The Current

“The future ain’t what it used to be.”

Yogi Berra certainly was the master of the obvious.  Yogi also once said, “It’s tough to make predictions, especially about the future.”

But you know what, Yogi wasn’t from Pennsylvania…

In 1990, the late Governor Robert P. Casey was facing Auditor General Barbara Hafer in the general election. That year, the General Assembly and Governor Casey adopted an election year budget with no tax increases and with increased spending on “populist” programs. 

Hafer warned of election year politics and that financial disaster was on the horizon for Pennsylvania.  But nobody took her seriously.  Governor Casey won in a landslide and members of the General Assembly managed to maintain the status quo.

A year later, Pennsylvanian's faced the largest tax hike in history.

Within a year, Pennsylvanian’s became victims of the largest tax increase in history.

Fast forward 16 years….

Despite months of warnings that Pennsylvania has financial troubles that are rooted in Pennsylvania’s Medical Assistance programs, Governor Rendell introduces what he calls, “A terrific budget.”  Others caution that financially for the Commonwealth things aren’t as rosy as they are being portrayed.  But who do you think will prevail in the budget debate in an election year? 

My money (while I still have it) is on elected officials who will employ Yogi Berra’s philosophy of not wanting to make “too many wrong mistakes,” and the budget will fail to address costly programs and encourage economic growth.  And since I’ll need it for next year, I’ll take double or nothing that we’re all going to pay for the short-sightedness one way or another a year from now.

I promise you, Yogi was right about at least one thing, “This is like déjà vu all over again.”

So just remember to hold on to your wallets next year!

Time to Walk the Talk...

The General Assembly is considering two critical pieces of business legislation this week. One is the re-enactment of the Fair Share Act (contained in Senator Corman's bill SB 435) that the courts threw out on procedural grounds this past summer and HB 515 which contains several significant business tax changes. Here is the press release we issued today after we participated in a press conference with many other business supporters on HB 515.

PA Chamber: time is now to improve competitiveness of Commonwealth’s job creators

HARRISBURG, PA -- The Pennsylvania Chamber of Business and Industry today praised pro-jobs lawmakers for their commitment to creating a more competitive business climate in the Commonwealth by advancing needed business tax reforms (H.B. 515), and urged Gov. Ed Rendell to sign the legislation when it reaches his desk.

“Bold changes to the state’s business tax structure are needed to boost job growth, and ensure that jobs created today are here for residents tomorrow and in the future,” said Jim Welty, PA Chamber vice president of legislative and corporate affairs, speaking at a Capitol news conference organized by members of the CompetePA Coalition. “The Senate’s pledge to deliver House Bill 515 to the governor this year sends a message to the state’s job creators that it understands what is needed to support job growth in the long-term.”

Welty said the governor will soon have an opportunity to send a message about his commitment to the Commonwealth’s economic vitality.

“On behalf of our more than 12,000 members, and all job creators in the state, the Chamber urges the governor to support House Bill 515 and give business a framework to be competitive. Pennsylvania consistently lags behind our competitor states. With these tax reforms, the state can start to reverse this trend.”

Welty said establishing a Single Sales Factor for Corporate Net Income tax apportionment; raising the cap on Net Operating Losses; and reducing the Personal Income Tax are steps in the right direction toward giving businesses large and small the ability to grow and prosper.

Improving Pennsylvania’s business tax structure is a priority for the PA Chamber, and is a key component of its members’ Agenda for Jobs, a plan developed by job creators for job creation.

Ouch!

Ever feel like you’re hitting your head against a brick wall? I feel that way every time I open a newspaper these days or listen to the administration's rhetoric on business taxes.

The business tax reform debate here in Pennsylvania continues to be clouded by a misunderstanding of the negative effects the governor’s mandatory unitary combined reporting proposal (MUC) would have on job creation. The editorial writers and anyone who chooses to listen only to the Governor, fail to understand the business community’s position on this issue.

The administration claims that the Commonwealth would capture approximately $100 million in revenue by addressing “abuses” in the tax system. MUC, on the other hand, is estimated to capture nearly half a billion dollars, and many experts suggest this number is underestimated. This burdensome proposal has not been adopted by any major state in the past 20 years, and with good reason!

Clearly, MUC goes well beyond capturing any “abuses” there may be in the system, as the governor purports to address. Therein lies the business community’s objection.

The PA Chamber has continuously expressed its willingness to sit down with the administration to identify these abuses. The administration, on the other hand, would rather continue using sensationalized figures to imply that a majority of corporations are unethically avoiding taxes – all part of an effort to gain support for a flawed plan.

If the governor truly regrets not helping Pennsylvania’s job creators in the new budget, as he recently told an audience at the Harrisburg Regional Chamber, he should work with the business community to create a competitive tax system that fosters job creation, not one that merely shifts the tax burden, creating winners and losers.

