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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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