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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: January 31, 2018 11:14 AM
From: Senator Patrick M. Browne
To: All Senate members
Subject: Legislation to Conform the PIT to the new Federal Opportunity Zones Program
The Federal Tax Cuts and Jobs Act makes major changes to federal individual and corporate income taxes. In the near future, I plan to introduce legislation that will conform Pennsylvania’s personal income tax to the new Federal Opportunity Zones Program, which was enacted recently as part of the federal tax reform package.

Under the Federal Opportunity Zones Program, the Governor of each state is authorized to designate a certain number of Opportunity Zones into which private investment can flow through Opportunity Funds. The program uses low-income community census tracts as the basis for determining areas of eligibility throughout the state. Investors in the Opportunity Funds are eligible to receive federal tax deferrals/eliminations and other tax benefits on unrealized capital gains associated with these investments. In turn, Opportunity Funds are authorized to invest in Opportunity Zone Property such as stock in a domestic corporation, capital or profits interest in a domestic partnership, and tangible property used in a trade or business of the Opportunity Fund that substantially improves the property located in designated Opportunity Zones.

The Opportunity Zones Program is an inventive approach to unleashing private investment that will support low-income urban and rural communities throughout Pennsylvania. I strongly believe that the Commonwealth should enhance the federal program by providing similar tax benefits at the state level in order to boost the attractiveness of the program and to foster even greater economic growth and opportunity in our low-income communities. The combined effect of a federal/state collaboration could set us apart from how the program might be utilized in other states, thereby allowing Pennsylvania to become a leader among states in attracting Opportunity Fund investments.

Please join me in cosponsoring this important legislation that will ensure Pennsylvania maximizes the impact of this innovative new federal program. By conforming Pennsylvania’s personal income tax to the federal rules that allow for the tax deferral/elimination of only those capital gains associated with the Opportunity Zones Program, we can utilize our Tax Code to direct private investment where it is needed most while being fiscally responsible at the same time.

Introduced as SB1197