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05/27/2018 11:26 PM
Pennsylvania House of Representatives
http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20170&cosponId=25342
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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted: March 5, 2018 11:09 AM
From: Representative Scott Conklin
To: All House members
Subject: CNI Reduction and Combined Reporting
 
In the near future, I will be introducing legislation that will enact combined reporting, a necessary step in closing the “Delaware loophole," and that will reduce the corporate net income tax from 9.99% to 7.99%.

A recent Tribune-Review article noted that Pennsylvania's Corporate Net Income (CNI) Tax rate of 9.99% is the second highest in the nation. Only one state, Iowa, has a higher rate at 12%. If Pennsylvania is going to be an innovator in business development, we need to consider reducing the corporate tax burden, however, it should not be done at the expense of working families in Pennsylvania. In his 2018-19 budget address, Governor Wolf suggested both reducing the rate of the Corporate Net Income tax and enacting combined reporting.

This session, I introduced House Bill 1719, Printer's Number 2304, which requires corporations and their related subsidiaries to file taxes as a single company for state Corporate Net Income Tax purposes. Doing so would abolish a wide array of tax avoidance strategies that large foreign and multi-state corporations use to elude paying their fair share of taxes to Pennsylvania. In 2015, of the 113,400 businesses that were subject to the CNI, 76% paid no tax. Rather, small and medium-sized companies that don't have out-of-state subsidiaries have been paying more than their fair share while larger businesses take advantage of the “Delaware loophole” by sheltering their assets.

In an effort to enhance job growth in Pennsylvania, protect our small and medium-sized businesses and ensure taxpayers are not footing the bill for large corporations, I will be introducing legislation that reduces the Corporate Net Income Tax to 7.99% and enacts combined reporting. According to the Pennsylvania Department of Revenue, this proposal will raise an additional $330 million in new revenues.

Please join me in cosponsoring this important legislation.