Special Edition: Increasing Opportunity in PA Through Tax Reform

Special Edition: Increasing Opportunity in PA Through Tax Reform

Dear Friend,

The iconic American Dream paints a picture where hard work = success and a comfortable lifestyle. But with historic inflation, increased government intervention, high taxes, endless bureaucratic red tape, and other government-inflicted barriers, the American Dream is becoming out of reach for many Pennsylvanians.

Pennsylvania has become reactive rather than proactive in laying out a vision that will clear the way for residents to achieve earned success, upward economic mobility, and the comfortable lifestyle promised by the American Dream. This has resulted in a stagnant economy with stagnant worker wages, and it’s left us in a precarious situation where we must either adapt and overcome or be left behind in the global economy.

We must plan instead of react, we must be competitive instead of regressive, and we must have a vision for the future that will allow Pennsylvanians to truly live out the American Dream.

Learn more below about my proposal to build a stronger Pennsylvania where entrepreneurship, innovation, and economic opportunity can thrive.

God Bless,

State Senator Ryan P. Aument
36th Senatorial District

In This Update:

Decreasing the CNI Tax to Increase Opportunity in PA
Increasing PA’s Population by Incentivizing More People to Move Here
Elevating Home Values in Local Communities
Raising Workers’ Wages
No Negative Impacts to State Revenue
Constituent Feedback
Join the Discussion!

Decreasing the CNI Tax to Increase Opportunity in PA

To attract new employers and promote economic growth in the Commonwealth, I have proposed Senate Bill 771, which would gradually reduce the state’s Corporate Net Income (CNI) tax rate. I believe this proposal will not only help employers, but it will also raise the overall quality of life for Pennsylvanians in all corners of the Commonwealth – here’s how:

Research shows that, in addition to creating better job opportunities and a more favorable business climate, lowering a state’s CNI tax rate:

Increases population by incentivizing more people to move here,
Elevates home values in local communities,
Raises workers’ wages, and
Does so without negatively impacting state revenue.

Specifically, Senate Bill 771 would incrementally reduce the CNI tax from its current rate of 9.99% to 6.99% by 2024. The rate could then be further reduced only if it meets or exceeds the revenue projections for 2024 at the 9.99% rate.

This performance-based mechanism is unique from other proposals because it only reduces the CNI tax to its lowest rate if the economic success of lowering it can be shown through revenue projections. In other words, the benefits must equal or outweigh the costs of cutting the tax, or else the tax will not be further cut.

It is my hope that making Pennsylvania more economically competitive by lowering our CNI rate will benefit working class families, reverse our stagnant population growth, and ensure that Pennsylvania is an attractive place to live, work, and raise a family for generations to come.

Learn more about my bill to increase economic opportunity for all Pennsylvania residents here.

Increasing PA’s Population by Incentivizing More People to Move Here

After the preliminary 2020 Census data was released earlier this year, we learned that Pennsylvania’s population growth has been so stagnant that we again lost a seat in Congress. This is the continuation of an unfortunate trend where the Commonwealth has consistently lost at least one Congressional seat in all of the last 10 censuses, beginning in 1930.

The state’s inability to retain residents or attract new ones has cost us political influence in Washington.

Beyond our diminishing power in the nation’s capital, many Pennsylvanians have seen this outbound migration in action as they watch the dream of having their children live nearby fade away as economic opportunity pulls our younger generations out of the Commonwealth to jobs in other states where there’s greater promise of upward mobility.

We must counter this population trend, incentivize working professionals and families to move here and stay here, and create economic opportunity for ALL our residents – the first step to achieving those goals is to make the state’s Corporate Net Income (CNI) tax rate competitive with that of neighboring states.

Based on data from the U.S. census, research shows that lower corporate income tax rates are associated with higher rates of population growth.

Additionally, interstate migration trends in 2019 show that many more people move to states with lower CNI rates than move to states with a higher rate, supporting the claim that states with lower CNI rates have more favorable business climates and better job opportunities. Specifically, data modeling projects that lowering the CNI by one point can increase Pennsylvania’s population by an additional 18,000 people in the first year and that population will continue to grow each year thereafter.

