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September 25, 2012 | By | Posted in Legislature

Income tax jobs incentive could go to even more businesses

Companies new to Pennsylvania could keep 95 percent of their employees personal income tax as an incentive to relocate inside the commonwealth, according to proposed legislation.

By Melissa Daniels | PA Independent

HARRISBURG — A day after a lawmaker proposed a sweet deal for out-of-state business thinking about locating in the state, legislators may be ready to expand the program.

The Promoting Employment Across Pennsylvania (PEP) proposal would let qualified companies that are moving to Pennsylvania retain 95 percent of personal income taxes that their employees pay. The commonwealth would collect the remaining five percent.

The House Finance Committee moved the legislation, House Bill 2626, on Tuesday, and it was introduced in the House.

But some representatives are uneasy about what the bill means for employees.

MIRABITO: Concerned about incentive transparency.

State Rep. Rick Mirabito, D-Lycoming, was one of two representatives to vote against the bill in committee.

“I just think that people have a right to know that, in essence, they are making a direct contribution to their employer to keep his business going,” Mirabito said. “Nothing wrong with it if that’s what we think should be done, but people have a right to know. They earned it. They literally earned it.”

Pennsylvania has a flat personal income tax rate of 3.07 percent of a person’s gross wages.

State Rep. Madeleine Dean, D-Montgomery, said in addition to transparency, she has concerns about adding to the state’s incentive “tool box,” as it’s often called.

“I’m really worried about the layers and layers of incentive programs, what it costs to put them in place and to follow and to monitor and administer,” she said.

BENNINGHOFF: Sponsoring legislation that would let certain businesses new to Pennsylvania retain employees’ personal income tax dollars.

Bill sponsor and House Majority Committee Chairman state Rep. Kerry Benninghoff, R-Centre, said PEP is a way to get new businesses into Pennsylvania, in the face of the high unemployment numbers and a desire to aggressively recruit business.

“This is about whether or not Pennsylvania is on the short list,” he said.

Benninghoff, who proposed the bill on Monday, said he does not think the proposal is unfair to those employees whose taxes go directly to the state.

He said many constituents get frustrated seeing “government hand out big cardboard checks” for economic development projects that don’t always pan out. And already, payroll taxes handed over to the state may fund programs that the taxpayer doesn’t approve of, he said.

Under PEP, the company has the opportunity to reinvest that tax money locally, he said. And it doesn’t cost “one red cent” from the state.

“I think the average taxpayer would prefer that especially because they know that the money is staying locally, staying in their own communities and helping to provide jobs for them and their own families,” he said.

But if the legislation makes it to a vote in the week of session days the House of Representatives has left this year, it could be expanded to apply to businesses already operating in Pennsylvania.

BOYD: Will offer amendment to expand PEP proposal.

State Rep. Scott Boyd, R-Lancaster, said he will offer a floor amendment that would expand the program to existing companies creating new jobs, providing they meet the proposal’s criteria.

It wouldn’t mean lost revenue for the state, he said.

“It’s not lost dollars, it’s not receiving new dollars,” Boyd said, adding that new jobs means tax revenue in other places. “Chances are, they’re going to be paying property taxes, sales taxes and they’re actually going to be paying federal taxes too, so it will help on that standpoint.”

Benninghoff said he wasn’t against the amendment, if it was the will of the House majority.

Should the House vote in favor of the bill, it’s unclear whether it will get moved through the Senate before the end of the session, which consists of six scheduled voting days.

Senate Majority Leader Dominic Pileggi, R-Delaware, said he has not looked at the bill, and could not offer an opinion on it.

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Melissa Daniels is a reporter for PA Independent. She can be reached at 717-350-0962 or Melissa@PAIndependent.com

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