PA Manufacturers' Association- Press Releases

Archives- February, 2008:

02/05/08

Stealth Business Tax Hike in Rendell Budget

Amid flurry of spending and borrowing,
Rendell seeks delay of CSFT relief

Although he did not mention it in his address to the General Assembly, Gov. Ed Rendell’s FY 2008-2009 General Fund budget includes an increase in the Capital Stock and Franchise Tax for 2009. The CSFT is a tax on business assets, which employers pay every year regardless of their earnings or losses.

Under current law, the CSFT rate fell to 2.89 mills on January 1, 2008 and will drop to 1.89 mills on January 1, 2009. Under Rendell’s budget plan, the CSFT rate for 2009 would be 2.49 mills. The phase-out of the CSFT was begun in 2000 by Gov. Tom Ridge but was delayed twice, first by Gov. Mark Schweiker in 2002 and again by Rendell in 2003. Under the original Ridge phase-out plan, the CSFT would have dropped to 0.49 mills on January 1, 2008 and expired on January 1, 2009.

“Governor Ridge was correct in 2000 when he described the CSFT as a stupid, job-killing tax and he was correct in putting it on a path to extinction,” said David N. Taylor, Executive Director of the Pennsylvania Manufacturers’ Association. “Most states have either a business income tax or a business assets tax – not both. Pennsylvania’s one-two punch of CNI-plus-CSFT is a major competitive disadvantage, which should make eliminating the CSFT a critical priority. Gov. Rendell’s attempt to lay hands on the CSFT phase-out shows he’s not serious about Pennsylvania’s economic competitiveness.”

Founded in 1909, the Pennsylvania Manufacturers’ Association is a statewide trade organization representing manufacturers in the state’s public policy process. Learn more about the association and its work at www.pamanufacturers.org.