'Broad-based' business tax reforms hailed
As part of his budget plan, Gov. Tom Corbett proposed business tax reforms the business community welcomed.
Corbett billed the reforms as “broad-based” and focused on cutting business “tax burdens that inhibit job creation and economic growth.” The Department of Revenue estimated the measures would spur at least 18,000 jobs in the next 10 years and grow the state's economy enough to raise an additional $1 billion in business tax revenue by 2030.
• Reduction of the corporate net income tax to 6.99 percent from the current 9.99 percent by 2025. Pennsylvania's corporate net income tax rate is the nation's second-highest, behind only Iowa, whose 12 percent rate applies only to companies with at least $250,000 in profit.
• Raising the cap on net operating losses companies can deduct from their taxable income to $5 million, or 30 percent of income, whichever is greater. The state caps the deduction at $3 million, or 20 percent of income. New Hampshire is the only other state to impose a cap on deductible losses.
• Eliminating the capital stock and franchise tax in January 2014. The levy taxes both company assets and income. Pennsylvania is the only state to impose both a capital stock and franchise tax and a corporate net income tax.
“Clearly, reducing the corporate net income tax and uncapping the net operating losses will make Pennsylvania more attractive to business,” said Kevin Shivers, executive director of the Pennsylvania chapter of the National Federation of Independent Business, Harrisburg.
Opponents of the capital stock and franchise tax first targeted it for elimination in 1999 and, “We're finally going to eliminate it under the governor's plan,” said Shivers.
Brian Kennedy, vice president of government relations for the Pittsburgh Technology Council, said raising the cap on deductible losses particularly would help the kind of early-stage companies his South Oakland group represents because most young companies lose money their first few years.
“This has been a top priority of ours for many years,” Kennedy said. “This proposal starts to bring (Pennsylvania) into the competitive middle of the pack of states.”
Thomas Olson is a staff writer for Trib Total Media. He can be reached a 412-320-7854 or at email@example.com.