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For Immediate
Release
5/20/08
 
- Sen. Browne
- Sen. Corman
- Sen. Eichelberger
- Sen. Regola
- Sen. Vance
- Press Conference
Senate Republicans Unveil Tax Stimulus Package
Would provide
$96 million in relief for FY 2008-09, $246 million by 2010-11
The Senate Republican Caucus today unveiled a sweeping stimulus package that
would provide nearly $96 million in tax relief in the upcoming fiscal year for
lower-income working Pennsylvanians, small businesses looking to expand, as well
as major employers and job creators.
The four-bill Senate Republican Tax Stimulus Package was presented today
during a press conference in the State Capitol Media Center hosted by Senator
Pat Browne (R-16 and Chairman of the Senate Finance Committee), which has
oversight powers over state tax matters.
"The package we are unveiling today is the result of intensive study and
review of a number of proposals with the goal of finding the optimum combination
to provide tax relief where it is most needed and best be able to stimulate
Pennsylvania's economy," Senator Browne said. "I plan to bring these proposals
to the Finance Committee as soon as possible, since these measures must be
included as part of the General Assembly's consideration of Pennsylvania's
2008-09 budget."
Senate Bill 1385, sponsored by Senator Jake Corman (R-34), would
expand the cap on the Net Operating Loss provision of the Corporate Net Income
Tax to $5 million or 20 percent of taxable income. The NOL cap is currently set
at $3 million or 12.5 percent of taxable income. If enacted, the effective date
of the increase would be January 1, 2009.
The NOL expansion is projected to save Pennsylvania employers $21.5 million
in Fiscal Year 2008-09, $68.4 million in Fiscal Year 2009-10, and $78.2 million
in Fiscal Year 2010-11.
"One of the best ways for Pennsylvania to act to spur the state's economy is
to ease the financial burden shouldered by our employers and job creators,"
Senator Corman said. "Increasing the NOL cap would provide a real incentive for
business expansion and development, which in turn should provide more security
for existing jobs and make it more attractive for employers to add new
positions."
Senate Bill 1386, sponsored by Senator Bob Regola (R-39), would
increase the eligibility limits for special tax forgiveness for low-income
Pennsylvanians. The bill would increase claimant income eligibility limits by a
total of $2,000 over three years and the dependent allowance by $500 over the
same period.
Currently, a family of four with a combined income of less than $32,000 pays
no state income tax. Under SB 1386, families earning $37,000 or less would be
exempt. That increase is projected to provide $74.6 million annually in savings
to low-income working Pennsylvanians.
"There has not been an increase in the base amount since 1998 and the
dependent allowance has not been increased since 2003, the same year that
Governor Rendell imposed his 10 percent personal income tax increase," Senator
Regola said. "With rising energy and food costs, lower-income working families
are struggling to make ends meet. Raising the ceiling on tax forgiveness would
provide true tax relief to those Pennsylvanians who need it the most."
Senate Bill 1387, sponsored by Senator Pat Vance (R-31), would double
the amount that small businesses may deduct as Section 179 expenses on their
income tax filings. Section 179 of the federal Internal Revenue Code provides
for the deduction of all or part of the costs of machinery and equipment used
for business purposes.
SB 1387 would increase the maximum annual deduction to $50,000, which is
projected to provide $6.6 million in savings to Pennsylvania's small businesses.
"This will provide relief to those small businesses looking to make
substantial investments in equipment and machinery by providing for an increased
tax deduction," Senator Vance said. "That deduction may very well make a
difference in whether a company will expand its operations. Those purchases help
employers modernize and upgrade their facilities, while providing a boost to the
suppliers of the equipment as well."
Senate Bill 1388, sponsored by Senator John Eichelberger (R-30), would
amend Pennsylvania's Corporate Net Income Tax to expand the sales factor to 85
percent. Most corporations that conduct business in more than one state are
required to use a three-factor apportionment in order to apportion their
business income among the states where they have activity.
The three-factor apportionment formula consists of property, payroll and
sales factors. As things stand, Pennsylvania companies continue to be penalized
by increased taxes when they hire new employees or make capital investments in
the Commonwealth. Currently, the sales factor accounts for 70 percent of the
apportionment formula, and the property and payroll factors each account for 15
percent.
"Increasing the weight of the sales factor would help Pennsylvania companies
that are based here and employ our citizens as opposed to those companies that
just sell their products here," Senator Eichelberger said. "This change will
help to stimulate manufacturing jobs in Pennsylvania – and benefit companies who
make their products in Pennsylvania."
Contact:
Stacey Connors (Senator Browne)
(717) 787-1349
Don Houser (Senator Corman)
(717) 787-1377
Nathan Silcox (Senator Regola)
(717) 787-6063
Mark Ryan (Senator Vance)
(717) 787-8524
Austin O'Neill (Senator Eichelberger)
(717) 787-5490
Additional Information:
Tax Relief
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