In Pennsylvania, our recovery from the pandemic depends upon a pro-business environment both enacted and maintained statewide. Our workers and businesses have been hit hard by the economic fallout of the pandemic — we cannot increase taxes, regulations and other financial burdens from the government at a time when so many are still struggling to bounce back.

However, to generate funds for infrastructure development, federal officials are planning to raise the corporate tax rate from 21% to 28% and the Global Intangible Low Tax Income rate from 10.5% to 21%. These tax hikes will seriously impede the economic growth and recovery of American businesses, as well as lead to fewer jobs, reduced competitiveness and higher costs.

The proposed tax hikes also come on the heels of a significant pipeline permitting delay at the Federal Energy Regulatory Commission (FERC), which continues to threaten jobs and delay work statewide.

The Associated Builders and Contractors of Pennsylvania is against these tax hikes, and we urge FERC to resolve its permitting delays. ABC of Pennsylvania represents nearly 1,400 members companies, and it is our mission to advocate for open competition throughout the commonwealth. We believe tax increases and bureaucratic delays come at the wrong time for Pennsylvania’s business community and will do more to harm than good for our workers and enterprises, both large and small.

American companies already pay some of the highest corporate taxes in the world, effectively paying a combined corporate tax rate of more than 25% when also accounting for state and local taxes. If the tax increases proposed by federal officials come to pass, then American enterprises will end up paying the highest corporate tax rate in the industrialized world. This not only stifles the recovery efforts of Pennsylvania’s business community, but also reduces American competitiveness and increases costs at a time when we should be supporting our enterprises — not bleeding them dry for revenue.

Additionally, raising the GILTI tax puts American multinational companies — including the ones headquartered here in Pennsylvania — at a competitive disadvantage and affects the critical revenues and jobs they provide. Designed originally to keep the foreign profits of American companies at home and prevent them from offshoring funds, it has been effective in doing so at its current rate of 10.5%, increasing domestic employment among U.S. multinational companies by 2.1% since its inception in 2018.

However, the proposals by federal officials to reform the GILTI tax include doubling the rate to 21% and requiring companies to report foreign profits on a country-by-country basis. Not only would these changes limit American growth and competitiveness abroad, they would also place undue burdens on some of our country’s most successful enterprises, leading to reductions in wages and jobs. Raising GILTI does not incentivize our countries to keep jobs and profits in the United States, but instead harms American business and workers.

Lastly, the current permitting quagmire at FERC also threatens American jobs and workers, especially here in Pennsylvania. We have seen how permitting delays have prolonged projects such as the $1 billion PennEast Pipeline for years, which was originally projected to be constructed in 2019 and provide thousands of jobs, but now is still fighting to complete the first phase of the project.

Given that Pennsylvania’s impact fee — the tax collected from oil and gas operations that is used for public outlays like education and health care — totaled only $146 million in 2020, the lowest fee since its inception, FERC must resolve its permitting delay so that Pennsylvania’s communities can continue to construct vital energy infrastructure and receive adequate funding. Further permitting delays to projects like PennEast will only hurt our economy and reduce job opportunities when they are needed most.

Federal proposals to increase taxes — combined with the current permitting standstill at FERC — pose a significant challenge to Pennsylvania’s economic growth and recovery following the pandemic. Our elected officials need to make smart policy decisions that do not put more obstacles in our path toward recovery, but rather clear the way.

David Greineder is director of government relations at the Associated Builders and Contractors of Pennsylvania.

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