Jan 19, 2017 3 min read

An area lawmaker is again pushing a bill that would cut the corporate net income tax in half after his last attempt stalled when he introduced it a year ago.

State Rep. Jason Ortitay, R-South Fayette Township, said Wednesday he is reintroducing a bill that would cut the tax companies pay on their earnings generated in Pennsylvania from 9.99 percent to 4.99 percent over five years.

Ortitay said in a prepared statement the move would make the state better able to attract new businesses and allow “businesses that are already in the state to use that money to hire additional employees.”

Corporate taxes account for about 8 percent of state revenue.

Each percentage point of the corporate tax rate translates into roughly $285 million, according to the Department of Revenue. Any reduction in the corporate income tax would mean less money for the state at a time it is already grappling with a $1.7 billion deficit projected for next year.

The GOP-led Legislature has opposed any increases in broad-based taxes such as sales and income to close that gap.

Asked about how his proposal fits with the state’s budget situation, Ortitay stressed what he said would be the long-term impact of the legislation. He said the state would eventually see more revenue from other sources such as income taxes as companies hired more workers and more taxpayers stayed in the state.

“Yes, there will be some short-term budget issues, but in the long run, it’s better for everybody,” he said.

Ortitay conceded he didn’t have any hard numbers to support this prediction.

Ortitay’s was one of several proposals to cut the corporate income tax in the House last session that never made it past the Finance Committee.

Marc Stier, director of the Pennsylvania Budget and Policy Center, said reducing corporate taxes could force the state to make further cuts in human services and education.

“This strikes me as an utterly irresponsible idea,” he said.

He argued other states that have done so have spent less on infrastructure and schools, actually harming economic development.

“The premise that this is going to improve the economy – not only do I think it’s wrong, there’s evidence that shows it’s wrong,” Stier said.

The free-market think tank Commonwealth Foundation has long pushed for a reduction in corporate taxes.

Elizabeth Stelle, the group’s director of policy, argued the state could recoup lost revenue by eliminating some $700 million in annual special subsidies she derided as “corporate welfare.”

“At the end of the day, Harrisburg has a spending problem and shouldn’t use that problem as an excuse to ignore needed tax reform,” she said.

Among the arguments against lowering corporate taxes Stier cited was that 71 percent of companies subject to corporate taxes already don’t pay them.

House Democratic spokesman Bill Patton said caucus members would generally support reducing corporate taxes, “but we agree with the governor that if you’re going to do that, we need to close the numerous loopholes that large corporations substantially benefit from now.”