PA Manufacturers' Association- Press Releases

Archives- June, 2007:

06/15/07

MULTIBILLION-DOLLAR BUSINESS TAX INCREASE APPROVED BY HOUSE FINANCE COMMITTEE

House Democrats gamble newly-won majority to advance Rendell's big-government agenda

After twelve years in the wilderness, the House Democrat caucus is prepared to gamble their tenuous, one-seat, minority-Speaker majority to advance Gov. Ed Rendell's agenda of tax increases and higher spending. In the House Finance Committee on Wednesday (June 13), Chairman David Levdansky (D-Allegheny) rammed through his legislation (House Bill 1186) to enact the business tax increase known as "mandatory unitary combined reporting", which would give the state Department of Revenue extraterritorial powers, eliminate the predictability of tax compliance, and impose many hundreds of millions of dollars - possibly billions - of taxes on Pennsylvania employers for activities outside the commonwealth.

With the honorable exception of freshman Rep. Rick Taylor (D-Montgomery), Levdansky led the Democrat members of his committee - including six freshmen - in casting a series of damaging votes for business tax increases and against multiple pro-growth amendments to improve the bill. The House Democrat leadership has exposed these members to great political peril, even though "mandatory unitary combined reporting" appears to be a dead-letter in the state Senate with virtually no chance of being included in the final budget.

Voting FOR the tax increase and AGAINST all positive amendments were:

Freshman Lisa Bennington (D-Allegheny), Florindo Fabrizio (D-Erie), Dan Frankel (D-Allegheny), freshman John Galloway (D-Bucks), freshman Jaret Gibbons (D-Lawrence), freshman David Kessler (D-Berks), freshman William Kortz (D-Allegheny), David Levdansky (D-Allegheny), Jennifer Mann (D-Lehigh), Chris Sainato (D-Beaver), Dante Santoni (D-Berks), freshman Tim Seip (D-Schuylkill), Josh Shapiro (D-Montgomery), Mike Sturla (D-Lancaster), and Rosita Youngblood (D-Philadelphia).

Voting AGAINST the tax increase and FOR all positive amendments were:

Freshman John Bear (R-Lancaster), Scott Boyd (R-Lancaster), Steve Cappelli (R-Lycoming), Gordon Denlinger (R-Lancaster), Brian Ellis (R-Butler), Adam Harris (R-Juniata), Daryl Metcalfe (R-Butler), Steve Nickol (R-Adams), freshman Michael Peifer (R-Monroe), Thomas Quigley (R-Montgomery), Dave Reed (R-Indiana), Mario Scavello (R-Monroe), freshman Rick Taylor (D-Montgomery), and freshman Randy Vulakovich (R-Allegheny).

Members of the committee who voted for the tax increase did so contrary to the warnings of the business community, including the CompetePA coalition of which PMA is a member. All of the coalition members made clear that "mandatory unitary combined reporting" would be a crippling blow to Pennsylvania's economic competitiveness, driving away investment, increasing the tax burden, and adding new litigation and compliance costs on Pennsylvania's job-creators.

Efforts to protect employers from a tax hit greater than the highly questionable estimate of $560 million were voted down by the same 15-14 roll call shown above, contrary to the repeated assurances of Gov. Rendell and Revenue Secretary Tom Wolfe that the Commonwealth is not seeking a tax-collection windfall.

"This vote was a declaration of war against Pennsylvania's productive sector and we will respond accordingly" said PMA Executive Director David N. Taylor. "It will be very interesting to see if the House Democrat leadership will be able to convince the rest of their rank-and-file to follow them off the cliff. Pennsylvania employers already pay more than $22 billion per year in state and local taxes, over 45 percent of all taxes paid. State corporation taxes brought in $200 million beyond what was needed to balance last year's budget and are on track to exceed this year's estimates by a similar amount. At a time when Pennsylvania's economic growth is 25 percent below the national average, talk of higher business taxes is insane.

"Make no mistake, a House floor battle on this issue will force every member to go on record either FOR or AGAINST a multibillion-dollar business tax increase to pay for bigger government," Taylor said. "As they say in boxing, you can run but you can't hide."