Harrisburg –The state Senate today gave final approval of initiatives introduced by Sen. Bob Mensch (R-24) to boost investment in Pennsylvania manufacturing and job creation. The measure now goes to the Governor for enactment.
The following provisions are part of House Bill 542, Tax Code legislation approved by the Senate and House of Representatives:
Qualified Manufacturing Innovation and Reinvestment Deduction
This initiative will provide an incentive to Pennsylvania manufacturers to make large-scale investments to increase or establish manufacturing capacity within the Commonwealth. It will permit manufacturers making capital investments in excess of $100 million to claim a deduction against their taxable income.
“This deduction will encourage businesses to invest in Pennsylvania and pave the way for the economic growth and job creation throughout the state,” Mensch said. “It is imperative that the legislature start to shift its focus to how it can facilitate economic growth. The Qualified Manufacturing Innovation and Reinvestment Deduction is an important tool to use in this crucial effort.”
This provision will have no adverse fiscal impact on 2017-18 or 2018-19 budgets as the recipient has three years to make the qualified capital investment and five years to attest to the state that the project is completed. Additionally, the deduction cannot reduce the manufacturer’s tax liability by more than 50 percent.
“This new concept will permit Pennsylvania to provide an incentive to attract capital investment in our manufacturing facilities now without any negative impact on our budget process or revenue collections,” Mensch said.
Corporate Net Income
House Bill 542 also includes Senator Mensch’s legislation to remove the $5 million cap on Net Operating Losses deductions and increases the cap of 30 percent of taxable income as follows: 35 percent of taxable income for tax year 2018 and 40 percent of taxable income for tax year 2019 and thereafter. Additionally, the measure addresses a recent Supreme Court ruling that a flat deduction for net loss carryover is unconstitutional since it violates the Uniformity Clause of the Pennsylvania Constitution.
This provision is estimated to generate additional revenues of $52.6 million in 2017-18 and $80.3 million in 2018-19 following the court ruling.
“Initiatives that help grow the economy are my top priority, and I am thrilled that these job-creating provisions have been amended into the Tax Code,” said Mensch. “An expanding economy means more jobs and new revenue derived from commercial activity, not the taxpayer’s wallet.”
For more information on Senator Mensch’s legislation, visit www.senatormensch.com. State updates can also be found on Senator Mensch’s Facebook at https://www.facebook.com/PASenatorBobMensch/ or Twitter @SenatorMensch.
CONTACT: Sarah Rasmussen firstname.lastname@example.org (215) 541-2388