01/09/2008
Mr. Chairman and members of the committee, my name is Ron Sniegocki. I am a Certified Public Accountant and a principal in Sniegocki Financial Services located in Palmyra, Lebanon County, as well as the CPA firm of Midura, Sniegocki & Associates, located in Clarks Summit, Lackawanna County.
I have more than 25 years experience in the tax and financial field, with a strong concentration in helping small-business people with the myriad regulations and taxes imposed upon them by all levels of government and regulatory agencies.
I am also a Certified Financial Planner and I am proud to serve on the Pennsylvania Leadership Council of the National Federation of Independent Business. Joining me today is Kevin Shivers. Kevin is the state director of NFIB.
Based upon my years of experience, and as an owner and manager of a number of Pennsylvania businesses, I feel uniquely qualified to speak with you on behalf of all small-business people in the state, and more specifically for the members of the NFIB.
I want to thank you for inviting us to appear before you. I know I speak for all small-business people when I say that we, along with NFIB, urge you to return the Personal Income Tax (PIT) rate to 2.8 percent.
I can speak with conviction when I say that by doing so you will be returning money to the small business engines of the Pennsylvania economy. You can be assured the money will be used by this group to help grow their businesses -- to buy that piece of equipment needed to attract those new sales; or to hire that extra worker it currently cannot afford.
The recent federal tax cuts further illustrate the direct relationship between reducing the tax burden and expanding the economy. This lesson cannot be better applied than on Pennsylvania's small businesses.
In Pennsylvania, as with the nation as a whole, small firms lead the way in employment and job creation. Nearly 98-percent of all businesses in Pennsylvania employ fewer than 100 workers and we small-business people create almost 70-percent of all new jobs in the state.
Yet our small businesses in many ways are treated unfairly compared to large corporations. Our small-business job engines are organized primarily in one of three ways for legal and state reporting purposes: sole proprietorships, as partnerships or as small-business corporations best known as Subchapter-S corporations.
All of these entities are directly impacted by the Personal Income Tax, which takes taxes out of theses entities through the owners' earnings and salary.
While larger corporations, known a C-Corporations, can carry-forward losses incurred in the early formative years of the business -- or any year when they incur a loss from normal operations -- small businesses get no such help from our revenue code.
When a small business makes a profit, the owners pay the PIT tax that year. When a small business loses money, or when an entrepreneur starts a business, they cannot deduct this loss against other income to offset their taxes owed. State law also prevents them from being able to carry-forward this loss to offset future profits when they grow or recover.
In addition to returning the PIT level to pre-2003 levels, our small-business members request that they be afforded the same consideration large corporations enjoy in the area of business loss recovery. Keep in mind that we, not the large conglomerates, are your economic engines. We need your help to grow Pennsylvania's economy.
In conclusion, the small businesses in this state need your help.
First and most importantly: Reduce our tax burden. Specifically the PIT rate imposed since 2003 has dragged our economy downward. We suggest that the state government spend less and return those funds to us so we can re-invest in our small businesses;
Second: Align the state tax code with federal laws, such as equipment depreciation rules and "Section 179" expensing limits. There are many more examples. Help small business reduce the need for several sets of books;
Third: Allow small businesses to carry-forward losses in similar fashion as C-corporations;
Finally: Do whatever you can to ease the tremendous regulatory and paperwork burden that small businesses face on a daily basis. State employees and state agencies and their regulations should not impede our abilities to earn a living and provide jobs for our workers. Some regulation is needed. But state agencies should come from an attitude of "helping" not "controlling."
We stand ready to meet with you to discuss how we can accomplish all or any of these ideas.
Again, thank you for inviting us to speak with you. And thank you for your service to the citizens of our state.
