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Senate Sends Tax Cut Package to
Governor
HB 515 Includes PIT Reduction, Economic
Incentives
HARRISBURG -- The Senate today approved a
measure to provide tax relief to families and small
businesses while promoting economic development and job
creation, according to Senator Robert J. Thompson, Chairman
of the Senate Appropriations Committee.
House Bill 515 is now headed
to the Governor for his signature and enactment into law,
Senator Thompson said.
HB 515 would reduce the
state Personal Income Tax, which is levied on individual
wage earners and small businesses in the Commonwealth, from
the current level of 3.07 percent to 3.05 percent in
2007. Previously, Senate Republicans had amended HB 515 to
provide a two-step reduction that would have reduced the PIT
rate to 2.98 percent in 2008.
"While we had hoped that the
Senate Republican package, which included more extensive tax
reductions, would be the one sent to the Governor, we also
recognize that it is essential to provide relief to
taxpayers and small businesses," Senator Thompson said.
"This is a step forward in rolling back the tax rate. It
will save millions of dollars for wage earners and small
businesses."
Senator Thompson said many
small and start-up businesses would also benefit from an
expansion of the state's net operating loss (NOL) carry
forward provision, which allows companies to apply losses in
one year to lower their tax bills in future years.
"These cuts are intended to
help small businesses establish themselves in Pennsylvania
-- including high-tech firms that often have long start-up
periods and heavy losses early on. Once established, these
businesses typically expand rapidly and create good-paying
jobs for skilled workers. It's a positive economic
development cycle for business and families alike," Senator
Thompson said.
HB 515 includes a series of
increases in the state's NOL cap to $10 million or 75
percent of taxable income, whichever is greater by 2010.
|
Taxable Years
Beginning |
NOL Cap |
|
2006 |
$2 million |
|
2007 |
$5 million |
|
2008 |
$7.5 million |
|
2009 |
$10 million |
|
2010 and thereafter
|
Greater of $10 million
or 75% of taxable income |
The measure also includes a
series of graduated increases in the Corporate Net Income
Tax apportionment formula. The three-factor apportionment
formula consists of property, payroll and sales factors.
Currently, Pennsylvania
applies this three-factor apportionment by triple-weighting
the sales factor in the formula. As a result, the sales
factor accounts for 60 percent of the apportionment formula,
and the property and payroll factors each account for 20
percent. HB 515 would phase in a Corporate Net Income Tax
apportionment formula to 100 percent sales by 2010 to
encourage companies to build facilities and increase payroll
in Pennsylvania.
|
Taxable Years
Beginning |
Sales |
Property |
Payroll |
|
2006 |
60% |
20% |
20% |
|
2007 |
70% |
15% |
15% |
|
2008 |
80% |
10% |
10% |
|
2009 |
90% |
5% |
5% |
|
2010 and thereafter |
100% |
0% |
0% |
"Pennsylvania has been
called unfriendly to business since its tax structure
stifles economic growth and is a detriment to our efforts to
attract new companies. We must turn that around. By cutting
these taxes, we send a message that Pennsylvania is a good
place to live and do business. We must foster growth and job
development and create good-paying jobs," said Senator
Thompson.
Thompson
Regola
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