PennPIRG also failed to mention that many Pennsylvania corporations that would see higher taxes under combined reporting do not even have passive investment (Delaware holding) companies, or that combined reporting would not guarantee additional revenue for the commonwealth. Even the Rendell administration previously testified that under combined reporting, more than half of corporations would still legitimately owe little CNI tax.
Some corporations do take advantage of passive investment companies to legally reduce their tax liability in the same way that a homeowner might deduct mortgage interest from his or her tax return. And the state Revenue Department has the power to address abuses in the use of passive investment companies and has brought actions against certain companies in recent years. Additionally, the business community has repeatedly offered to sit down with Revenue officials to jointly identify "egregious violations" and agree on a plan to address these situations.
Rather than look for taxes that haven't yet been imposed, a better approach would be to create a climate that enables the commonwealth's economy to grow and private-sector jobs to be created. But in order for lawmakers to engage in a reasoned debate about how to move the commonwealth forward, facts must be part of the discussion.
Vice President, Government and Public Affairs
Pennsylvania Chamber of Business and Industry