Until we hear from him, I'll stock up on bandaids!

Ghost Blogger

Greetings! I'm Jim's editor and his guest blogger for today. He's busy eating beluga caviar and doing God's work on behalf of the business community--so you get me. No name (I’m no fool).

As Jim's editor I get to look at his blog stats, his blog hits, and more importantly, the Google searches that land people on his blog. Some examples: Jimmy Buffet ice luge; economic growth and NBA basketball; I've a feeling we're not in Kansas any more; Viagra; and my personal fave – how to do a feathered haircut. (Note to self -- tell Jim to be careful what he writes.) So, I prefer that anything I say here be attributed to Jim.

Jim thought it might be worthwhile to share an editorial that recently appeared in the Pittsburgh Tribune Review along with our response. Here's the link to the article (The Cotton Swabs vs. the Q-tip Campaigns), and below is our response.

If Jim is still missing in action next week, I’ll be forced to tell everyone the story about his fear of scaly, legless reptiles, and his run in with a gardner snake…

Hang in there Jim, it's almost over.

Dear editor,

Colin McNickle hit the nail on the head with his assessment of the governor’s flawed economic policies and the culture of uncontrolled spending that has increased under his administration (The cotton swabs vs. Q-Tips campaign, June 5, 2005).

Pennsylvania employers struggle to create jobs in the face of tax laws that are antiquated and burdensome; health-care costs that are rising at alarming rates; a legal system that lacks fairness and personal responsibility; and labor laws that are not cost-effective.

Meanwhile, government in the Commonwealth continues to grow beyond its means, viewing both business and individual taxpayers as its personal piggybank.

Between 1991 and 2002, Pennsylvania had the fifth highest real per capita spending growth at 103 percent. However, during that same time period, Pennsylvania’s employment job growth rate was 50.5 percent lower than the national rate; and Gross State Product and personal income growth were 18.3 percent and 20.1 percent slower respectively than the national rate.

Taxing and spending our way into prosperity doesn’t work. Government doesn’t create wealth, it only redistributes it. The more government takes away from hard-working, risk-taking business owners, the less money is available for expansion, growth and jobs.

Pennsylvania will continue to languish unless efforts are made to limit government spending and allow the private sector to drive the economy. The objectives of the Keystone Manufacturing Initiative are similar to the PA Chamber’s own Agenda for Jobs – a job creation plan developed with input from more than 9,000 Pennsylvania employers. Both proposals all allow the private sector to be the economic engine that provides quality jobs for residents. KMI and the Agenda for Jobs recognize a fundamental principal lacking from the governor’s policies; jobs come from a free market within an environment of competitive business taxes; limited and efficient regulation; balanced labor laws, and freedom from lawsuit abuse – not from government.

The PA Chamber will continue to work with pro-jobs lawmakers in the General Assembly to create a climate that will enable Pennsylvania to flourish, not fall further behind.

Toto, I’ve a feeling we’re not in Kansas anymore

I need to respond to the administration’s ongoing rhetoric regarding their business tax proposal. 

And go easy on my movie reference – those who know me will tell you it beats the hell out of hearing me sing show tunes.  But do indulge me for a moment…. 

If Toto pulled back the curtain on The Great and All Powerful Oz, here’s the truth that would be revealed about their business tax proposal:

First, while the administration hides behind the 2004 tax reform commission, in reality, their proposal violates the commission’s clear directives. Even The Scarecrow has the brains to distinguish the differences if he read the Commission’s report. 

Second, if the state adopts the proposed tax-reporting scheme, called mandatory unitary combined reporting (I call it MUC because, let’s be honest, that’s what it is), Pennsylvania would be crippled for economic development purposes.  Think of MUC as those damn Flying Monkeys; picking up taxes from one business (or poppy field) and shifting them elsewhere, creating winners and losers.

Third, even if positive aspects of the administration’s proposal were adopted, companies wouldn’t see relief until 2007, at the earliest.  Look, Pennsylvania needs to take a hint from The Cowardly Lion and find the c-c-c-courage to adopt changes that will help create jobs today.

Finally, how can this administration take credit for the capital stock and franchise tax (CSFT) phase-out?  The phase-out was enacted by the 2000 General Assembly and signed into law by a previous governor.  Wanna know how I know this?? The Chamber helped draft the bill. The fact is that the phase-out is already in law.  The only connection this administration has to the CSFT is that it successfully advocated RAISING the tax in 2003.  Come on, even The Tin Man has the heart to give credit where the credit is due.

Now, we’ve all seen the movie and know that The Wizard of Oz turns out to be a good guy. Everyone lives happily ever –after. I actually believe this Governor means well, too.  He simply needs better direction when it comes to economic policy.

Chamber members collectively agree that government needs to stop dictating and start listening to the professional job creators as to what it takes to make Pennsylvania economically competitive.

So, will somebody over there please don the ruby slippers and click their heels three times…