Want to Be Fair to PA Businesses? Close Loopholes

The Pittsburgh Post-Gazette has published my letter to the editor responding to an opinion piece last week calling on Pennsylvania lawmakers to be fair to business. We agree that lawmakers should be fair to all businesses. That's why we support closing tax loopholes and leveling the playing field for all corporations in the state. Here's my letter.

Gene Barr of the Pennsylvania Chamber of Business and Industry is right to suggest that Pennsylvania be fair to business ("Be Fair to Pa. Businesses," March 19 Perspectives), which is why closing corporate tax loopholes makes sense. It will level the playing field for Pennsylvania corporations that are competing against large multistate companies.

Most states with corporate income taxes have closed tax loopholes because they drain resources for schools, colleges or support for seniors.

There is little evidence that Pennsylvania's corporate tax rate is a deterrent to investment. Site Selection magazine rates Pennsylvania third in the nation, for three years running, on new or expanding facilities. Corporate income taxes are a small share of total state and local business taxes, only 7.1 percent, according to the business-funded Council on State Taxation.

For a decade, the chamber and other business groups have opted for corporate tax cuts that benefit a few select businesses over cutting the corporate income tax rate. That isn't fair either. Mr. Barr admits that Delaware subsidiaries are primarily tax avoidance tools that have no other economic purpose. The home-mortgage deduction taken by families isn't comparable; people don't buy houses to avoid taxes.

Pennsylvania legislators have two options: stop companies from gaming the tax system or continue to cut schools, delay infrastructure investments and hike college tuition. The choice seems obvious.

Pennsylvania Budget and Policy Center


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