2008 Releases
Senate Passes Historic Tax Package
Senate Bills address many of Harrisburg Regional Chamber’s Legislative Goals
HARRISBURG (Tuesday, June 17, 2008) - A tax package that would provide individuals and businesses as much as $96 Million in tax cuts beginning in July passed the Senate o n Monday, June 16 th. It is estimated that the stimulus package will provide $96 million in relief for fiscal year 2008-2009. The four-bill package would benefit lower-income working citizens, small businesses looking to expand, and major employers and job creators in the State.
The Harrisburg Regional Chamber has had among its legislative priorities for several years now expanding the cap on Net Operating Loss and shifting the formula for the Pennsylvania Corporate Net Income tax towards the sales factor from 70% to 85%. The measure passed the Senate largely along a party line vote, but there appears to be support in the Democratic Caucus in the House and Governor Rendell has indicated an interest in these bills.
The Harrisburg Regional Chamber’s Government Relations Committee and the Tax Subcommittee have encouraged this type of action for several sessions of the General Assembly. The Chamber is also part of a statewide coalition known as CompetePA that has focused on these issues along with other local Chambers and other Statewide organizations.
David Black, President & CEO of the Harrisburg Regional Chamber & CREDC said, “This is a very good day in Pennsylvania, not only for the business community but for working Pennsylvanians at the lower end of the wage scale struggling to make ends meet. Tax policy needs balance and this legislation led by the Senate Republicans has balance helping both those in need, as well as providing long overdue adjustments in business taxes that will help Pennsylvania during both tough economic times and looking ahead to when the national economy picks up again. It’s a reminder that the legislative process is a lengthy process and this is a giant step as the legislation heads to the House for action. We do want to thank our local Senate delegation for the support of this legislation - Senators Vance, Piccola, Corman, Gordner and Folmer.”
A summary of the bills provided by the Senate Republicans are as follows:
Senate Bill 1385 (Corman, R-34) addresses the cap on the Net Operating Loss (NOL) provision of the Corporate Net Income Tax. The legislation expands the cap from $3 million (12.5 percent of taxable income) to $5 million (20 percent of taxable income). It is estimated that employers in the State would save $21.5 million in the coming 2008-2009 fiscal year and $68.5 million in fiscal year 2009-2010.
Senate Bill 1386 (Regola, R-39) addresses special tax forgiveness for lower-income Pennsylvanians. The legislation would increase the eligibility limits to $37,000 for a family of four to be exempt from paying the state income tax. Currently, families of four who earn $32,000 or less are exempt from the state income tax.
Senate Bill 1387 (Vance, R-31) addresses small businesses and the amount they could deduct as Section 179 expenses on income tax filings. Section 179 allows for the deduction of all or part of certain depreciable assets, such as machinery and equipment, for business purposes. This legislation would increase the maximum deduction allowed to $50,000.
Senate Bill 1388 (Eichelberger, R-30) addresses the State's Corporate Net Income (CNI) Tax. It would expand the sales factor to 85 percent, current level is 70 percent. This is significant because corporations that do business in one or more states must use a three-factor apportionment formula (property, payroll and sales factors) in order to divide their business income among the states involved. Currently in Pennsylvania, corporations are severely punished when they hire new employees or make capital investments in the State since the apportionment formula accounts for property and payroll factors at 15 percent each. By raising the sales factor to 85 percent, corporations in the State would benefit significantly since both the property and payroll factors would be reduced to 7.5 percent each.
Black added, “It’s important that people realize business interests did not get everything they wanted, but in the spirit of compromise and the best interests of the State, this seems to have degrees of fairness across the board.”
The CompetePA coalition, which includes the Harrisburg Regional Chamber, has been advocating for the elimination on the cap for Net Operating Loss carry-forwards, as well as the need for a Single Sales Factor apportionment of the Corporate Net Income Tax.
The Harrisburg Regional Chamber & CREDC serves as a catalyst for promoting growth and quality of life in Cumberland, Dauphin and Perry Counties by providing a unique blend of business, community and economic development and advocacy services under one roof to boost our economic vitality and livability as a region. HRC/CREDC has been accredited with four stars from the United States Chamber of Commerce.
