November 30, 2023
FOR IMMEDIATE RELEASE
Contact: Kirstin Snow, Communications Director, Pennsylvania Policy Center, snow@pennpolicy.org; Ellie Blachman, Center on Budget and Policy Priorities, (202) 325-8718, eblachman@cbpp.org
New report: Pennsylvania will lose $3.1 billion to corporate tax cuts by 2028
Pennsylvania is part of historic, nationwide tax-cutting wave that jeopardizes investments in communities and our ability to meet the challenges of the future.
Harrisburg, PA — In recent years, policymakers in Harrisburg joined their counterparts in more than half the states across the country on a historic revenue-reduction spree that shifted public funds away from public investments and toward tax cuts that primarily benefit wealthy households and corporations.
Those corporate income tax cuts have already cost Pennsylvania $127 million in revenues and will cost an additional estimated $3 billion by 2028, according to a new report by the Center on Budget and Policy Priorities (CBPP). Those tax cuts—including the corporate tax rate reduction passed in Pennsylvania in 2022—will grow more expensive over time, with more revenue lost each year that could have been used to fully and fairly fund education and address the housing crisis.
“Pennsylvania is struggling to address a court-mandated requirement that we adequately and equitably fund K-12 education, but policymakers have cut the corporate tax revenue we need to tackle those problems head-on. And now Republicans want to accelerate those cuts,” said Marc Stier, executive director of the Pennsylvania Policy Center. Stier added, “By contrast, Democrats in the House have passed a strong plan to close the loopholes that allow wealthy multi-national corporations to escape paying any taxes. They show that we have choices when it comes to our tax code. We don’t have to tilt the system toward the wealthy. We can ensure that everyone pays their fair share and that we have the tools we need for our people and communities to succeed.”
Twenty-six states have enacted cuts to personal or corporate income taxes, or both, over the past three years. And 13 of those states have cut taxes multiple times during that period.
The cuts will shrink revenues by roughly $29 billion annually by 2028, according to CBPP. Cumulatively, they will have cost states roughly $124 billion by that time. The costs will continue to grow if policymakers do not reverse course.
“The recent surge of state personal and corporate income tax cuts is historically large in size and scope,” said Wesley Tharpe, senior advisor for state tax policy at CBPP and author of the new report. “State revenues aren’t just a number on a spreadsheet, they are critical resources that support families, communities, and our economy. Tax cuts on this scale will seriously hamper states’ ability to adequately fund current services or meet future challenges.”
The report notes that while 26 states have cut tax rates in the past three years, others have chosen a different path.
For example, Washington state established a new tax on capital gains received by the wealthiest 0.2 percent of taxpayers, which is expected to raise at least $500 million in new annual revenue for childcare, school improvements, and construction. Massachusetts approved a millionaire’s tax that will raise $2 billion annually for public education and transportation.
“As we look ahead to the new year, policymakers should prioritize meeting the demands of both the present and the future, not tax cuts for those at the top,” Stier said.
