Business Tax Reform Upheld By Court

Member Group : News Releases

Representative Mike Turzai
Speaker of the House
28th District
Pennsylvania House of Representatives
Media Contact: Stephen Miskin [email protected]
717.772.9943 (office), 717.756.3936 (cell) / /

September 26, 2016

Integrity of Pro-Jobs "Net Operating Loss" Statute Defended by House Republican Caucus
At the possible expense of others, Nextel seeks to change the law through the courts for its own benefit; House Republicans disagree

HARRISBURG – The House Republican Caucus won a victory last Friday on the constitutionality of a business tax reform law when the Pennsylvania Supreme Court allowed the caucus’ friend of the court brief to be filed, said House Speaker Mike Turzai (R-Allegheny) and Majority Leader Dave Reed (R-Indiana).

"The NOL law was established 22 years ago to help promote business investment, from the small start-ups to manufacturers in Pennsylvania – and those investments equal new jobs and careers," Turzai said. "Each time we expanded the NOL law, it has received widespread, bipartisan support in the General Assembly."

On Sept. 23, the Supreme Court ruled, per curiam, that the House Republican Caucus’ application to file an amicus brief defending the constitutionality of the Net Operating Loss Carryforward (NOL) would be accepted. The NOL statute is the subject of an appeal in Nextel Communications of the Mid-Atlantic Inc. v. Commonwealth.

Pursuant to the court’s order, the caucus is filing its brief arguing that the NOL provision is constitutional because the Legislature, following past practices in the Tax Reform Code, appropriately allowed businesses to deduct prior years’ losses from current year taxable income. All businesses – large and small – benefit from this law, while the Commonwealth’s ability to collect necessary revenue is preserved. A copy of the caucus’ brief is attached to this release.

The NOL provisions in the Tax Reform Code were originally established in 1980. Ten years later, the NOL was repealed only to be re-established in 1994. Over the 22 years that followed, and through four different gubernatorial administrations, the General Assembly has expanded the ability of businesses to recoup losses over time.

Nextel’s suit seeks to expand its benefit by revising the law through the courts. Tax policy, especially policy of this magnitude, should be decided by the legislature and the governor.

"We have carefully crafted this legislation to improve our jobs climate while at the same time preserving revenue for the Commonwealth. The integrity of our work should be upheld," Reed said.

In defending the statute, the Republican Caucus argues strongly that, if changes to this vitally important program are to be made, such changes are more appropriately made through the constitutionally prescribed legislative process, not through the judiciary.