Bottom line – reducing our state’s CNI rate would directly address our ongoing issues with outbound migration while at the same time providing real, tangible benefits to those who reside here in the Commonwealth.

Learn more about my proposal to reduce Pennsylvania’s CNI tax and the research behind it here.

Elevating Home Values in Local Communities

Pennsylvania consistently ranks amongst the worst states for business, claiming one of the highest Corporate Net Income (CNI) tax rates in the country, second only to New Jersey. With Pennsylvania’s current rate of 9.99%, we’re at a great competitive disadvantage compared to most of our neighboring states who boast rates of around 6-6.5%.

We must take action to incentivize working professionals and families to move here and stay here, and create economic opportunity for our residents – the first step to achieving those goals is to make the state’s CNI tax rate competitive with that of neighboring states.

Lowering a state’s CNI rate is associated with increased growth in home values. For the period between 2010-20, data analysis shows that the 23 states with the lowest CNI rates experienced significant growth in typical home value compared to the 23 states with the highest CNI rates.

Learn more about my proposal to reduce Pennsylvania’s CNI tax and how that would raise home values in Pennsylvania communities here.

Raising Workers’ Wages

One of the most compelling arguments for lowering the Corporate Net Income (CNI) tax rate is the benefit that it would provide to Pennsylvania working families. Decades of research demonstrate that there is a direct correlation between lower CNI rates and higher wages for working class families.

Unfortunately, when politicians talk about lowering corporate taxes, many middle- and lower-class working families are skeptical that such a policy would benefit them. Though many believe that reducing corporate taxes would only help upper-class CEOs and large corporations, the data clearly shows that this is false and that individual employees and their families will also benefit greatly by enjoying higher wages.

Learn more about my proposal to reduce Pennsylvania’s CNI tax and how that would raise workers’ wages here.

No Negative Impacts to State Revenue

Not only do the data show a strong connection between a lower CNI tax and higher population, home values, and workers’ wages, but these goals are able to be achieved without impacting general fund revenue or raising taxes on Pennsylvanians.

Learn more about my proposal to reduce Pennsylvania’s CNI tax here.

Constituent Feedback

In May 2021, I published an economic growth survey question in my e-newsletter and on my social media accounts, asking constituents to respond. 54% of those who responded indicated that they would SUPPORT a proposal to attract new industries to PA to increase economic opportunity. You can view the full results here.

In January 2022, I published another economic growth survey question and asked constituents to respond. 70% of respondents said Pennsylvania should be doing more to create new jobs, attract new industries, and incentivize existing businesses to stay here. You can view the full results here.

Here are some comments fellow constituents have sent me regarding economic growth and reducing PA’s CNI tax:

“Law makers should be working on big picture items. Reducing our state tax burden for residents and businesses will help us to be more competitive with other states and therefore allow us to attract more businesses to the state as well as new residents as a potential workforce for those companies.” – Jeffrey from Stevens, PA

“Secure the economic growth of the state.” – Scott from Elizabethtown, PA

“I strongly support your initiative for reducing our Corporate Tax rate. I also continue to notice that Ohio is getting investment, and PA is not. I was on a team that was researching new plant locations (we had many in PA), and although we would have liked to expand here, it was clearly not business friendly. (Income Tax, Workers Comp, Unemployment) etc. PA is not competitive with Ohio for manufacturing jobs.” – Jeffrey from Ephrata, PA

“As a business owner I am worried about inflation, job creation and property taxes. I love PA but as My companies grow, I can see why businesses leave PA for other business friendly states.” – John from Lititz, PA

Join the Discussion!

To effectively increase economic opportunity for all Pennsylvania residents, I will need the continued engagement of my constituents and local leaders, as an ongoing dialogue between lawmakers and those they represent is absolutely critical to succeed.

As such, please fill out my Voice Your Concerns Form with any further questions, thoughts, or concerns you may have. I firmly believe that an open and productive conversation is necessary as we seek to build a stronger Pennsylvania, together.