By Caelin Grambau, University of Pittsburgh English Writing & Spanish double major
Did you know that there are over one million small businesses in Pennsylvania alone? According to PA’s government-official business hub, “Pennsylvania is home to 1.1 million small businesses, and employs 2.5 million individuals — about half of the state’s private workforce. Small businesses play a vital role in Pennsylvania’s economy, accounting for 99.6 percent of businesses in the state. Their economic impact is evident across a variety of business sectors here, ranging from professional services, retail, construction, and health care to manufacturing, education, and beyond.”
What you might not know, however, is that Pennsylvania also employs a corporate net income (CNI) tax rate sitting at a whopping 9.99%, making PA home to one of the highest CNI tax rates in the entire United States. While this might sound like something that doesn’t affect you on a personal level, business development and CNI tax go much further than affecting just business owners.
Presente sat down with Melanie Marie Boyer, Executive Director of the Pittsburgh Hispanic Chamber of Commerce, to discuss what PA’s CNI tax rate means for small businesses, for individuals, and most notably, for Latinos.
Now, we’re breaking it down below.
Businesses always want to grow and put down roots in new cities, but the corporate net income tax rate plays a huge part in where a business will settle. Even just the smallest difference of deciding between Pittsburgh, Pennsylvania and Columbus, Ohio can come down to the state’s CNI tax.
“When businesses are looking at where they want to grow and where they want to build, this [CNI tax rate] makes Pittsburgh absolutely out.” Boyer explains. “All of these entrepreneurs, especially those from minority communities, they’re not going to move here with that. Having such a high tax rate, we’re advocating to get it lowered.” she says.
If larger corporations didn’t affect communities and small business owners the way that they do, this wouldn’t be a big deal. What makes it a big deal though is that corporations don’t just create revenue, industry and job opportunities, they also help to create a whole ecosystem of support for the communities that they are in.
“The more big companies there are, the more infrastructure and ecosystem grow and right now with the high diversity, equity and inclusion initiatives that are being started across the board, now is the best time for these companies to have more money for more opportunities and to be able to have [and support] diverse suppliers.” Boyer says.
In short? The more money that large companies make, the more they are able to invest back into smaller, more diverse suppliers, made up of smaller, diverse communities. Everyone makes more money, and the community that was invested in grows and prospers.
This also affects Latino communities heavily. “Latinos are responsible for 87% of all new jobs since the last recession, and Latinas alone are responsible for 50% of all new jobs in the United States.” Boyer notes.
As Latinos, we start the most businesses, but we’re the least likely of any group to reach the million dollar mark. So we’ve got the most to lose. We can’t afford to give more taxes just to live in a different place.” she says. “This [CNI tax rate] is a huge deciding factor, especially for underserved, or underestimated groups.”
Businesses and communities thrive off each other, and when one is taken away the other suffers. That’s why Boyer and other groups, such as Compete PA, a coalition of businesses and organizations through the Greater Pittsburgh Chamber of Commerce representing more than half of the private sector employment in Pennsylvania, are fighting so hard to bring awareness to PA businesses’ tax situation.
Boyer stresses that the best thing you can do, either as a business or an individual is to be aware and get involved.
Compete PA and the Greater Pittsburgh Chamber of Commerce offer resources, as well as meetings and more for business owners across Pennsylvania. Whether you want to get involved as an individual, or join the coalition as a business, more information can be found at https://greaterpittsburghchamberofcommerce.com/compete-pa/.