House Co-Sponsorship Memoranda

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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted:	May 6, 2015 01:14 PM
From:	Representative Jake Wheatley, Jr.
To:	All House members
Subject:	Omnibus Revenue Package for the 2015-2016 Budget

In the near future, I plan to introduce the omnibus revenue package for the 2015-2016 budget, which would implement the tax reform initiatives as proposed by Governor Tom Wolf.

As you are all well-aware, there are many challenges Pennsylvania faces that must be addressed, including: a significant budget deficit, sluggish job growth, bond ratings that have been in decline, and many struggling schools throughout the Commonwealth. However, Pennsylvania will not improve until we rebuild our middle class. We cannot do the same things over and over and hope for different results.

In order to achieve a better future for the Commonwealth, this proposal cuts taxes to spur the growth of jobs that pay and support a family, addresses our outdated corporate tax structure and promotes an overall tax system that is equitable and fair. In addition, the legislation provides the necessary means to eliminate the structural deficit and end our Commonwealth’s seemingly endless year-after-year fiscal crises.

In particular, this legislation:

Initially reduces the Corporate Net Income Tax (CNIT) from 9.99 percent to 5.99 percent, which would improve the Commonwealth’s ranking from second-highest to eighth-lowest while bringing Pennsylvania’s tax rate below the national average and below all of our neighboring states. In addition, within two years, the tax rate would drop to a final rate of 4.99 percent, which would rank the fourth-lowest among states with such a tax;
Maintains the full phase-out of the Capital Stock and Franchise Tax;
Finally closes the “Delaware Loophole” by enacting mandatory combined reporting. Pennsylvania would join 28 other states that require combined reporting, which treats affiliated corporations engaged in a unitary business as a single group for purposes of determining taxable income;
Updates the cap on the CNIT net operating loss deduction from $5 million or 30 percent of income to $3 million or 12.5 percent of income. This change would impact a small number of corporations, but allows the CNIT rate to be reduced for all corporations subject to the tax;
Increases the eligibility for the Personal Income Tax special poverty exemption to 150 percent of the poverty threshold for a family of four (currently $32,000 and would increase to $36,400);
Increases the Bank Shares Tax to 1.25 percent, retroactive to January 1, 2014, and clarifies the goodwill deduction;
Increases the Personal Income Tax to 3.7 percent, which would be the third-lowest rate of all states with an income tax. This is significantly lower than all of our neighboring states;
Expands and increases the sales and use tax to be more consistent with the modern economy and the rest of the nation. Pennsylvania’s sales tax rate would increase by 0.6 percent to a total rate of 6.6 percent while exemptions for food, clothing and prescription drugs would remain in place;
Increases the Cigarette Tax by $1.00 per pack; and
Imposes a tax on all other tobacco products including e-cigarettes.

Please join me in co-sponsoring this important legislation that rebuilds the middle class in Pennsylvania.

House Co-Sponsorship Memoranda

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House of Representatives Session of 2015 - 2016 Regular Session

MEMORANDUM

House of Representatives
Session of 2015 - 2016 Regular Session