PA Chamber: Combined Reporting Would Hinder PA Economic Recovery

Wednesday, June 3, 2009

PA Chamber: combined reporting would hinder Pa.’s economic recovery

HARRISBURG, PA – The Pennsylvania Chamber of Business and Industry today said a Senate Democratic plan to implement mandatory unitary combined reporting would hinder economic recovery and do little to close the state’s budget deficit.

"At a time when Pennsylvania is desperate for revenue, Senate Democrats are pushing a piece of legislation that experience shows may not result in increased revenue for the state," said Gene Barr, PA Chamber vice president of government and public affairs.

A Council on State Taxation study determined that combined reporting has an uncertain impact on a state’s revenues, making it very difficult to predict the revenue effect of adopting the reporting requirement. A Tennessee study found no statistical evidence that states enforcing combined reporting collect more tax revenues than states that employ separate accounting.

"Combined reporting is a complex issue," Barr said. "What should be easy to understand is that it won’t solve the Commonwealth’s budget woes, but it will put up a huge red flag for business development."

Barr said decisions must be made that will help Pennsylvania recover from the recession – such as eliminating the restrictive cap on net operating losses and adopting a single sales factor apportionment formula for the Corporate Net Income tax – not take actions that will make recovery more difficult.

While the business community welcomes any conversation about lowering Pennsylvania’s 9.99 percent CNI – the highest in the nation — Barr said the proposed ‘middle-of-the-road’ 7.99 percent rate by 2013-14 is not what the Rendell administration’s Business Tax Commission recommended when it was charged with determining what it would take to enact combined reporting. The commission recommended reducing the CNI to between 6 percent and 7 percent under that scenario.

Barr said lawmakers also continue to mislead the public about Pennsylvania corporations’ tax liability.



"Corporations that have no tax liability include companies that exist simply for liability protection, dissolved corporations and companies that incurred a loss and therefore have no income," Barr stated. "What’s more, other states, such as Utah, that have implemented combined reporting have an almost identical level of corporate taxpayers with only zero or minimal payments."

Barr said the state Revenue Department already has the ability to collect taxes from companies they believe are not paying their fair share, and in fact, has done so in the past.

"Enacting a proposal that economic studies and modeling have shown will negatively impact the economy, and that will not resolve the budget deficit at a time of recession is the wrong direction for Pennsylvania, its residents and its job creators," Barr stressed.


The Pennsylvania Chamber of Business and Industry is the state’s largest broad-based business advocacy association, representing businesses crossing all industry sectors and of all sizes. The PA Chamber is The Statewide Voice of Business.