Court Opinion

ID: 4953024
Source: CourtListenerOpinion
Date Created: 2021-09-24 13:20:52.423385+00
Date Added: 2024-06-11T08:15:28.247768
License: Public Domain

RODGERS, Senior Judge,
dissenting.
While I find no merit in the constitutional arguments advanced by the petitioner, PPG Industries, Inc., (PPG), I respectfully dissent from the statutory interpretation by the court of the capital stock tax manufacturing exemption applicable to PPG’s corporate headquarters in Pittsburgh.
It is not disputed that the administration of PPG’s manufacturing and fabrication facilities are centralized at its Pittsburgh headquarters, nor is it disputed that about 86% of its income is received from the sale of products it manufactures. Yet the Pennsylvania Department of Revenue finds that only about 22% of the capital invested by PPG in its corporate headquarters is invested in the manufacturing business in Pennsylvania, because the balance is not invested in Pennsylvania, but in other states and countries. But the headquarters’ property is occupied in Pittsburgh, the headquarters’ payroll is paid in Pittsburgh and its headquarters’ property and personnel are engaged in the manufacturing business in Pittsburgh, even though they may also be helping to administer manufacturing facilities and plants in other states and countries.
The statute in question reads as follows: Provided, That ... the provisions of this section shall not apply to the taxation of the capital stock of corporations ... organized for manufacturing, processing, research or development purposes, which is invested in and actually and exclusively employed in carrying on manufacturing, processing, research or development ivith-in the State, ... but every corporation ... organized for the purpose of manufacturing, processing, research or development ... shall pay the State tax ... upon such proportion of its capital stock, if any, as may be invested in any property or business not strictly incident or appurtenant to the manufacturing, processing, research or development business, in addition to the local taxes assessed upon its property in the district where located, it being the object of this proviso to relieve from State taxation ... only so much of the capital stock as is invested purely in the manufacturing, processing, research or development plant and business.
Section 602(a) of the Tax Reform Code of 1971 (Code), Act of March 4, 1971, P.L. 6, os *832amended, 72 P.S. § 7602(a) (language of the Code quoted is the pertinent portion in effect for the 1988 tax year) (emphasis added).
I find nothing in the statute or the law that requires the exemption be limited only to headquarters’ property and personnel engaged in administering other manufacturing facilities and plants in Pennsylvania. Indeed, the exemption was created to establish a favorable climate in Pennsylvania for manufacturers and thus encourage the development of industry. Commonwealth v. Deitch Company, 449 Pa. 88, 295 A.2d 834 (1972). Such legislative purpose is better served by recognizing that PPG is almost totally engaged in manufacturing and that most of its headquarters’ personnel and property are in the manufacturing business in the Commonwealth of Pennsylvania.