Reduction in
Death Tax, CSFT Are Top Priorities for Small
Business
Pennsylvania, May 17,
2000 -- The Commonwealth's leading
small-business group applauded state legislators
for approval of measures designed to ease the
tax burdens on small business.
"Today's vote
is a victory for Main Street business owners,
their families and employees who have been
unduly burdened by taxes that strangle potential
and frustrate growth," said NFIB/Pennsylvania
Director Jim Welty.
Welty's remarks followed
passage of a bill that cuts the death tax rate
from6 percent to 4.5 for lineal heirs and 15
percent to 12 percent for non-lineal heirs. In
addition to death tax reductions, the bill
addresses the most onerous of business taxes for
small businesses -- the Capital Stock and
Franchise Tax (CSFT). The bill immediately
eliminates the minimum payment of $200 and
reduces the millage rate from 10.99 to 8.99. It
also imposes a 1.5 mil reduction in the for next
year and phase out the tax by reducing the
millage rate by1 mill each year thereafter until
the tax is eliminated.
Pennsylvania is one of
only 13 states to levy a death tax. The state's
tax rates - up to 15 percent of the total value
of an estate - are among the nation's
highest.
Welty emphasized the financial
burden the death tax has placed on small
business owners. "The death tax causes extreme
complications as small business owners plan
their estates and simply cripples a small
business after the unexpected death of an owner.
We are grateful to the General Assembly,
specifically the Senate of Pennsylvania, for
recognizing the importance of chipping away at
this gruesome tax."
Welty added that NFIB
continues to be committed to the eventual
elimination of the dreaded tax. "We commend this
legislature for starting us down the road of
eliminating this ghastly death tax once and for
all," he said. "But we cannot rest until the
death tax is finally in its
grave."
Elimination of the CSFT was also one
of NFIB/Pennsylvania's top priorities for the
legislative session. The Capital Stock and
Franchise Tax is a "property" tax imposed on all
corporations in Pennsylvania. The tax is based
on the net worth of a company, which is
determined through a formula that incorporates
the company's capital and physical
assets.
Welty noted that the CSFT is an
unfair tax for several reasons. First, most
other states do not impose this tax in such a
broad manner or at such a high rate. This makes
Pennsylvania's business climate less attractive
than those of other states. Second, the tax
assessment is based on the net worth of a
company, not on sales or profits. Therefore, a
capital intensive business could lose money in a
given year and still be subject to a large tax
liability.
"The elimination of the minimum,
the significant reduction in the rate and the
planned phase-out of the Capital Stock and
Franchise Tax further demonstrate that this
legislature and administration are serious about
the small businesses in Pennsylvania."
"The
gradual elimination of the Commonwealth's death
tax and the capital stock and franchise tax have
been priority issues for our membership," said
Welty. "The reductions approved by the General
Assembly are commonsense measures that will
improve Pennsylvania's small business climate
and attract more businesses to the
Commonwealth."
CONTACT: Jim Welty
at 717.232.8582or Matt
Latimer at 202.554.9000
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