Loophole Bill Does Not Get the Job Done

A recent proposal to close corporate tax loopholes that drain millions of dollars annually from Pennsylvania schools, colleges, and other vital services would fall far short of its goal and aggravate our state’s financial problems.

We have a new policy brief at the Pennsylvania Budget and Policy Center on House Bill 440, which passed the state House by a vote of 129-65 on May 6. The bill aims to prevent corporations from unfairly shifting profits earned in Pennsylvania to Delaware and other low- or no-tax states, but it would be largely ineffective at stopping the practice and even creates new tax loopholes corporations could exploit.

Because the bill’s loophole-closing measure would be largely ineffective, its cuts in corporate tax rates would end up costing hundreds of millions of dollars per year in lost tax revenue and force further cuts to the assets that make Pennsylvania a good place to do business in the first place. 

Corporate tax avoidance is a growing problem that leaves Pennsylvania companies and individuals who play by the rules to pick up more of the tab. But fixing this must be done carefully, and there are better alternatives than House Bill 440. We have more on those alternatives in our policy brief. Check it out.

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