GOP lawmakers: 'Government cannot spend its way out of a recession'

On the eve of Tax Day, Pennsylvania Republican lawmakers are calling for tax cuts and reduced state spending to take the state out of a recession.

As millions of Pennsylvanians rush to meet the April 15 deadline to send more money to the state and federal government, Republican lawmakers wanted to draw attention to the fact that there is an alternative to the tax-borrow-and-spend policies of Gov. Ed Rendell.

"Over the past five years, the governor's priorities have been focused on increasing taxes, spending and borrowing," state Rep. Mike Turzai, R-Allegheny, said during an afternoon press conference. "Our goal is to put money back into taxpayers' pockets and the economy. We need to refocus our spending priorities and cut taxes, which will make Pennsylvania more business friendly and create more family-sustaining jobs."

In the past five years, Pennsylvania has lost 79,000 manufacturing jobs, according to the U.S. Department of Labor.

A Tax Foundation study found Pennsylvania's combined corporate tax rate to be the second highest in the world. The American Legislative Exchange Council ranked Pennsylvania 37th out of 50 states in economic outlook and 44th in economic performance.

As the Commonwealth lost family sustaining jobs and raised taxes on business, Rendell increased state spending by approximately $7 billion, Turzai said. In his first term, Rendell increased borrowing by $3.15 billion, which will cost more than $4.76 billion to repay, Turzai said.

Despite the economic conditions, Rendell wants to spend the state out of recession.

Rendell is proposing an additional $4.37 billion in borrowing for 2008 that if enacted, would cost $6.47 billion to payback, Turzai said.

Turzai, chairman of the House Republican Policy Committee, was joined by GOP colleagues to promote their version of an economic stimulus tax cut proposal.

House Bill 2270 will make Pennsylvania more competitive in retaining and attracting businesses, and creating more family-sustaining jobs, while returning hard earned dollars to taxpayers’ pockets, according to Turzai.

The legislation includes:
· Implementing Compete PA business tax relief, which includes removing the cap on net operating losses and shifting from a 70 percent to a 100 percent sales factor for calculating the Corporate Net Income (CNI) tax.
· Rolling back the Personal Income Tax (PIT) to 2.935 percent from the current 3.07 percent rate.
· Reducing the consumer electric gross receipts tax by 50 percent, phasing in over five years.

"Rolling back the PIT would benefit virtually every family in this Commonwealth," said Rep. Tom Quigley, R-Montgomery. "This is not a stimulus proposal that would provide gain for only a select group, but this package would impact individual taxpayers and small businesses, which are the driving force of our economy. The result would be a broad-based jolt to the economy."

Quigley has spearheaded the effort to reduce the PIT from its current rate of 3.07 percent.

"While the governor's plan would stimulate the state's coffers, we are interested in stimulating Pennsylvania’s economy," said Rep. Stan Saylor, R-York. "Government cannot spend its way out of a recession. Instead, government must lower taxes to spur economic growth. The answer is not to have government collect more money from taxpayers and spend more on programs. The answer is to stop government from collecting so much money in the first place."

If enacted, these tax cuts would put an extra $500 million into Pennsylvania's economy, benefiting middle-class families, small businesses and large employers, Turzai said.