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FOR IMMEDIATE RELEASE |
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State
Rep. Michael Gerber |
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As budget address nears, Gerber, Eachus, Turzai, Reed
announce bi-partisan economic stimulus package
Call for targeted business tax cuts
HARRISBURG,
Feb. 1 – State Rep. Mike Gerber, D-Montgomery, today circulated among his House
colleagues an economic stimulus proposal with the goal of keeping
Pennsylvania’s businesses running strong despite the slowing national
economy. Gerber’s proposal has strong bi-partisan support.
Joining Gerber as initial co-sponsors of the bill are Democratic Policy
Committee Chairman Todd Eachus, D-Luzerne, Republican Policy Committee Chairman
Mike Turzai, R-Allegheny, and Rep. Dave Reed, R-Indiana. The bill would provide
strategic business tax cuts to make Pennsylvania’s business environment more
competitive during the current economic slowdown.
The last time this quartet teamed up to cut business taxes, their legislation attracted
support from 163 cosponsors, 127 of whom remain in the House. That
proposal was very similar to the one released today and was incorporated in the
2006-07 budget.
"I am pleased to be working with this bipartisan group to advance this
economic stimulus package. It is our belief that enacting these cuts will
trigger immediate and substantial investments by Pennsylvania's largest
employers, while at the same time fostering a supportive environment for
start-up companies," Gerber said.
“We want to lead the way to invest in our entrepreneurs who really put people
to work at jobs that pay family sustaining wages and this package gives
businesses the tools they need to succeed,” Eachus said. “For too long we’ve
watched high-tech, high-wage companies leave the state. This proposal is going
to help companies invest in themselves, invest in their communities and
guarantee a brighter future for all of us.”
Gerber and his co-sponsors believe the most effective and efficient way to
stimulate economic activity, particularly during our current economic slowdown,
is to eliminate the current barriers to capital investment and job creation by
eliminating the cap on net operating losses and fully implementing a single
sales factor.
Right now Pennsylvania is one of just two states that limit
NOL deductions. The current cap is the greater of $3 million or 12.5 percent of
taxable income. This bill would raise that cap in 2007 to the greater of $3
million or 50 percent of taxable income and would eliminate the cap altogether
in 2008.
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These NOL deduction changes will level the playing field for cyclical companies that experience large swings in profitability; help start-up companies that typically experience losses in their early years; and eliminate a negative perception of Pennsylvania’s business climate.
Additionally, the bill calls for moving Pennsylvania to a single sales factor in a two-step process. Currently, the corporate net income tax is determined by weighing three factors: sales, property and payroll. These three factors are not given equal weight, as sales represents 70 percent, property represents 15 percent and payroll represents 15 percent of the CNIT formula. This bill would change the formula to 85 percent sales, 7.5 percent property and 7.5 percent payroll in 2007 and to 100 percent sales for 2008 and beyond. The current approach penalizes companies that own property in Pennsylvania and pay Pennsylvania workers. These proposed changes eliminate those penalties, making investing in Pennsylvania an asset and Pennsylvania workers more attractive for businesses.
The proposal Geber, Turzai, Eachus and Reed advanced two years ago also focused on raising the cap on NOL deductions and giving more weight to the sales factor.
“While the federal economic stimulus package is aimed at driving consumer
spending on a national level, our goal here is to make Pennsylvania a more
competitive state,” Gerber said.
This bi-partisan proposal has wide support in the business community, which has
formed a coalition supporting these changes, called CompetePA. For a complete
list of the members of the CompetePA coalition, visit http://competepa.com/.
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CONTACT: Mike Storm |