The Democratic governor has said he is optimistic about coming to an agreement with Republican lawmakers on a plan to cut taxes for corporations that pay Pennsylvania’s 9.99% tax rate. That's one of the nation’s highest.
For years, Wolf has sought a tax cut, but with structural changes to crack down on tax avoidance that were opposed by the Pennsylvania Chamber of Business and Industry. Talks this year have centered on giving auditors more power to prevent tax avoidance or inserting triggers to reduce the rate if certain revenue thresholds are met.
The state’s bank accounts are now flush with $12 billion in reserves and surpluses, boosted by inflation and an economy juiced with federal pandemic subsidies. That has given lawmakers more incentive to cut taxes. Over time, corporate tax collections in Pennsylvania have shrunk from about 20% of all tax collections in the 1999-2000 fiscal year to about 15% in the 2020-21 fiscal year, largely because of the Legislature's passage of a law that ended a separate tax on business assets.