Reps. Seth Grove (R-York), Eric Nelson (R-Westmoreland) and Jim Cox (R-Bucks/Lancaster) recently met with advocates to discuss a package of legislation that aims to ensure small businesses are treated fairly when it comes to taxes.
“This package of bills would remove unfair tax obstacles small businesses must face,” Grove said. “Small businesses are pillars of economy, creating 65 percent of jobs in the Commonwealth. These bills would allow them to compete effectively, so they can grow more jobs for current and future generations.”
Grove’s House Bill 1603 would allow small businesses to take advantage of a net operating loss deduction similar to the one that corporate taxpayers can currently take. Small businesses would be able to deduct losses recorded in one year against other classes of income recorded in the tax year.
Currently, Pennsylvania small businesses are taxed for like-kind exchanges, such as trading one parcel of land for another of comparable value. Pennsylvania is the only state in the nation that taxes these kinds of exchanges. Cox’s House Bill 105 would eliminate this tax.
“We want our tax policies to encourage business growth and job creation,” Cox said. “This is an issue of tax fairness. We want Pennsylvania job creators to be able to compete with businesses in other states on a level playing field. These are the kinds of policies that can determine whether a new job is created in our Commonwealth and a Pennsylvanian is able to feed his or her family.”
Nelson’s House Bill 333 would give small businesses the option of deducting the full purchase price of qualifying equipment purchased during the tax year, up to $1 million. The deduction would be phased out if the total amount of equipment purchased is over $2.5 million.
“Small businesses are the backbone of our economy, and we should do everything we can to remove barriers to success,” Nelson said. “Last session, my legislation passed the House but didn’t clear the Senate. I’m hopeful we can get this bill over the end line this time so that small businesses can receive the same state tax credits for equipment purchases as large corporations.”
The House Finance Committee approved House Bills 105 and 333 earlier this week. The bills now head to the full House for consideration.