HARRISBURG PA — Pennsylvania could have a new pitch for companies looking to relocate. According to The Pennsylvania Independent online news service, it might go something like this: Settle in the Keystone State, and keep the heaping pile of money your employees pay as state income tax.
That’s the concept behind a new jobs-boosting proposal offered by Centre County Republican state Rep. Kerry Benninghoff, chairman of the House Finance Committee.
The proposal, called the Promote Employment Across Pennsylvania Program, or PEP, would let qualifying businesses keep 95 percent of personal income tax that their employees would otherwise pay to the state. The remaining 5 percent would go to the state, The Independent reported Monday (Sept. 24, 2012).
Typically, those personal income tax dollars go right to the state’s general fund, with all wage-earners chipping in to fund state services. A portion of state income tax dollars already goes to private businesses through loans or grants offered through the Department of Community and Economic Development, but a program like PEP would cut out the incentive middle man, giving tax dollars directly to the company.
Benninghoff told The Independent that the current system of offering tax breaks keeps governments from collecting revenue at all. With PEP, new companies would still pay local property and state sales taxes, and in some cases, state corporate net income taxes.
And, there’s no direct cost to the state, he added.
To qualify, businesses must be existing, for-profit entities relocating in Pennsylvania that pay at least 50 percent of health insurance premiums for the employees. Excluded from the program are retail stores, utility companies, food service companies or public administration or education services. The state Department of Revenue would review the applications before approving participation.
- Read a story by reporter Melissa Daniels, titled “Jobs proposal funnels income tax straight to employer” and published Monday by The Independent, here.
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