A state budget must be in place for the start of the next fiscal year, beginning July 1.

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