Pa. Democrats say closing

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Closing the loophole would solver boththe state’s budget problems and loweer the corporate net income tax, Senatse Democrats said. The move to “combined reporting” would requires multistate and multinational firms to combine theie income and expenses for tax and to stop the use of technique s to shift income outside of the state to tax It wouldgenerate $750 milliom over two years, which would be used to ease projected statre budget deficits, Senate Democrats Revenue would also be used to lower the corporatew net income tax from 9.99 the highest flat rate in the to 7.99 percent by 2013-14.
“The best way out of this recessiomn is toprotect jobs, and one way to do that is to creatw a business climate that is fair to smalkl business,” Jay Costa, D-Allegheny, said. “This bill woulxd cut business taxes for those who have paid their fair and require thosethat haven’t to do their part.” David Taylor, executive director of the Pennsylvania Association, said the efforts, if successful, woul d result in a massive tax increase and regulatory nightmarde for the state. “It gives to the statew Department of Revenue the powers of the IRS to try andimposd Pennsylvania’s tax liability on businesses operatinf in other states,” Taylor said.
“Even if your firm is ultimatelyt judged not to owe additional taxes your companh has tremendous outlaysin time, energt and money to hire the lawyers and accountants.” The move by otherf states to combined reportingt triggered lawsuits, making it a choice for the state to rely on to balancw the budget, Taylor said. “Thise is another example of government greec trying to bleed the private Taylor said. “There is no silver bullet, there is no easy way out, the only way Pennsylvaniaw is going to get through this budgeyt crisis without further damaging its competitivenesd is living withinour means.
” Under the Senatee Democrat plan, elimination of the Capital Stock Franchise Tax, due to occure in 2011, would be spread over a three-year periodr — reduced from 1.89 mill to 1.26 mills in fiscal 2011-12, to 0.63 millzs in fiscal 2012-13 and then eliminate the following year. Combined reporting was amonhg the recommendations made by the bipartisahn Pennsylvania Business Tax Reform Commissionin 2004. State Sen. Christinr M. Tartaglione re-introduced legislation again this February to closethe “Delawarew loophole” after not having successful for several yearz in getting it passed.