Let us start with a proposition that most people would accept, up to and including Gov. Ed Rendell: Taxes are too high in Pennsylvania and this discourages business and the creation of jobs. House Bill 515, which has passed both the state House and Senate, addresses this issue.

It would shave the personal income tax rate to 3.05 percent, down from the current 3.07 percent (it was 2.8 percent as recently as 2003). And it would change the formula for figuring the corporate net income tax, currently 9.99 percent, the second highest in the nation -- basing it only on sales made within Pennsylvania.

The bill would also gradually lift the $2 million limit on the amount of net operating losses a company could carry forward and offset against its corporate net income tax liability in future years. Pennsylvania is one of only three states to have a cap.

Groups like the Pittsburgh Technology Council and the Allegheny Conference on Community Development -- as part of the CompetePA Coalition that represents more than 80 groups across the state -- have argued persuasively for HB 515, pointing out, for example, that the current cap on losses that can be carried forward falls hardest on cyclical manufacturers and high-growth startups. They face tax rates that are significantly higher than competitors in other states.

Clearly, something must be done. So why is Gov. Rendell, who has promised a business-friendly administration, threatening to veto the bill? Because, in the short run at least, the state treasury could be some $46 million the poorer. Unlike the federal government, a state must balance its budget. If the state cuts taxes, it has to cut something else to compensate, just in case the stimulus effect of cutting taxes doesn't live up to expectations next fiscal year.

That's a fact of life -- one that the GOP-led Legislature has blithely chosen to ignore. It offered no suggestion, leaving the hard choices -- and the political consequences -- to the governor as he enters an election year. You don't have to be a cynic to think that this was part of the calculation.

Nor does one have to think that HB 515 is a way to help businesses at the expense of poor Pennsylvanians. Businesses are incubators of jobs that will benefit lots of people at all pay scales. That said, struggling Pennsylvanians might have to wait a while before the benefits trickle down to them in the form of an improved economy. Meanwhile, the state struggles to supply Medicaid benefits, support for mass transit and other public services.

So while sympathetic to the idea of cutting taxes, we think that the timing is wrong and the context way too political. We would rather this be done methodically as part of the soon-to-begin budget process when legislators can play a part in shaping priorities.

Nevertheless, we are not about to let Gov. Rendell off the hook if he vetoes this bill. He should make it part of his next budget. He says he wants a business-friendly environment -- in the near future, let him prove it.