Money for Jobs and Education, Not Tax Breaks for Corporations!

outside EQT Plaza

outside EQT Plaza

If you’ve been to an action with One Pittsburgh you know the chant. It helps us move our feet, clap our hands and it’s what we want most of all–for corporations to pay their fair share.

We are so excited about Governor Wolf’s proposal to rebalance the budget and reinvest in education and good jobs for our communities. There are some pretty simple steps that we want everyone to understand:

Step 1: Close the Delaware Loophole

Step 2: Reduce the Corporate Tax Rate to 5%

Step 3: Reinvest in jobs and education.

Let’s take this one step at a time:

Step 1: Close the Delaware Loophole.

For years One Pittsburgh activists have demanded that Harrisburg close the Delaware Loophole–a tax gimmick that allows corporations to incorporate in Delaware allowing them to dodge billions of dollars in tax payments on profits earned in Pennsylvania. Some infamous Delaware Loopers are: GE, Google, Comcast, Walmart and our own Pittsburgh Pirates.

The response from Harrisburg was consistent–

  • Corporate taxes are too high in PA!!!
  • Closing the loophole would be a job killer!!!!
  • Corporations would flee over the borders!!!!!

Enough exclamation points, let’s talk about what’s true.

  • 74% of corporations pay less than $1000 income tax to Pennsylvania because of the Delaware Loophole.
  • Pennsylvania is facing a $2 Billion shortfall in the state budget this year.
  • The average Pennsylvania taxpayer paid $847 more this year to cover the $150 billion that GE and others that use offshore tax havens skipped out on.

This is what we mean when we say corporations aren’t paying their fair share. Closing the Delaware Loophole is a great start to re balance the tax burden.

Step 2: Reduce the Corporate Tax Rate to 5%

WAIT! We’re going to cut taxes for corporations? Kind of.  Remember how we just said that most corporations pay nothing? Right, so 5% is a substantial increase for them.

So, who’s getting a tax cut then? Well, who pays PA corporate income taxes now? Small businesses make up the lion’s share. A business with the smallest margin of profit, a pillar in our community, pays more in corporate income tax than the top 10 corporate earners combined because those top corporate earners in this state pay 0%.

By closing the Delaware Loophole and requiring combined reporting those big profitable corporations will have to pay their fair share.  And what about those little guys?  They get a break. PA corporate tax rate will be reduced from 10-5%.

This corporate “tax break” is actually relief for small businesses and increases taxes on the other 70% who have been playing accounting tricks.

Step 3: Reinvest in jobs and education.

We’ve talked about money for education in our last post on the budget. Did you miss it? Take a look here.

Pennsylvania was 50th in job growth from 2011-2014. We can do better. We will do better. Looking forward to the Governor’s proposed budget we see a few strategic investments that will create jobs.

Here are just a few of the initiatives that caught our eye.

  • An increase from $20 million to $45 million for PA First subsidies for job creation
  • $21 million, up from $6 million, for Keystone Communities, including Main Street and Elm Street programs
  • A bump in Infrastructure and Facilities Improvement Grants, from $19 million to $30 million
  • $5 million for Made in Pennsylvania Job Creation
  • $12 million for Industrial Resource Centers, including $5 million for the “IRC Manufacturing Initiative” to partner with research universities to advance manufacturing technology and commercialization

Overall Governor Wolf has proposed $1.75 Billion in job growth initiatives.

Money for Jobs and Education sounds like a winner to us.

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