Gov. Tom Corbett's $28.4 billion general fund spending plan for 2013-14 continues to reshape Pennsylvania's image as a business-friendly state.
Here are some highlights:
• The capital stock and franchise tax would finally be eliminated. The tax is on track for elimination in January 2014.
• The cap on net operating losses would increase to $5 million from $3 million. The deduction cap would increase to $4 million in 2014 and $5 million in 2015. Technology, bioscience, research and large manufacturers stand to benefit because this tax break allows job creators to smooth large early losses they incur from current to future tax years.
• Pennsylvania's corporate net income tax would be reduced over 10 years, beginning in 2015, from 9.99 percent to 6.99 percent.
• The corporate loans tax would be repealed. The tax is paid on nonbank business loans made by Pennsylvania residents and companies with treasurers based in the state. The tax rate is 4 mills; the amount taxed depends on the loan interest rate.
• Level funding for the research and development tax credit ($55 million), the Ben Franklin Technology Partnership ($14.5 million) and the Life Sciences Greenhouses initiative ($3 million).
High budget praise from business leaders
David Black, president and CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corp.: He called it the "best overall proposal" so far from Gov. Tom Corbett. "All of his tax initiatives will be well-received by the business community," he said, referring to proposals such as the elimination of the capital stock and franchise tax and a long-range plan to lower the corporate net income tax. "We need to see more detail, but (we) like the sounds of a proposed deduction for business startup costs, and tax simplification is always appreciated." Black also said transportation for commerce and public safety are "too important to be ignored," referring to the governor's funding proposal.
Christopher Molineaux, president of Pennsylvania Bio: He was pleased about level funding for several programs that affect the life sciences industry, including the state's research and development tax credit. "The private market is not showing up. Venture capital is not there for early-stage companies," he said. "The state needs to help startup companies." Molineaux said he hopes to see additional investment in the future, citing a goal of seeing a $100 million R&D tax credit in the budget. It currently is $55 million. That type of credit creates jobs and expands companies, he said, which leads to new products and treatments.
David Patti, president and CEO of the Pennsylvania Business Council: He said "everybody wins" in this budget proposal, citing an ongoing focus to keep spending under control. Fiscal discipline is a big win, he said. The proposed changes to the tax structure "say a lot for economic development," Patti said. He was reluctant to call it Corbett's best budget, saying it is different than his two previous plans. "Circumstances are different," he said. Budget debate is a lengthy process and this is a "really good" starting point, Patti said.