PMA Bulletin -- November 6, 2013

PA Improves from “D” to “A-” Under Corbett’s Leadership on Tax Reform

The commitment by Governor Corbett and the Pennsylvania General Assembly to improve the commonwealth’s business environment is getting national attention. Words of praise for Pennsylvania resonated at the 44th Annual Meeting of the Council on State Taxation (COST), held in Phoenix, Arizona.

“COST commends the leadership and hard work of Governor Corbett and his team for taking courageous and measurable steps to vastly improve state tax administration in Pennsylvania.  Since 2010, Pennsylvania has moved from an overall grade of ‘D’ on our last state tax Administrative Scorecard, to a grade of ‘A-’ in the soon-to-be released 2013 updated report.  By adopting an independent tax dispute forum, embracing more transparent administrative processes, establishing an even-handed statute of limitations for taxpayer disputes, and a few other important reforms, Pennsylvania is being heralded in the business taxpayer community and by COST members as the most improved state for fair, effective and customer-focused tax administration,”  said Douglas L. Lindholm, President & Executive Director, COST.

One of the ways Governor Corbett has been dedicated to being the “more jobs governor” is by advancing reforms to improve Pennsylvania’s overall business tax environment. The results are more than promising: Pennsylvania has added over 140,000 private sector jobs since Governor Corbett took office. Additionally, the commonwealth has recovered over 70 percent of the jobs lost at the height of the recession while many other states are fortunate to have regained 30 or 40 percent.

PMA's Director of Government Affairs, Carl A. Marrara, attended COST’s 44th Annual Conference, where he spoke on a panel that included Gene Burner of the Maryland Association of Manufacturers and Ken Pokalsky from the Business Council of New York State.

"While my colleagues from Maryland and New York were not able to share much positive news regarding their governments’ efforts, we have a great story to tell here in PA," Marrara said. "The move to 100 percent sales factor for CNI, our commitment to reduce and eliminate onerous and redundant taxes, and the positive trajectory of our tax policy is putting Pennsylvania back on many selection surveys. That's much more than the others can say." He maintained though, the commitment to reduce the burdensome 9.99 corporate net income (CNI) tax rate remains essential in attracting new business investments.

"Our biggest downfall was the lack of action on pension reform which 'necessitated' the extension of the Capital Stock and Franchise Tax (CSFT)," Marrara said. "The many high-level corporations that were in attendance here know about that tax and they were disappointed that it will be extended beyond December 31 of this year."

Also speaking at the conference was Jonathan Williams of the American Legislative Exchange Council, who is the coauthor of “Rich States, Poor States”. He said, "As capital becomes increasingly mobile, states and localities are quickly realizing that competitiveness is essential for future economic development and job growth. While Pennsylvania's policy makers have made some important strides to enhance competitiveness in the past few years, sadly, the capital stock and franchise tax remains a job killer.”

Marrara explained to the audience that as the rate lowered from year-to-year since 2002, the amount of tax revenue stayed fairly stagnant. Therefore, the tax being eliminated would only make Pennsylvania more competitive, spur business reinvestment, and accelerate economic growth while recouping that revenue through CNI, income, and other business taxes.

COST is the premier state tax organization representing taxpayers.  COST is a nonprofit trade association consisting of more than 600 multistate corporations engaged in interstate and international business.  COST's objective is to preserve and promote equitable and nondiscriminatory state and local taxation of multijurisdictional business entities.

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