As we work to help regional technology companies succeed, the Pittsburgh Technology Council remains committed to creating a positive, competitive business climate in southwestern Pennsylvania. Towards that end, the Council’s public policy committee has targeted business tax reform as a key focus area for our government relations efforts. As a threshold goal, it is our intention to help move Pennsylvania from a comparatively high business tax state to one that is more competitively positioned to support the growth and success of the emerging innovation economy.
To promote a competitive business climate for southwestern Pennsylvania’s technology companies, the Council seeks to:
Reform Pennsylvania’s Corporate Net Income Tax
In 1991, faced with a massive budget deficit, Pennsylvania increased its corporate net income (CNI) tax by more than 50 percent. Seventeen years later, Pennsylvania’s CNI rate stands as the second highest rate in the nation and our state’s economic growth rate has consistently lagged national growth trends.
Increase Pennsylvania’s R&D Tax Credit
Since 2003, when Pennsylvania enacted legislation that allowed small businesses to sell unused R&D tax credits to other Pennsylvania taxpayers, demand for R&D tax credits has skyrocketed. In 2007, the state received qualified applications for more than $95 million in credits, despite facing a $40 million statutory cap on the program.
Eliminate the Capital Stock and Franchise Tax (CSFT)
Pennsylvania is one of the few states in the nation that levies business taxes on both capital worth and corporate net income. For this reason, existing law provides for the complete elimination of the CSFT by the end of 2011. However, at least one proposal before the General Assembly would provide for a slowed phase-out in 2009, resulting in at least a $40 million tax increase on Pennsylvania’s employers. The Council will oppose this proposal and will aggressively defend the existing phase-out plan for this out-dated tax.