Will save PA small businesses time and money
NFIB is working hard to get a Tax Fairness Package passed in the Pennsylvania Capitol on behalf of our members. The three pieces of legislation in the package will provide parity and consistency with federal tax policy, saving our members time and money.
A coalition of business groups in Pennsylvania signed a joint letter to lawmakers in support of the Tax Fairness Package. You can read the letter below, which was sent recently to all members of the General Assembly. It explains the details of the three bills in the package and our reason for supporting them.
To: Honorable Members of the General Assembly
Re: Small Business Tax Fairness Package
Date: June 11, 2018
National Federation of Independent Business
Manufacturer & Business Association
Northeast Pennsylvania Manufacturers and Employers Association
PennAg Industries Association
Pennsylvania Farm Bureau
Pennsylvania Food Merchants Association
Pennsylvania Manufacturers’ Association
Pennsylvania Retailers’ Association
SMC Business Councils
As members of a broad coalition of business groups whose members are the mainstay of local communities, we are writing to request your commitment to ensuring that Pennsylvania’s small businesses can take advantage of an historic opportunity to invest in the future by supporting several important tax changes. The following three bills, the Small Business Tax Fairness Package, provide parity for small businesses and consistency with federal tax policies and those with other states. Their passage will go a long way toward giving Pennsylvania’s small businesses the tools they need to innovate, expand, and succeed in today’s competitive economy.
HB 331 / SB 201: Like-Kind Exchanges
This change would amend state tax law to match the federal government’s allowance of tax deferral when property is exchanged for similar property, encouraging business expansion and hiring. Pennsylvania is the only state that does not permit like-kind exchanges. SB 201 has passed the Senate, and HB 331 has passed the House.
HB 332 / SB 202: Net Operating Loss
This proposal would permit small business owners to use a net operating loss against a tax bill to better cope with downturns in the business cycle. This is especially helpful to start-ups and to small businesses that typically experience cyclical markets for their products. Corporate taxpayers can already do this under state law.
HB 333 / SB 203: Section 179 Expensing
This change would allow small businesses to take the full expensing deduction the year an asset is purchased, helping owners buy equipment, machinery, or other expensive items that are necessary to grow their businesses. The limit would increase from $25,000 to $1 million to match the new federal tax law, the expansion of which has stimulated business growth and capital investment across the country. Pennsylvania’s extremely restrictive cap places our businesses at a competitive disadvantage and limits opportunities for growth. HB 333 has passed the House.
Small businesses, including small manufacturers, professionals, farmers, retailers, and other entrepreneurs, are truly the backbone of Pennsylvania’s economy and its local communities. Over 99% of businesses in Pennsylvania are small. They hire half of our workforce and create two out of every three new jobs. Ensuring that small business owners have access to the resources necessary to purchase new equipment and invest in their businesses is an investment in our economy as a whole. When small businesses grow and expand, they create jobs, raise wages, and inject capital into their local communities.
In fact, this is exactly what has happened across the county as a result of the Tax Cuts and Jobs Act, which is putting more money into the pockets of small business owners to invest in their businesses and their employees. NFIB’s Small Business Optimism Index has been at record highs for 16 months, with businesses planning to hire employees and increase spending on new buildings and equipment. A full 26% plan capital outlays in the next few months.
But even as Main Street is roaring across the country and planning to grow, Pennsylvania small businesses are at a disadvantage because its tax laws act as a barrier to the kind of growth and investment spurred by these national trends. These three bills are designed specifically to remove these barriers and give small business owners the tools they need to invest and plan for the future.
Now is the time to act. At record rates, small businesses across the country are taking advantage of federal tax changes to expand, hire employees, and invest in their businesses’ future. But Pennsylvania small businesses are struggling because of outdated tax provisions that limit their ability to grow. Now is the time to remove these barriers, allow the small businesses in our communities to plan for a bright future, and ensure that Pennsylvania does not fall behind during this era of economic opportunity.