Chester County Businesses Bid Good Riddance to “Redundant” Business Tax

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It has been a long time coming for a lot of business owners and companies in Pennsylvania, but a much reviled business tax that has plagued the state for nearly two centuries finally came to an end with the start of the New Year.

Gary Miller, a State Revenue Department spokesman, announced yesterday that the capital stock and franchise tax expired last Thursday just as the year ended.

Gene Barr
Gene Barr

Gene Barr, the President and Chief Executive of the Pennsylvania Chamber of Business and Industry, had called the tax unfair as it was forcing businesses to pay tax on the assets they owned whether they were making a profit or not.

There had been an ongoing effort, started by Governor Tom Ridge in 2000, to gradually phase out this tax that has been on books in Pennsylvania for 171 years. However, the actual elimination of the tax was postponed on several occasions due to the potential for decline in state revenue.

An opinion piece posted on the Pennsylvania Manufacturers’ Association’s blog during one of the postponements called the tax redundant, also stating that “by requiring firms to pay taxes on their overall value regardless of their earnings during a particular year, capital stock taxes can be a major hardship for struggling businesses during difficult economic times. This burden inhibits capital accumulation and hiring, and adversely impacts the competitiveness of Pennsylvania businesses.”

Ridge’s fellow Republican, Former Governor Tom Corbett put into motion the final phase-out schedule which was left untouched by the Democratic Governor Tom Wolf as part of his business tax reforms in the budget plan for this year, which finally allowed the tax to be eliminated.

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