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Thompson Proposes Capital Stock And Franchise Tax
Cut
$25 Million Reduction Could
Help Spur Economy, Job Growth
HARRISBURG -- Senator
Robert J. Thompson, R-19th District and Chairman of the Senate Appropriations
Committee, has introduced Senate Bill 250, legislation to reduce the state’s
Capital Stock and Franchise Tax as a way to promote economic growth and job
creation.
“In the past, we have pushed
back the elimination of the Capital Stock and Franchise Tax by two years in
order to balance the General Fund Budget,” Senator Thompson said. “With the
current revenue surplus in excess of $260 million and increasing, it is time to
again think about phasing this tax out more quickly. We have seen in the past
that this tax has a negative impact on economic growth and jobs.”
Reducing the Capital Stock
and Franchise Tax has been a priority issue for Senate Republicans as a way to
reduce the burden placed on businesses that limits their ability to expand and
hire staff. A hike in the rate to 13 mills in 1991 under then-Governor Robert
Casey has been suggested as one of the major reasons for the closure or
relocation out of Pennsylvania by many companies and the resulting loss of
thousands of jobs. It has also been a major impediment to the attraction of new
companies.
Currently, Pennsylvania’s
Capital Stock and Franchise Tax rate is 5.99 mills. Senator Thompson’s measure
would lower the Capital Stock and Franchise Tax rate to 4.5 mills for tax year
2006 and to 3 mills for tax year 2007. Under current law, the tax rate for 2006
will be 4.99 and 3.99 mills in 2007.
“By escalating the phase out
for the next two calendar years, we will eliminate this onerous tax by the end
of 2009,” Senator Thompson said. “The bill would decrease the tax burden on
businesses by approximately $25 million for the next fiscal year. This will
allow for business investment and the creation of additional jobs.”
The reduction is proposed by Senator Thompson to
be included as part of the Commonwealth’s final budget for Fiscal Year 2005-06.
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