PEPping Up the Economy and Employers
On October 26, Governor Tom Corbett (R-PA) signed into law the Promoting Employment Across Pennsylvania Act (PEP) (House Bill 2626). This law is touted as an attempt to create new jobs in Pennsylvania and promote economic development.
What does this mean for thousands of Pennsylvania employers? If you are able to create at least 250 new jobs in Pennsylvania within 5 years (with 100 of the new jobs created within the first 2 years), you will be eligible to retain 95% tax witholdings for the persons employed in the new jobs. Under the Act, the employer may select to remit all of the personal income tax witheld from employees then receive a rebate of the tax from the Commonwealth.
Job creators grow while growing the economy in the process. These tax savings may provide opportunities for employers to further increase their number of employees beyond the initial 250 or reinvest in other areas of the business. Presumably, the Commonwealth benefits as well. More persons employed in the Commonwealth lead to economic growth through purchasing power and sales tax revenues.
There are restrictions and critiques. Non-profit entities, religious organizations, utilities, restaurants/bars, gambling establishments, retail stores, and education or public administration offices need not apply. Plus, an open question remains whether the program amounts to an employee paying an employer for his/her job.
To take advantage of this opportunity, employers must enter into an agreement with the Department of Community and Economic Development (DCED). Any interested employer should move quickly because the ceiling for the program in Pennsylvania is $5 million per year. This Act expires January 1, 2018.