On Feb. 4, Gov. Tom  Wolf announced his proposed budget for 2020-21. The budget calls for a few key changes to the commonwealth’s tax system. The top three proposed changes will be discussed below. However, the proposed changes are not new; the governor has unsuccessfully attempted to pass all three of the proposed changes in previous years. For various reasons, each has been met with criticism, lobbying, and eventual defeat. While it is likely the proposed changes will see the same fate in 2020, each is worth discussing and understanding.

  • Lowering the Corporate Net Income Tax Rate

Pennsylvania has the second highest corporate net income tax (CNIT) rate nationwide, currently at 9.99%. Pennsylvania is outdone only by Iowa, which imposes its CNIT at a rate of 12%. The fear with a high comparative CNIT rate is that Pennsylvania is not competitive in attracting businesses. When companies consider where to locate, such a high tax rate is a deterrent to investment in the commonwealth.

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