Tuesday, June 30, 2009

Capital Stock Tax Back in Limelight

The business community is taking issue with one of Governor Ed Rendell's tax proposals, saying it's a blindside that will hurt small companies across the commonwealth. As a way of helping fill Pennsylvania's budget gap, Rendell wants to freeze a long-planned reduction in the Capital Stock and Franchise Tax, which is due to expire in 2011. This year, companies are paying a 1.89% levy on every thousand dollars of assets. The governor wants to retroactively bump that up to 2.89%. President and CEO of the Pennsylvania Business Council David Patt has a problem with that. “For firms that have already legally complied with the tax law, and fully paid 100 percent of what they were supposed to pay, we would now be saying, 'oh, sorry. We took the tax rate up. You're going to have to pay more money for the last six months.’” The tax is scheduled to gradually decrease for the next few years, but Rendell wants to keep the rate at 2.89 percent through 2011, and phase it out in 2014. The phase out of the tax has been delayed and accelerated several ties over the last several years. The Governor says the additional revenue will help see Pennsylvania through the current recession.

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