Tax breaks multiply in Pa. House

HARRISBURG - A state House debate on lowering property taxes turned into a multibillion-dollar tax-cutting party yesterday, as the chamber gave preliminary approval to breaks on everything from cell phones and business profits to inheritances and pet adoptions.

None of the measures passed out of the House, because the votes were for amendments to an underlying bill that could come up for final consideration today.

Unbridled from a pay-as-you-go rule that is part of the budget process, the House stampeded through one tax break after another, as members paid little heed to warnings about the enormous hole they were potentially blowing in the state budget.

"I see a lot of passion for what the state might lose in all these taxes that aren't collected," said Rep. Scott Perry (R., York) during debate on an amendment to eliminate the state inheritance tax at a cost of $420 million in the first two years. "It's not our money to begin with, it's the taxpayers' money."

The House also voted to cut the personal income tax by an expected annual cost of $1 billion, lower the corporate net income tax by hundreds of millions of dollars a year, and eliminate the gross receipts tax on cell phones.

Rep. Steve Samuelson (D., Northampton) sought to delay debate for nearly two weeks so that the House could adopt a rule requiring a tax-cutting amendment to show how it would account for the reduced revenue in the budget.

"That would allow us to adopt a pay-as-you-go rule so that we're not just voting blindly on an amendment that could possibly reduce every line item in the state budget," he said. Samuelson subsequently withdrew the motion, saying he would offer the rule change as a separate measure.

Minority Leader Sam Smith (R., Jefferson) said the amount of tax cuts voted on yesterday was "probably not realistic," but sent an important message to Democratic Gov. Rendell about the mood in the House as budget negotiations approach.

"It's meaningful at least in the sense it's setting the tone for moving in that direction," Smith said afterward.

Still ahead are tougher votes on whether to increase the sales tax or personal income tax to make up the revenues that would be lost if property taxes are significantly reduced. Majority Leader Bill DeWeese (D., Greene) said amending a bill addressing those issues was on today's agenda.