Last week was the first week that the House returned to Harrisburg for legislative session since breaking for the holidays. Normally that would mean that you should hold onto your wallets, but thanks to the efforts of House Republicans, nearly $2 billion in tax decreases, that is right, DECREASES, "were amended into Democrat property tax reform bills.one of my own initiatives was added to House Bill 377. My amendment would exempt active military personnel serving in combat zones or recovering in hospitals with injuries received in combat zones from the employer withholding requirements of the Pennsylvania Personal Income Tax (PIT). Currently, such military personnel have the tax withheld from their pay and the soldiers's families must claim a refund on their annual tax return. Both the amendment and the bill to which it was attached passed the House unanimously.
one amendment to House Bill 377 which will impact nearly every Pennsylvania resident is the rollback of the state's PIT to 2.8 percent over a period of two years. Currently, Pennsylvania's PIT rate is 3.07 percent, which was set in 2003 when Gov. Ed Rendell lobbied the Legislature to raise the PIT to fund his major initiatives. This tax rollback would return the PIT to the preRendell rate of 2.8 percent, and will give back $1 billion to the people of this Commonwealth.
Another major tax reduction included in the legislation passed last week was a phase-out of Pennsylvania's inheritance tax by 2012. The current rate for the Pennsylvania Inheritance Tax is 4.5 percent of the estate's value for direct descendants, 12 percent for assets passing to siblings and 15 percent for other heirs. Classes that are currently exempt include transfers from children under the age of 21 to parents, jointly owned property or property passed between spouses, and property left to charitable organizations. The phase-out of this tax will allow Pennsylvania residents to keep nearly $800 million more per year.
These tax cuts and phase-outs may be only the beginning. News stories reported last week revealed that the federal government may be looking to send rebates ranging from $300 to $800 to low-and middle-income Americans. These rebates and tax cuts are meant to spur economic growth at a time when many analysts are predicting a recession. I am proud that Pennsylvania has taken a proactive approach to the recent economic downturn, and I am hopeful that our tax cuts will be approved by the Senate and signed into law by the governor by the end of the year.
Bryan Cutler represents the 100th District. His email address is email@example.com.