PA House Bill Won't Close Tax Loopholes

I wanted to share a memo I sent to editors and reporters today outlining some concerns about legislation that is expected to come before the Pennsylvania House this week. Here is an excerpt from the memo:

The Pennsylvania House will take up House Bill 2150 this week which couples a half-hearted attempt to close corporate tax loopholes with nearly a billion dollars in business tax cuts by the end of the decade. These tax cuts will do little to boost the economy but will drain needed resources for education, hospitals and infrastructure in Pennsylvania.

Corporate tax loopholes are a costly problem for Pennsylvania, and House Bill 2150, sponsored by Rep. Dave Reed, is an important acknowledgement of that problem. The state Department of Revenue has estimated that loopholes cost the state more than $500 million a year.

Responsible tax reform should be a priority for lawmakers, but this bill restructures the state’s tax system in a way that Pennsylvania cannot afford. It would enact nearly $1 billion in tax cuts by the end of the decade – offset, at best, by $250 million or so in new revenue from closing loopholes. The full House is expected to debate and vote on amendments to the bill Tuesday, May 1.

Both House and Senate leaders have signaled displeasure with the Governor’s proposed 2012-13 budget, which includes cuts to higher education, county human services, Accountability Block Grants and the General Assistance program, and provides no relief for school district funding cuts enacted last year. The slow economic recovery, aging population, higher pension costs, and rising health care costs will continue to exert pressure on the state budget for several years. 

Given this set of long-term fiscal pressures, lawmakers need to act prudently on both the revenue and expenditure side of the budget. House Bill 2150 leans more toward reckless than prudent, promising long-term tax reductions during a period when the commonwealth is likely to face great difficulty paying its bills. 

There's more and you can read it all at the Pennsylvania Budget and Policy Center's web site.


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