HARRISBURG — Gov. Ed Rendell plans to veto a package of tax cuts sent to him Monday by the Legislature because lawmakers did not pair the legislation with a corresponding spending cut or a way to replace the lost revenue.

Rendell’s press secretary, Kate Philips, said the governor would veto the legislation that she called “hypocritical at best.”

A proponent, Sen. Jeffrey Piccola, R-Dauphin, said the legislation would lower taxes and attract more employers, thus leading to more jobs in the state.

“Signing these tax cuts into law should be a no-brainer,” he said in a statement.

The proposed cuts, approved 35-13 by the Senate on Monday, include a small rollback of the personal income tax rate and two gradual changes to the business tax code. The legislation passed the House of Representatives 183-11 on Nov. 22.

The cuts would take effect Jan. 1, 2007. According to a House Republican analysis, the cuts would cost the state $46.8 million in the fiscal year beginning July 1, 2006 — less than one-fifth of 1 percent of this year’s $24.3 billion state budget. The price tag would rise as the business tax changes unfold over five years, although the Legislature did not provide an estimate of the full cost.

In a Nov. 3 news conference on another subject, Rendell criticized the pending legislation as fiscally irresponsible, and pointed out that businesses have benefited from an ongoing phase-out of the capital stock and franchise tax as well as expanded tax credits for research and development.

Under the income tax rollback, the rate would drop from 3.07 percent to 3.05 percent — a difference of $8 to a family earning $40,000 a year.

For businesses, the legislation would raise the amount of operating losses that businesses can carry forward as a write-off from $2 million to $10 million, or 75 percent of taxable income, whichever is greater.

It would also change the way businesses calculate their corporate net income taxes to stress sales rather than property or payroll, thereby encouraging businesses to buy property and hire workers in Pennsylvania, supporters say.

Recommended for you

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.