Mike's Memo

Week of June 2, 2008

Gift Ban Bill Considered

The Senate State Government Committee recently held a hearing on a proposal by Committee Chairman, Senator Jeff Piccola, that would ban gifts, hospitality, travel, and lodging from registered lobbyists to members of the General Assembly, executive branch, and their respective staffs.  Similar rules have been established by Congress. A number of proposal weaknesses and unintended consequences were identified at the hearing, but I do plan to cosponsor the legislation once these issues are addressed.

The Committee also reviewed a proposed Real Property Disposition Plan of the Department of General Services relative to state-owned properties that the Commonwealth plans to sell.  This legislative review is required by the Disposition of Commonwealth Surplus Land Act.

Tax Stimulus Package Introduced

I am pleased to join with a number of my Senate colleagues in sponsoring a tax stimulus package that seeks to make Pennsylvania's economy more competitive.  These bills are in addition to the Senate Republican efforts to maintain the schedule of the phase out of the Capital Stock and Franchise Tax (the Governor has again proposed altering the schedule of this planned phase out).  Preserving the phase out would inject $40 Million into Pennsylvania’s economy in 2008 – 2009; it would save job creators an additional $40 Million in both 2009 – 2010 and 2010 – 2011.  Other bills in the tax stimulus package include:

• Senate Bill 1385 (Senator Corman):  expand the cap on the Net Operating Loss (NOL) to $5 Million or 12.5% of taxable income (Pennsylvania's current $3 Million cap is one of the most restrictive in the nation).  This change would inject $13.3 Million into Pennsylvania's economy in 2008 – 2009 and save job creators an additional $41.9 Million in 2009 – 2010 and $46.9 Million in 2010 – 2011
• Senate Bill 1386 (Senator Regola):  increase the eligibility limits for tax forgiveness for low-income Pennsylvanians.  This change would save working Pennsylvanians and seniors $74.6 Million annually
• Senate Bill 1387 (Senator Vance):  increase employers' maximum annual deduction for the costs of machinery and equipment.  This change would save small employers $6.6 Million
• Change the Sales Factor for Pennsylvania's Corporate Net Income (CNI) Tax (Senator Eichelberger):  increase the sales factor to 85% (currently at 70%).  This change helps employers who invest in Pennsylvania by moving CNI taxes away from property and payroll to sales

State Tax Comparisons

If you don't think that Pennsylvania needs a tax stimulus package, consider some of the state comparisons recently released by both The Taxpayers Network and The Tax Foundation:

• Population Growth (2000 – 2007):  Pennsylvania 1.62% (42nd in the nation)
• Corporate Net Income Tax rates:  Pennsylvania 9.99% (2nd highest)
• State Business Tax Climate Index:  Pennsylvania 5.15 (27th)
• Corporate Tax Index:  Pennsylvania 4.43 (42nd)
• Individual Income Tax Index:  Pennsylvania 5.13 (26th)

Save Our Homes Rally Held

On Monday I joined with more than 500 taxpayers and homeowners from across the state to rally around State Representative Sam Rohrer's School Property Tax Elimination Act, House Bill 1275.  This landmark legislation would eliminate the heavy burden of school property taxation, while transitioning Pennsylvania to a broader-based state Sales Tax at the same rate of 6 percent. Property Tax elimination is a central part of my Promise to Pennsylvania.

Senate Returns to Session

The State Senate returned to Session this week and will be in Session on a regular basis until the 2008 – 2009 state budget is passed – hopefully by the Constitutional-mandated deadline of June 30.  Scheduled session days are: June 2, 3, 4, 9, 10, 11, 16, 17, 18, 23, 24, 25, 26, 27, and 30.  Click here to watch the Senate when it is in Session.