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One of PA Chamber members' top tax priorities has received legislative sponsorship in the state House of Representatives.

House Republican Whip Mike Turzai, R-Allegheny, has introduced legislation (H.B. 710) that would remove the restrictive cap on Net Operating Losses.

"During this tough economic climate, we need to do everything we can to keep jobs in Pennsylvania," Turzai said in a press release issued by his office. "Removing the cap on net operating losses will help manufacturers lower overhead costs so that they can thrive and expand in Pennsylvania. This change will be a huge incentive for job creators to relocate to Pennsylvania and help strengthen the Commonwealth's economy."

Net operating loss carry-forward provisions allow corporate employers to use a business loss to offset income earned in future tax years in order to adjust their Corporate Net Income tax liability. Because cyclical businesses and start-up companies, for example, are particularly vulnerable in a volatile economy, a change in NOL policy would enable more job creators to ride out the current economic downturn rather than close their doors.

Pennsylvania is one of two states to cap a business taxpayer's net operating loss deduction. Forty-five states and the federal government allow for the use of unlimited net operating losses.

In 2006, the NOL cap was increased from $2 million to $3 million or 12.5 percent of taxable income. While an improvement, complete elimination of the cap would improve the competitive standing of Pennsylvania businesses and better position them during the current economic downturn and eventual recovery. The legislation would. also level the playing field in the race with other states for attracting new industry.

"We have a tremendous opportunity to reform our business tax structure in order to better position the Commonwealth to recover from the economic downturn in a much stronger competitive position," said Gene Barr, Vice President of Government and Public Affairs for the Pennsylvania Chamber of Business and Industry. "Removing the restrictive NOL cap is one step Pennsylvania must take to bolster economic growth."

To read more about the case for competitiveness, click here.