PA House Moving Governor's Costly Corporate Tax Cut Plan

The Pennsylvania House of Representatives is expected to vote this week on the Governor's plan to enact hundreds of millions in new corporate tax cuts that come at the expense of investments in schools, colleges, human services, adult literacy and other critical areas.

The Governor's plan was added to House Bill 440. This bill also creates a new rule aimed at stopping some corporate tax avoidance — but it falls well short of closing tax loopholes that allow companies to game Pennsylvania's tax system. Exceptions to the rule will allow many companies to continue to legally avoid state income taxes.

At the end of the day, the bill acknowledges that corporate tax loopholes are a problem in Pennsylvania but does little to close them while ushering in major new business tax cuts. By 2025, the plan will give away $7 for every $1 it brings in — a total cost of about $700 million annually.

Pennsylvania cannot afford new business tax cuts at a time when it is struggling to fund schools, health care and human services. The Governor's 2013-14 budget proposal included several uncertain revenue sources, and recent monthly revenue shortfalls may put spending in the next budget in even more jeopardy.

The House is expected to vote on amendments to the bill Wednesday. Lawmakers should not tie the hands of future lawmakers by putting automatic business tax cuts into law, as HB 440 does. Tax cuts should be considered annually, just as funding is determined for schools, health care and other priorities.

Lawmakers from both parties recognize that loopholes are a problem in Pennsylvania. Now we need real tax reform that levels the playing field for all businesses without undermining our schools and communities or shifting more costs onto local property taxpayers.

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