Corbett Proposing $330 Million More in Business Tax Cuts This Year, without closing loopholes
There is certainly logic at the state and federal level in reducing corporation tax rates, if they are combined with the closing of loopholes, so that everyone pays their fair share. On paper, corporations in PA. have high tax rates, but very very few actually pay those rates.
Corbett is proposing $330 million in new business tax cuts for the upcoming budget year. There also are large new tax credits proposed that are intended to increase the demand for natural gas.
These tax cuts would not be so horrible IF there was real progress on closing the Delaware Loophole that allows thousands of corporations to hide their profits made in Pennsylvania in one non-descript office building in Wilmington. Many other states have closed that loophole, but PA. still has not.
http://pennbpc.org/memo-reporters-and-editors-close-look-governors-tax-cut-plan
Excerpts:
"Hidden deep within Governor Tom Corbett’s proposed 2013-14 budget is a plan to enact a 30% cut in Pennsylvania’s corporate net income tax rate over 10 years, along with a number of other tax policy changes, that when fully phased in will cost the commonwealth—conservatively—more than $800 million annually.... It comes on top of 12 years of tax cuts whose value has reached more than $3 billion annually.
The Governor’s Tax Plan reduces the corporate net income tax rate from 9.99% to 6.99% by tax year 2025. The plan continues the increase in the Net Operating Loss carry-forward for a maximum of $5 million and 30% after tax year 2015. A conservative estimate pegs the total cost of the proposal at $389 million by FY 2020-21 and $819 million when fully phased in. It puts the vast majority of the cost onto a future administration, as the bulk of the rate cut occurs after 2018.
... One reason that costly tax cuts produce few jobs is they offer little benefit to most companies. 80% of the tax cut benefits will go to the top 1% of corporate income tax filers in Pennsylvania — about 1,000 large multistate and multinational companies that may invest the state tax savings in Europe, Asia or other market."
