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Legislative Update

Week Ending Nov. 16, 2007

• Senate Confirms PICPA’s Levin to Accountancy Board
• Earned Income Tax Credit Bill Clears Committee
• School Property Tax Elimination Plan Introduced in Senate
  
• Plan Would Help Municipalities with Tax-Exempt Property
• Open Records Bill Approved by Senate Committee
• Maryland House Passes Tax Reform Act
• Nickol Announces He Will Not Run for Re-Election
  

Senate Confirms PICPA’s Levin to Accountancy Board

On Tuesday, Nov. 13, the State Senate unanimously confirmed PICPA and Lehigh Valley Chapter member Martin C. Levin, CPA, for appointment to the State Board of Accountancy. The Board is now at its full compliment of nine CPAs.

Mr. Levin is a director of accounting services at Levin, Savhcak and Associates PC located in Allentown. He is a summa cum laude graduate with a BS degree in Accounting from Rowan University. He is also a member of the AICPA’s Accounting and Review Services Committee, which is responsible for drafting reporting and engagement standards pertaining to the preparation of unaudited financial statements for all privately held companies in the United States.

Earned Income Tax Credit Bill Clears Committee

Legislation establishing a refundable earned income tax credit based on federal eligibility criteria cleared the House Appropriations Committee on Wed., Nov. 14. The bill now goes to the full House for consideration.

House Bill 377, sponsored by Appropriations Committee Chairman Rep. Dwight Evans, would provide a tax credit in lieu of utilizing the special tax provisions for poverty as outlined in Section 304 of the Tax Reform Code.

A tax filer that qualifies for the federal earned income tax credit and has at least one or more dependents would have the option of choosing the tax credit in place of the special tax provision.
As amended, the bill phases in the credit, initially providing up to 15 percent of the federal Earned Income Credit the first year and increasing to 30 percent the second year. This will take effect immediately and applies to taxable years beginning after Dec. 31, 2007.

School Property Tax Elimination Plan Introduced in Senate

Saying Pennsylvania can "do better, much better" on the issue of property tax reform, state Sen. Mike O'Pake Tues., Nov. 13, introduced a three-bill package that he believes will abolish the homeowner school property tax via a graduated state income tax on incomes over $100,000.

No one earning less than $100,000 would pay a higher state income tax. For incomes over $100,000, there would be a gradual one-half of a percent increase in the state income tax rate per every $50,000 in additional income with a maximum rate of 6.57 percent for incomes over $400,000.

O'Pake's proposal would require a constitutional amendment, but one of the Senator's bills proposes an "emergency amendment" that—if approved by a two-thirds majority of the General Assembly—could reach the voters for a final decision in short order. He said a constitutional change was needed, in any event, to forever prohibit homeowner school property taxes from being re-imposed once they have been eliminated.

O’Pake’s legislation will be referred to committee for consideration.

Plan Would Help Municipalities with Tax-Exempt Property

At a Capitol news conference Tuesday, state Rep. Bob Freeman unveiled legislation that would provide funding to municipalities with high levels of tax-exempt property.

House Bill 2018 would create the Tax-Exempt Property Municipal Assistance Fund, which would be funded by dedicating revenue generated by the 18 percent Johnstown Flood Tax. Under the proposal, any Pennsylvania municipality in which 17 percent or more of the total assessed value of properties within its borders is tax-exempt would qualify for compensation.

The Johnstown Flood Tax, enacted by the state legislature in 1936 to provide financial relief to victims of flooding in Johnstown, is levied on the sale of wine and liquors. Although intended to be temporary, it now provides the state with approximately $240 million in annual revenue.

Freeman’s legislation has been referred to the House Local Government Committee for consideration.

Open Records Bill Approved by Senate Committee

Legislation to strengthen Pennsylvania’s Open Records Law was approved Wed., Nov. 14, by the Senate Appropriations Committee. The full Senate could consider the bill as soon as next week.

Senate Bill 1 was amended in committee to make the new Open Records Clearinghouse an independent entity within the Department of Community and Economic Development. The Clearinghouse will decide appeals when a records request is denied and provide training to agencies to improve compliance with the law. 

Senate Bill 1 would establish the presumption that all records from Commonwealth agencies and local agencies are open unless they fall under a specific exception established in law. The exceptions allow certain records to remain private, such as Social Security numbers, medical records, records that would threaten domestic security, and police investigative records.

The bill also requires state contracts, including contracts with the Legislature, to be posted online in a searchable database.

Maryland House Passes Tax Reform Act

The Maryland House of Delegates passed a bill that proposes to, among other things, increase the corporate income tax rate from 7 percent to 8.75 percent, and alter the personal income tax rates and rate brackets.

Maryland House Bill 2 would create three additional personal income tax brackets that would be taxed at a rate of 5.25 percent, 5.50 percent, and 5.75 percent. Currently, the highest personal tax rate is 4.75 percent. The new brackets would begin at $125,000 a year for single filers and $150,000 for couples.

The bill also would define the terms "combined group" and "unitary group" and would discuss the way these groups compute their Maryland taxable income. 

Nickol Announces He Will Not Run for Re-Election

Rep. Steven Nickol announced on Wed., Nov. 14, his intention to leave office at the end of his current term in 2008. Initially elected in 1990, Nickol is the senior member of the Adams and York county House delegations. He is presently the minority chairman of the House Finance Committee and the vice chair of the Pennsylvania Public School Employees’ Retirement Board. 

“I have spent 17 years in office and countless hours in session, often delayed late into the night with too much talk and too little action. The increasing partisanship has made accomplishing even the mundane difficult, and I am hungry for fresh challenges,” Nickol stated.

Nickol joins Reps. Jerry Nailor and Tom Tangretti to announce their early retirements.