The Pennsylvania House of Representatives passed legislation recently that could end up costing the state nearly $1 billion in lost revenue every year. The bill would allow giant multistate and multinational corporations to continue avoiding the corporate net income tax, provide a laundry list of other permanent tax breaks for big corporations and force increased property taxes and other local taxes on families and small businesses.
Yet the majority party portrayed House Bill 440 as tax “relief” and tax “reform.”
It would be nice if the General Assembly put as much focus on tax fairness. But instead of leveling the playing field for all taxpayers, the governor and majority legislators have been focused almost exclusively on providing tax favors for the biggest corporations, leaving everyone else to make up the difference.
House Bill 440 is a perfect example. Part of the bill purportedly closes the Delaware Loophole. Big companies and their armies of lawyers and tax accountants use this loophole to avoid paying corporate taxes on the profits they earn in Pennsylvania. But HB 440 doesn’t close the loophole.
In fact, it specifically allows these big corporations to continue using the same accounting gimmicks as long as they are for “legitimate business purposes.” And the big corporations get to define “legitimate business purposes.”
The other provisions in HB 440 are advertised as “Reforming Pennsylvania’s Business Tax Structure.” But these “reforms” do nothing more than continue Gov. Tom Corbett’s list of big business tax giveaways. Who is going to pay for the nearly $1 billion in corporate tax revenue that would be lost each year by 2025 because of these cuts?
Pennsylvania families and small businesses, that’s who.
There is a way to eliminate the Delaware Loophole for real. It’s called combined reporting, and 23 other states have instituted it to make sure companies that earn profits in those states pay their fair share of taxes. The Democratic chairwoman of the House Finance Committee has introduced legislation to require combined reporting in Pennsylvania, and I voted for an effort to make it part of HB 440. Needless to say, we were defeated. No reason to let productive public policy get in the way of phony public relations.
It’s time for the General Assembly and Corbett to put as much effort into tax fairness for everyone as they’ve put into tax favors for their friends. Pennsylvania should join the other states that have instituted combined reporting and close the Delaware Loophole – for real. And, until defenders of big-business tax breaks can show evidence they are creating jobs, Pennsylvania should slow its headlong rush to eliminate all corporate taxes and give individual and small-business taxpayers the break they have been waiting for – and deserve.
State Rep. Gary Haluska, D-Patton, represents portions of Cambria County.
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