The bad news is that Pennsylvania’s chronic economic underperformance has robbed us of prosperity that should have been ours. The good news is that we can set things right if our leaders in Harrisburg choose to embrace a pro-growth, pro-production, pro-jobs agenda—and stick to it.

Year after year, decade after decade, PA’s economy has grown more slowly than the national average. Faster-growing states have benefited from greater private-sector investment, leading to more and better jobs, more residents, and a growing local tax base. In contrast, the PA state budget has a structural deficit caused by too few working-age residents to pay for the needs of our growing population of retirees. 

Why is this happening? Pennsylvania has everything necessary to be an economic powerhouse: a key geographical location, abundant natural resources and some of the best institutions of higher education and largest financial entities.  We also have the tradition of pride in work that makes Pennsylvanians the most dedicated employees anyone could ask for. 

In a free country with a free economy, private investment is a choice. Ultimately, our policymakers in Harrisburg have to choose to make the state the smart business destination. For too long, the state has spent money faster than the taxpayers could earn it, suffocating growth. That overspending has locked in place high business tax rates, further restricting our appeal to investors. 

But the 2022-23 general fund budget includes a path to phase down our punishing 9.99 percent corporate net income tax rate (CNIT), dropping it to 8.99 percent as of January 2, 2023.

That is still higher than most of our competitor states and well above the national average. However, another 0.5 percent is set to be deducted each year until it reaches a more reasonable 4.99 percent in 2031.

For decades, our CNIT rate has scared off investors. By sticking to the CNIT phase-down plan, we can signal that Pennsylvania is open for business again. 

The long climb to business-tax competitiveness has begun, although the promised CNIT phase-down will have to be defended tenaciously in each upcoming budget. The longer the phase-down continues without interruption, the likelier it will be that we will reach our destination. 

Because competitiveness is multifaceted, our Pennsylvania policymakers will have to work on issues beyond taxes and spending, including fighting lawsuit abuse and reducing the regulatory burden. For the moment, let’s appreciate this promising new start and resolve to keep going until Pennsylvania is a national economic leader once again.

 David N. Taylor is the president and CEO of the Pennsylvania Manufacturers’ Association, the nonprofit statewide trade organization representing the manufacturing sector in PA’s public policy process.