In an effort they say will encourage small-business job creation, members of the state House today introduced legislation to simplify the state tax code.
State Reps. George Dunbar, R-Westmoreland; Stephen Bloom, R-Cumberland; and Seth Grove, R-York, said the bills seek to reform tax treatment for small businesses in three critical scenarios: Section 179 expense deductions, like-kind exchanges and net operating loss carry forwards. Together, the measures make up the “Small Business Tax Fairness Package,” the trio said in a news release.
Dunbar’s bill seeks to encourage modernization and small-business expansion by accelerating depreciation.
“Simply put, House Bill 2400 would allow a small-business owner to deduct a business expense from his or her income sooner rather than later, making more money readily available to invest in their day-to-day operations upfront,” said Dunbar, a certified public accountant, businessman and former Penn Township commissioner. “Understand this increase in the Section 179 deduction for smaller employers is not a tax credit, but allows a tax deduction earlier in the useful life of depreciable assets. Best of all, allowing for this increased tax fairness for smaller business owners will result in absolutely ‘no cost’ in terms of revenue for the Commonwealth."
The two additional measures aim to encourage job creation and economic growth by increasing uniformity between state and federal tax codes.
Grove authored House Bill 2401, which would allow a small business hit with operating losses to offset those losses against income in the same manner as currently provided under the federal tax code.
“Small businesses do not have the access to capital larger companies have,” Grove said. “This legislation would level the playing field and would allow small businesses to use a wider array of tax strategies to gain greater control over their financial position.”
Bloom’s House Bill 2402 would enable a business to sell its building or equipment and immediately purchase another property or buy more modern technology without a tax penalty. Pennsylvania is the only state that currently taxes these “like-kind exchanges.”
“Bringing Pennsylvania’s tax code in line with long-standing federal provisions will facilitate efficient investment in the job-creating assets businesses need to remain competitive,” Bloom explained.
The National Federation of Independent Business, which represents 15,000 small businesses in Pennsylvania, also expressed support for the Small Business Tax Fairness package and applauded the lawmakers for their efforts to reduce the fiscal burden on Pennsylvania entrepreneurs.
“If taxes are simplified, there is less paperwork and the need for tax experts is reduced; therefore, it will allow small business owners to focus instead on growing their companies,” said NFIB Executive State Director Kevin Shivers. “That’s good for the Pennsylvania economy and ultimately for job growth.”
All three bills have been referred to the House Finance Committee for consideration. Identical legislation is expected to be introduced in the state Senate.