On Wednesday, DePasquale joined state Rep. Dave Reed, R-Indiana County, to unveil House Bill 2150, a proposal to close what is known as the “Delaware loophole,” by which out-of-state retailers and corporations avoid Pennsylvania’s corporate net income tax merely by establishing a holding company with nothing more than a post office box in Delaware.
“If your presence is in Pennsylvania, then you have to go by Pennsylvania rules,” DePasquale said. “This (bill) is not a tax decrease or a tax increase. In the long term, it makes our state much more business-competitive.”
The bill would affect only businesses that are taking advantage of the loophole for the sole purpose of tax avoidance in Pennsylvania, he said. The bill also would dedicate the revenue captured through closing the loophole to reduce Pennsylvania’s overall business tax burden, he said.
Closing the loophole will enable the state to gradually reduce the corporate net tax from 9.99 to 6.99 percent, thus attracting more businesses to the state, DePasquale said.
The representative said the House bill has bipartisan support and he is glad to work on the measure with Reed.
Reed said in a statement that a successful business is not built on hiring attorneys and accountants to avoid paying taxes. Closing the loophole would ensure fairness, he said.
Reed and DePasquale said that while most businesses do not use the Delaware loophole, the corporations that use it are contributing to Pennsylvania’s struggles as it tries to improve its economy by providing a level playing field.
“Year after year, the state ranks among the worst in the nation for the cost of doing business, so it’s clear that comprehensive business tax reforms are needed,” Reed said. “Closing the Delaware loophole will bring consistency to our tax structure and lower the tax burden, showing that Pennsylvania is a great place to do business.”
The bill will go to the state House Finance Committee for consideration, DePasquale said.
http://www.yorkdispatch.com/news/ci_19826381
