In unveiling his “Ten-year Strategic Plan for Economic Development in Pennsylvania,” Governor Shapiro has also unveiled — perhaps more than anyone wants to see — that he is truly a governor without clothes. The emphasis on economic development is commendable, and the recognition of its importance to our state’s prosperity is a positive step forward.

However, the plan’s lofty aspirations fall short of providing actionable solutions to implement lasting change. The Governor’s blueprint jeopardizes success by ignoring the current limitations and obstacles in Pennsylvania’s economic foundation that prevent new ventures from forming and continues to hinder those businesses already rooted in our communities.

In the June 2023 U.S. Bureau of Labor Statistics report, Pennsylvania is ranked as the fifth-worst state for business migration. In terms of startup growth, although our Commonwealth offers abundant educational resources and entrepreneurial collaborative initiatives, the Kauffman Foundation indicates a sustained decline since 2019, placing Pennsylvania in a tie with West Virginia for the lowest rank in the nation.

The Governor’s plan lacks essential solutions long sought by both our business community and the state legislature. One such omission is the reduction of Pennsylvania’s Corporate Net Income (CNI) tax, which offers hope for businesses of all sizes and has proven to be a catalyst for economic growth. By reducing tax burdens, the state can encourage investment and job creation, providing a much-needed boost to our economic foundation.

The General Assembly made headway in addressing the CNI tax in the FY2022-23 Budget, incrementally reducing the CNI tax by .50 percentage points annually, from 9.99 percent until it reaches the target of 4.99 percent in 2031. While this is certainly an improvement, if we truly want to make Pennsylvania more competitive, nationally and globally, we must expedite our CNI tax phasedown. While a CNI tax phasedown benefits all companies within our Commonwealth, it would have a profound impact on our smaller companies. According to the U.S. Chamber of Commerce, 84 percent of the companies that would benefit from a CNI tax reduction have 20 or fewer employees.

Another missed opportunity is the lack of any reference to Net Operating Loss (NOL) carryover reforms within the strategic plan. NOL carryovers allow businesses to offset current-year profits with losses from previous years, providing them with financial flexibility and resilience. The ability to carry losses forward primarily benefits two types of businesses — startups and businesses that operate in cyclical business cycles, where profits and losses can fluctuate greatly.

Unfortunately, Pennsylvania is one of only two states that do not permit businesses to carry over NOLs in a manner consistent with the federal limit of 80 percent. With a stringent limitation of 40 percent, Pennsylvania has effectively implemented a tax on startups that is non-existent in 48 other states. This inhibits businesses from fully leveraging this crucial tool for sustained growth and is a significant deterrent for businesses looking for a home here in Pennsylvania.

Furthermore, while the governor’s blueprint acknowledges the need for permitting reforms, a long-standing complaint within our business industry, it falls short of providing a clear roadmap for its implementation. Streamlining processes and reducing onerous requirements are imperative, especially for smaller or newer businesses that face disproportionate challenges in navigating bureaucratic obstacles.

While the governor can issue executive orders to ease the permitting process, as was seen during the I-95 bridge collapse, he has failed to take real action to ease our permitting process for potential Pennsylvania businesses. I hope he follows through his campaign promise and works with the legislature on transforming permitting reform. Addressing these concerns is not just about fostering growth; it’s about ensuring inclusivity and creating an environment where businesses of all sizes can thrive with confidence in their future.

Pennsylvania has the potential to be an economic powerhouse; however, it requires moving past political rhetoric — curse words and all — and demands action towards realistic solutions. And to ensure the stability of our economic growth trajectory, we must enact the necessary changes via legislation rather than executive orders. Businesses will not be drawn to our Commonwealth if the enticing economic changes appear to be short-term whims rather than long-term, transformative solutions codified in law.

I strongly urge the Governor to put down the pen, pick up the phone, and start doing the work for the people with the people duly elected to represent them, keeping his campaign commitments. Repairing the foundation of our state’s economy should be the priority, laying the groundwork for a stable business-friendly environment in Pennsylvania that fosters growth and prosperity for all citizens.

And once and for all, put on some clothes.

Rep. Joshua D. Kail, a Republican, represents parts of Beaver and Washington counties.

2 thoughts on “Rep. Josh Kail: The governor has no clothes”

  1. It should be obvious to all that this is a way station for Mr. Shapiro and his entourage to prepare for a presidential run in 2027. We can’t expect a leadership that will benefit most Pennsylvanians and kick start our economic revival. Rather, he and his supporters are crafting policy based on polling and what the party determines to be the path forward.

    1. Excellent break down of what most level headed residents and taxpayers have seen from Shapiro. Philly was smart enough to foil Jim Kenney attempts to run for Governor after his 8 years of pandering and failing, but Shapiro is a much slicker snake. Obviously prepping for his next job with election year snake oil salesman promises of $317 mil of tax dollara for new Septa new rail cars in 5 years; all while the transit agency can’t go 1 day without equipment fails, not enough operators and criminals running amok. Wonder what Josh could get in return for the epic fail of the Proterra Electric busses, rotting in an impoundment lot.

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