Revenue Secretary meets with PAR leaders

Pennsylvania Revenue Secretary Dan Meuser met with a group of Realtors® this week at PAR’s office to discuss the proposed 2013-14 state budget and received input from members about various business proposals.

Meuser noted that Gov. Tom Corbett has three primary goals in preparing the budget: create a stable and reliable financial future; a job for every Pennsylvanian who wants one; and a trained and educated workforce to fill the jobs available.

Corbett announced his proposed 2013-2014 General Fund budget last week. The $28.4 billion budget includes a 2.4 percent increase from the current budget with no tax increases.

According to Meuser, the governor’s proposed efforts to improve the business environment in the Commonwealth include:

• Eliminating the capital stock/foreign franchise tax
• Reducing the corporate net income tax
• Increasing the cap on net operating loss deductions
• Providing for like-kind exchanges and start-up business deductions
• Repealing  the corporate loans tax
• Implementing sales factor market sourcing
• Changing tax codes to level the playing field and provide for fair and equitable tax policy
• Repealing nuisance taxes and obsolete taxation and administrative provisions.

Meuser said, “The estimated impact is 18,000 more jobs over the next 10 years; an increase of $2.8 billion in state GDP increases by 2030; and personal income growth by $1.9 billion by 2030. Overall, it will provide more than $1 billion in new tax revenue through 2030.”

Of special interest to commercial Realtors® who attended the meeting was the proposal to eliminate the Capital Stock and Franchise Tax (CSFT). With this budget, Pennsylvania will no longer be the only state in the country to tax both business income and business assets. The completion of the phase-out of the CSFT eliminates this business inhibitor.

Realtor® Larry Hatter of the Greater Harrisburg Association of Realtors® commended the secretary and governor for this change saying that the CSFT had been a major concern as he handled commercial transactions. “This is a change that was needed for a long time to help businesses,” Hatter said.

The governor’s budget proposal also creates Like-Kind Exchanges, similar to the federal 1031. This change would align Pennsylvania with federal rules, effective in fiscal year 2016-17, allowing for like-kind exchange of property without facing a negative tax consequence.

In addition, the state would eliminate the 89/11 Realty Transfer Tax loophole. The Department of Revenue projects generated revenue from this change to be $55 million over the next five years.