HARRISBURG, Pa., Nov. 30, 2004 (PRIMEZONE) -- The Pennsylvania Chamber of Business and Industry today said Gov. Ed Rendell gave companies looking to relocate another reason not to choose the Commonwealth with his veto of legislation (H.B. 176) that would have brought the state in line with the federal government and 49 other states in the treatment of non-qualified deferred compensation plans.
"The governor claims he wants to make Pennsylvania competitive for jobs, but once again his actions speak louder than words," said Jim Welty, PA Chamber vice president of Legislative and Corporate Affairs. "When faced with an opportunity to level the playing field from an economic development standpoint, the governor showed his true colors by vetoing this measure."
Many employers compensate their employees with non-qualified deferred compensation arrangements, agreeing to pay a portion of salary or bonuses, etc. at a future date. Under federal law, tax is owed when the compensation is received by the employee. However, a state Revenue Department decision -- recently upheld by Commonwealth Court -- requires that Personal Income Tax is owed when the compensation is deferred, despite the fact that in these arrangements, there is no employee contribution or separate fund for the deferred compensation.
"Under the Department of Revenue's interpretation, Pennsylvania law is contrary to federal law and the laws of any other state in the nation," Welty said. "Not only does our law defeat the purpose of deferred compensation arrangements, which is to provide tax benefits to participants, it serves as a deterrent to attracting and keeping employers in the state, and represents yet another factor that would discourage companies from choosing the Commonwealth as a place in which to do business."
Welty said changing the way the state treats deferred compensation would have improved the site selection process for companies looking to locate in Pennsylvania.
"The just-released Forbes Magazine Economic Freedom survey rated Pennsylvania as one of the worst states in which to do business," he said. "This should serve as a wake-up call to the administration to begin making good decisions that will improve Pennsylvania's overall competitiveness for all businesses, not misguided ones that prevent needed pro-jobs policies from seeing the light of day.
"The PA Chamber can only hope that another opportunity to enact corrective language like that contained in House Bill 176 will be realized before more jobs and companies leave Pennsylvania."
The Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association and the fastest growing state chamber in the United States, with more than 10,000 members covering all 67 counties. More information is available on the Chamber's website at www.pachamber.org.
The PA Chamber of Business and Industry logo is available at: http://media.primezone.com/prs/single/?pkgid=353