Even in the best economic times, Pennsylvania's corporate tax structure puts businesses at a competitive disadvantage with competing companies in other states that have lower rates and less cumbersome tax systems.

Problems such as these are systemic to our tax structure, and the issues are particularly magnified during difficult economic times like the present.

This results in a reduction of profit margins and wiping out capital reserves that businesses rely upon to grow.

Under these circumstances, bottom-line considerations become even weightier, forcing businesses and private investment decision makers to dig deep into cost-cutting analyses to find ways to either save money or limit risk.

As a policymaker and former small business lawyer, I try to see the world through the lenses of these decision-makers. It is through this prism that I see a structure that does not properly provide incentive for businesses to locate in Pennsylvania. I believe we clearly need a change.

To that end, in February, I joined as a co-sponsor of a bipartisan economic catalyst proposal in the state House, called "CompetePA."

If enacted, CompetePA would provide strategic business tax cuts that I believe will help Pennsylvania businesses during these tough economic times and correct the systemic problems that have hampered Pennsylvania's efforts to attract new businesses and private investment dollars.

The plan has gained a great deal of support among Democrats and Republicans.

There are 134 co-sponsors of the bill in the House.

This bipartisan support leads me to be optimistic that we will act on it this year.

So what is CompetePA? It is a twofold proposal to begin eliminating the cap on net operating loss carry forwards and phase into a single-sales factor (SSF).

Pennsylvania is one of just two states that limit the amount of net operating losses that can be carried forward from losing years to profitable years.

The current cap is the greater of $3 million or 12.5 percent of taxable income. This bill would raise that cap in tax year 2007 to the greater of $3 million or 50 percent of taxable income, and would eliminate the cap altogether for 2008 and beyond.

On the other hand, a company with steady profits over three years of $8 million, $8 million and $9 million would have a three-year profit of $25 million and pay taxes only on that $25 million. In states where there is no cap on NOLs, however, both companies would have a three-year tax base of only $25 million.

As a result, cyclical companies may be reluctant to locate in Pennsylvania.

By phasing out the cap on NOLs, we take that negative consideration off the table and make Pennsylvania a more attractive state in which to grow or locate a cyclical business.

Second, phasing out the cap on NOLs is good for start-up companies. Many new start-ups tend to lose money in their early years and don't show profits until products hit the market and sales occur. In states where there is no cap on NOLs, starting a business is more fiscally enticing because companies can lower their tax burden in profitable years by carrying forward their losses. Accordingly, uncapping NOLs is good for large and start-up companies, alike.

Similarly, moving Pennsylvania to a SSF will benefit large and small companies.

Currently, a company's Corporate Net Income tax liability is determined by weighing three factors: sales, property and payroll.

These three factors are not given equal weight; sales accounts for 70 percent and property and payroll each represent 15 percent of the formula.

The current approach effectively penalizes companies that own property in the state and employ Pennsylvania workers. It also gives an advantage to companies outside of Pennsylvania that sell their products here but don't own property or pay workers in our state. For these reasons, many states have enacted a SSF. To be competitive, Pennsylvania should do the same.

Accordingly, the CompetePA legislation would change the formula to 85 percent sales, 7.5 percent property and 7.5 percent payroll in tax year 2007 and 100 percent sales for tax year 2008 and beyond. These changes would eliminate those penalties, making investing in Pennsylvania assets and workers more attractive for businesses.

It is time that we move forward in creating a better business and job environment in Pennsylvania. We need to move aggressively forward to help our local businesses grow and attract new businesses to our region. I will continue to fight for a better business environment so we can gain jobs and grow Pennsylvania's economy.