House Finance Committee Advances Business Legislation

During a meeting in the beginning of January, the House Finance Committee advanced a package of bills named, the Small Business Tax Fairness Package, which offers tax breaks for small business.
 
Rep. Joshua Kail, the prime sponsor of one of the bills, stated, "Something that I have heard from the people coming to my area is that Pennsylvania's Tax Code is really a problem."

​He noted, "really for me, this is about jobs, its about growth, its about keeping people in Pennsylvania." 
 
However, Minority Chairman Patty Kim remarked, "we are not the same as the federal government... they have the ability to deficit spend while we, by law, have to balance an annual budget." She noted, "there's an estimate, about $500 million, where this will take out of our budget" $500 million. She said, "I think it's responsible for us to realize, you take something out, you put it back in." Rep Kim opposed HB1960, HB105 and HB333, referring to the state Revenue Department’s opposition to the tax bills before the committee as costing a potential $500 million state revenue loss if enacted.
 

• HB 1960 – This legislation allows businesses paying the state Corporate Net Income Tax to gradually increase the corporate net loss deduction limitation. It would increase the net loss deduction from the current 40 percent limit by 10 percent annually over four years until it reaches an 80 percent. The bill sponsor, Rep. Joshua Kail, R-Beaver, said it would align Pennsylvania’s law with federal tax law and make Pennsylvania more attractive to investment.

 

• HB 105 – This legislation allows businesses to obtain a state tax deferral when exchanging certain property for similar property. The intent of the bill is to allow for like-kind exchanges in Pennsylvania, mirroring Internal Revenue Code Section 1031 provisions. The bill applies to tax years beginning after December 31, 2020, and is effective immediately. - The bill was reported as committed along a party-line vote with Rep. Napoleon Nelson (D-Montgomery) joining all Republicans in the affirmative.

 

• HB 333 – This bill allows businesses to deduct the full purchase price of qualifying machinery and equipment purchased up to $1 million in the years following 2017. This type of deduction allows a business to reduce the value of an asset over its useful life. HB333 would align Pennsylvania with a federal tax cut law enacted in 2017, said Nelson. Rep. Eric Nelson, the prime sponsor of the bill, explained, "Our goal is to be able to level the playing field, create consistency across the Tax Code, and allow Pennsylvania businesses to reinvest if they want."

 

• HB324 - Extends the ability of Philadelphia businesses to carry-forward net operating losses for tax purposes. Rep. Martina White (R-Philadelphia), the prime sponsor of the bill, said, "This is one of the most important tools that Philadelphia uses to retain business and lure new businesses into the city." She continued, "I think given the nature of the pandemic and what we faced over this past year or so we could really use this piece of legislation."