Republicans Join Fight for New Pennsylvania Corporate Tax Laws

Jan 26, 2012

Several Republicans in the Pennsylvania House have thrown their support behind a bill that would lower corporate taxes while at the same time closing the so-called Delaware loophole. The move seriously bolsters the efforts of Democrats who have been fighting to get the measure passed.

"We need to lower the corporate net income tax rate," said House Majority Leader Mike Turzai (R-Allegheny County). "We have the second highest [rate] in the nation. We also need to continue the phase-out of the capital stock tax. It's a tax on value. It's got to go."

The bill lowers Pennsylvania's corporate net income tax from 9.9 percent to 6.9 percent over six years. The rate would slip by in 0.5 percent each year starting in 2014.

Turzai said businesses will not start up in the state or move here because of the high tax rates.

"At the end of the day the net result is going to be job creation," said Rep. Doyle Heffley (R-Carbon County). Heffley said he likes that this has become a bipartisan approach.

The bill would add an "expense add-back provision" to the tax code. That would end the practice used by some companies of shifting profits to a Delaware corporation to avoid taxes. It has been estimated that closing the Delaware loophole could add at least $30 million to $40 million to state revenue, which would help offset the losses from reducing the other taxes.