The tax code bill enacted along with the 2013-14 state budget maintained Pennsylvania's capital stock and franchise tax, which was set to expire in 2014, for two more years. It also took a small, first step to close the Delaware loophole, which has allowed large multi-state corporations to avoid paying income taxes in Pennsylvania. No tax code bill was passed as part of the 2014-15 budget.
Legislators have an opportunity — and an obligation — do the right thing for Pennsylvanians and enact a strong addback law. A weak rule will do little to stop corporations from sheltering profits in other states to avoid Pennsylvania taxes, and the commonwealth will continue to be shortchanged.
"We are disappointed with the House budget. It reflects the wrong priorities for Pennsylvania. It chooses tax cuts for profitable corporations over funding for public schools and makes permanent almost 85 percent of the cuts enacted two years ago," Sharon Ward said in a statement today on House passage of a 2013-14 budget bill.
PBPC Director Sharon Ward made the case for a comprehensive approach to closing corporate tax loopholes and for using the revenue it would raise to invest in schools and the public services that will help our economy to grow.
House Bill 440 aims to prevent corporations from unfairly shifting profits earned in Pennsylvania to low- or no-tax states, but its approach is flawed. It would not close the Delaware loophole and even creates new tax loopholes corporations could exploit.
The Governor's 2013-14 budget includes a proposal for costly new business tax cuts, including a 30% reduction in the corporate net income tax, that when fully implemented will drain hundreds of millions each year from the budget.