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COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES

FINANCE COMMITTEE PUBLIC HEARING

STATE CAPITOL HARRISBURG, PA

MAIN CAPITOL BUILDING ROOM 14 0

WEDNESDAY, APRIL 15, 2 015 9:00 A.M.

PRESENTATION ON COMBINED REPORTING

BEFORE: HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE

BERNIE O ’NEILL, MAJORITY CHAIRMAN STEPHEN BLOOM GEORGE DUNBAR MATTHEW GABLER SETH M. GROVE LEE JAMES AARON KAUFER JOHN A. LAWRENCE DUANE MILNE MIKE PEIFER THOMAS QUIGLEY BRAD ROAE THOMAS SANKEY JAKE WHEATLEY, DEMOCRATIC CHAIRWOMAN LESLIE ACOSTA MARY JO DALEY MARGO L. DAVIDSON MADELEINE DEAN SID M. KAVULICH STEPHEN KINSEY DANIEL T. MCNEILL

Pennsylvania House of Representatives Commonwealth of Pennsylvania

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COMMITTEE STAFF PRESENT: TAMARA FOX

MAJORITY EXECUTIVE DIRECTOR

MARK FOREMAN DEMOCRATIC EXECUTIVE DIRECTOR

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I N D E X

TESTIFIERS ~k k k

NAME PAGE

FERDINAND S. HOGROIAN, ESQ. SENIOR TAX AND LEGISLATIVE COUNSEL, TESTIFYING ON BEHALF OF COUNCIL ON STATE TAXATION........................... 8

RAYMOND CHOPPER, CPA TESTIFYING ON BEHALF OF PICPA COMMITTEE ON STATE TAXATION..................52

MATTHEW MELINSON, CPA GRANT THORNTON, LLP TESTIFYING ON BEHALF OF PICPA COMMITTEE ON STATE TAXATION..................57

TOM BOWEN, ESQ., CPA SHAREHOLDER OF STEVENS & LEE, CHAIR OF PA CHAMBER TAX EXECUTIVE COMMITTEE, TESTIFYING ON BEHALF OF PA CHAMBER AND PICPA PANEL......................... 65

SUBMITTED WRITTEN TESTIMONY ~k ~k ~k

(See submitted written testimony and handouts online.)

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P R O C E E D I N G S ~k ~k ~k

MAJORITY CHAIRMAN O ’NEILL: Good morning,

everyone. I’d like to bring the meeting of the House

Finance Committee to order. This is a public hearing.

Before we begin, I just want to inform everybody

that I believe we are being telecast live but it’s also

being filmed by the Chief Clerk’s Office, and so I’d also

ask you to respectfully turn off your cell phones or

silence all electronic devices.

Before we begin, what we’ll do is we’ll have the

Members introduce themselves. We’ll start with the

Chairman.

DEMOCRATIC CHAIRMAN WHEATLEY: Thank you,

Mr. Chairman.

Representative Jake Wheatley from Allegheny

County, Legislative 19th District, City of Pittsburgh.

MR. FOREMAN: Mark Foreman, Democratic Executive

Director.

REPRESENTATIVE KINSEY: Good morning,

Mr. Chairman. Representative Steve Kinsey from

Philadelphia County.

REPRESENTATIVE KAVULICH: Good morning, everyone.

Representative Sid Kavulich, 114th District, Lackawanna

County.

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REPRESENTATIVE BLOOM: Representative Stephen

Bloom, 199th District, which is Cumberland County.

REPRESENTATIVE ROAE: Representative Brad Roae,

Crawford County and Erie County.

REPRESENTATIVE SANKEY: Tommy Sankey, 73rd

District, Clearfield, Cambria.

REPRESENTATIVE DUNBAR: Representative George

Dunbar, Westmoreland County.

REPRESENTATIVE MILNE: Good morning. Duane

Milne, Chester County, Malvern area.

REPRESENTATIVE PEIFER: Good morning. Mike

Peifer, 139th District, Pike and Wayne Counties.

REPRESENTATIVE DAVIDSON: Margo Davidson,

Delaware County.

REPRESENTATIVE QUIGLEY: Tom Quigley, Montgomery

County.

REPRESENTATIVE GROVE: Seth Grove, York County.

MS. FOX: Tammy Fox, Executive Director to the

Committee.

MAJORITY CHAIRMAN O ’NEILL: And I’m

Representative Bernie O ’Neill, the Chairman, and I

represent the 29th District, which is the center of Bucks

County.

Before we begin, I just want to give a little

history. Today’s hearing is on combined reporting. I came

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up with this idea because it’s the old teacher in me.

Those of you who don’t know, I used to be a schoolteacher

at one time. I was actually a behavior specialist. That’s

why I can deal with her so well. Only kidding.

Anyway, there’s a lot going on with combined

reporting through the Governor’s office and other avenues

so it’s a very convoluted, difficult tax policy to

understand, so I thought it would be good to have an

educational hearing to educate the Members of the

Committee, as well as any other Members and the public that

would like to hear and learn about combined reporting. So

therefore, we put this hearing together.

We’ve made it very clear to the testifiers that

they’re only to speak to the educational part of what

combined reporting is. We respectfully ask them not to

deviate to anybody’s proposals, whether in favor of it or

against it or whatever, and we made that very clear. There

were some people and organizations that were invited to

testify but chose not to because they felt that they could

not honor that agreement in sticking just to the

educational part, and we respect that. So we thank them

for being forthright with us.

I spoke to my Members of my Caucus and made it

real clear that all questions and comments will be directed

towards the task at hand today and not any policy or

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politics of any kind. And I will be asking all Members of

the Committee to do the same.

So with that, we'll get on with the hearing, but

before we begin, I'll open up the comments to Chairman

Wheatley.

DEMOCRATIC CHAIRMAN WHEATLEY: Thank you,

Mr. Chairman.

And again, I definitely want to say thank you,

Mr. Chairman, for having this educational meeting today. I

would like to just go on the record and say, as a former

student, it was always good for me to have access to both

sides of an issue, and we all know that no one comes

totally without their own biases and independent thoughts

on subject matters.

And so we would just encourage, as we move

forward in this season and knowing that we will have

numerous other very complex subject matters, that we try as

best we can to have both sides of an issue at a table

informing the Members so that we can clearly see the full

picture and breadth of the scope of whatever we're dealing

with. And this is such a complex situation.

From a Democratic perspective, we would have

liked to have had at least given the Governor and the

Administration a chance to lay out why they thought this

issue was important for us as a Commonwealth, and hopefully

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moving forward we will be giving the Administration some

opportunities to discuss with us their rationale for not

only offering combined reporting but other avenues of tax

package changes or requests.

So with that, I'm definitely looking forward to

this information, and hopefully we will have a very engaged

conversation. Thank you, Mr. Chairman.

MAJORITY CHAIRMAN O ’NEILL: Thank you. And

hopefully maybe down the future we will be having those

types of conversations and hearings. So thank you for your

comments.

We’re going to begin today with our first

testifier, and that’s the Council on State Taxation, and

Ferdinand -- and I apologize if I do not pronounce your

last name right -- Hogroian.

MR. HOGROIAN: That’s very good.

MAJORITY CHAIRMAN O ’NEILL: Did I get it right?

MR. HOGROIAN: Hogroian.

MAJORITY CHAIRMAN O ’NEILL: Hogroian.

MR. HOGROIAN: Yes, sir.

MAJORITY CHAIRMAN O ’NEILL: Okay. Thank you.

Before we begin, we’ve also been joined by

Representative Gabler.

The mike’s yours.

MR. HOGROIAN: Thank you, Chairman O ’Neill,

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