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FOR IMMEDIATE RELEASE |
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State
Rep. Michael Gerber |
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Business leaders rally around Gerber's economic stimulus package
Gerber's business tax cut proposal gains momentum
HARRISBURG, March 18 – An economic stimulus proposal introduced earlier this month by state Rep. Mike Gerber, D-Montgomery, has quickly gained a great deal of support among Pennsylvania's business community and fellow lawmakers.
Gerber's proposal has 127 co-sponsors, nearly 60 percent of all House members.
Gerber was joined today at a Capitol news conference by fellow lawmakers Rep. Mike Turzai, R-Allegheny and Sen. Wayne D. Fontana, D-Allegheny, and by Barbara McNees, president of the Greater Pittsburgh Chamber of Commerce. The group called on the General Assembly and governor to pass Gerber's proposed "CompetePA" with a targeted approach to boosting the state's economy.
CompetePA would keep Pennsylvania’s business environment strong during a slowing national economy. The bill would provide strategic business tax cuts to make Pennsylvania’s business environment more competitive during the current economic slowdown, helping to keep jobs in the state and making the state more attractive to new business.
"I'm pleased but not surprised this proposal has gained so much support from the business community that needs our support in the House during what could be a difficult year," Gerber said. "I'm particularly encouraged by the overwhelming number of my House colleagues that have supported the legislation."
Among the more than 100 companies and organizations in favor of Gerber's proposal is the Greater Pittsburgh Chamber of Commerce. McNees, chamber president, sees Gerber's proposal as a chance to allow Pennsylvania to compete with its neighboring states' business climate.
“Pennsylvania is not growing jobs and is not attracting business investment at near the rates of competitor states,” McNees said. “We have to take these steps – specifically, creation of a single sales factor apportionment formula for the Corporate Net Income tax and elimination of the cap on net operating loss carryforwards – in order to compete. This legislation is important for Pennsylvania businesses and Pennsylvania families because it helps to secure a more prosperous future for us all, and it’s encouraging to see support continue to build as more co-sponsors sign onto this bill.”
With 127 co-sponsors of Gerber's bill, there are more than enough committed votes to pass the measure. As Gerber stated, "My co-sponsors and I believe that eliminating current barriers to capital investment and job creation -- specifically, eliminating the cap on net operating losses and fully implementing a single sales factor -- is the best way to encourage economic activity."
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. The bill would raise that cap in tax year 2007 to the greater of $3 million or 50 percent of taxable income and would eliminate the cap altogether in tax year 2008.
These NOL deduction changes would 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, Gerber's 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 and property and payroll each represent 15 percent of the CNIT formula. Gerber's bill would change the formula to 85 percent sales, 7.5 percent property and 7.5 percent payroll in tax year 2007 and to 100 percent sales for tax year 2008 and beyond.
Gerber argued that the current approach penalizes companies that own property in the state and employ Pennsylvania's workers. He said these proposed changes would eliminate those penalties, making investing in Pennsylvania assets and workers more attractive for businesses.
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