Stevenson Lauds Effort to Reform Business Taxes
Rep. Dick Stevenson joined a bipartisan coalition to announce legislation that seeks to reform the way business taxes are calculated in Pennsylvania. At the podium is Rep. Dave Reed (R-Indiana).
HARRISBURG – To help level the playing field when it comes to the state’s business taxes and create an atmosphere to promote private-sector job growth, Rep. Dick Stevenson (R-Mercer/Butler) today joined an effort in the state House to close a business tax loophole and make fairer the structure of other industry taxes.
House Bill 2150, which Stevenson is co-sponsoring, would close the Delaware Loophole, a situation in which some large industries establish a subsidiary in the state of Delaware and avoid or pay reduced Pennsylvania taxes. One of those, the Corporate Net Income (CNI) Tax, is one of the highest flat taxes in the nation at 9.99 percent and is cited as a key reason why some companies avoid the Keystone State.
“Some large corporations are using the Delaware Loophole to reduce or altogether avoid taxes,” Stevenson said. “As a result, the Commonwealth loses out on tax revenue and small- and medium-sized companies are at a competitive disadvantage. This bipartisan proposal seeks to balance the business tax structure so that everyone can compete fairly.”
By closing the Delaware Loophole, an expense add-back provision, already used in 23 states, would be apply to companies that use the loophole.
In addition to closing the loophole, House Bill 2150 would reform the state’s business tax structure by:
• Implementing a single-sales factor. This would effectively eliminate the
state’s “jobs tax” so that a company’s CNI Tax liability would be calculated solely
based on sales. Under the current system, the CNI Tax is assessed based on a
formula that encompasses a company’s sales, property and payroll.
• Reducing the CNI Tax. This would be reduced from the current rate of 9.99
percent to 6.99 over six years, a drop of 0.5 percent annually.
• Phasing out the Net Operating Loss (NOL) cap. This would phase out, over nine
years, the NOL carry forward that would help promote business investment and
growth. Pennsylvania is one of only two states that currently limits the NOL carry
“The need to reform the state’s business tax structure is evident, as based on low rankings from numerous business and policy organizations,” Stevenson said. “Not only will these reforms make taxes fairer for Pennsylvania businesses, but they will allow industries to better invest their capital in their own operations. This will help toward our overall goal of making Pennsylvania a friendlier place to do business and create jobs.”
State Representative Dick Stevenson
8th District, Pennsylvania House of Representatives
Contact: Jennifer Keaton