Sen. Doug Mastriano (R-33)
Small businesses in Pennsylvania are anything but small. They’re a force to be reckoned with as they employ about half of the state’s private workforce – 2.5 million individuals. The state’s 1.1 million small businesses play a vital role in our economy.
Yet, they aren’t having as much of an impact on our economy as they could, and, as I would argue, they should.
They are being unfairly limited in their capabilities to offer employees higher pay, hire more people and improve their businesses as they consider most appropriate. Instead, they face double taxation from which large corporations are exempt.
My bill, Senate Bill 253, would abolish double taxation on small business partners.
No longer would Pennsylvania resident business partners subject to pass-through entity taxes in other jurisdictions incur a double tax.
Pass-through entities are businesses in which the profits pass through to the owners of the business and are taxed at the individual tax rate.
Currently, pass-through entities in Pennsylvania are required to pay the tax twice: once to the commonwealth and a second time to the other state associated with the business.
They are denied a credit, relieving them of the double taxation requirement, even though a similar credit is available to resident S corporation shareholders.
Small businesses are the lifeblood of our communities and local economies. They deserve to be on a level playing field, especially because it would also benefit our economy. It’s good for business and it’s good for our people.
Members of the Senate Finance Committee agreed and passed Senate Bill 253 this week, advancing it to the full Senate for further consideration.
The committee also approved another one of my bills to help small businesses this week.
Senate Bill 396 would support the commonwealth’s small businesses and pass-through businesses by affording them the benefit of federal deductibility as an expense of the electing business. It would not change the amount of taxes paid.
My bill would provide federal tax income benefits and put federal tax dollars back into the pockets of Pennsylvania’s small business owners that could be used for reinvestment and growth – creating more jobs for commonwealth residents.
Thirty-four states allow the work-around my bill proposes, including all of Pennsylvania’s neighboring states.
If we want to keep the small businesses that have already set up shop in the commonwealth and attract even more, we have to treat and tax them fairly.
Their workers and our economy depend on it.
Sen. Doug Mastriano represents the 33rd Senatorial District, covering all of Adams and Franklin counties.