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PA Chamber proposes business tax reforms to legislative panel
Reduction in CNI a top priority for PA Chamber members
Pennsylvania Chamber members’ concerns about Pennsylvania’s poor
business tax climate were addressed on Aug. 23, when PA Chamber Government
Affairs Director Sam Denisco and PA Chamber Tax Committee Chairman and Stevens
and Lee Shareholder Tom Bowen testified
before the House Republican Policy Committee at a hearing on the state’s
business tax climate.
According to a recent survey
by Chief Executive Magazine, Pennsylvania ranked a
dismal 39th in terms of business friendliness – and was one of five
states with the biggest drop in the rankings over the past five years –
signaling that a clear change in public policy is needed in order to drive
business investment opportunities in the Commonwealth.
Denisco and Bowen explained how Pennsylvania’s existing
business tax laws slow job growth, and offered policy recommendations that
would improve Pennsylvania’s economic and competitive standing.
Several suggestions were shared with the lawmakers that
would streamline Pennsylvania’s
tax system with the more business-friendly policies in other states. Chief
among the proposals is a reduction in the Corporate Net Income tax rate, which
is the highest in the nation at 9.99 percent.
“Corporate Net Income tax rates are the most straightforward
measures that businesses use when comparing states’ business climates,” Denisco
told the committee. “While a reduction of just one percentage point to 8.99
percent would improve Pennsylvania’s
ranking by eight places, the Commonwealth still would remain well above the
national average of 6.80 percent.”
In addition to reductions in the CNI, a suggestion was also
made to shift the CNI apportionment entirely to a market-based formula, which
if adopted, would prevent companies with substantial operations in Pennsylvania from being
penalized for property and payroll. Another sales formula suggestion – moving
to a customer-base sourcing method for service jobs – is a market-driven measure
that has worked successfully in Maryland
for several years and has been recently adopted in 10 other states.
Other suggestions include discarding the concept of
mandatory combined reporting, which discourages multi-state businesses from
investing in Pennsylvania; removing the cap on Net Operating Losses to help
start-up companies retain earnings in their early years of operation; and continuing
the often-delayed phase-out of the Capital Stock and Franchise tax, which is
now set for elimination in 2014.
Gov. Tom Corbett has indicated support for additional tax
cuts in the 2012-13 state budget, including a continuation of the CSFT phase
out and a possible half percentage point reduction in the CNI.
With a core mission of supporting policies to help Pennsylvania businesses thrive, the PA Chamber’s proposals
to improve existing business tax laws directly reflect what members say will
encourage them to invest in Pennsylvania,
become more competitive and grow jobs.
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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.
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