PA. House voting for law that pretends to close loopholes, but will actually reduce State revenues

[JPZenger]

http://pennbpc.org/one-step-forward-two-steps-back

Excerpt:

"Closing corporate tax loopholes is a responsible way to prevent cuts to schools, health care and other investments that create jobs and build a stronger Pennsylvania economy. House Bill 2150, a corporate tax bill sponsored by State Rep. Dave Reed, does not achieve this goal. Instead, the bill is one small step forward paired with two giant steps backwards.

The legislation’s supporters describe it as a revenue-neutral tax reform that cuts corporate taxes and closes the Delaware loophole to pay for it. In reality, it will cost the state hundreds of millions of dollars annually within a few years. The bill prevents some corporations from unfairly shifting profits from Pennsylvania to Delaware and other low- or no-tax states by enacting an “addback rule,” but this doesn’t come close to covering the amount the state will lose in revenue from tax cuts in the bill. The result will be less money for things that boost Pennsylvania’s economy, such as a strong education system, roads and bridges, and safe communities. Closing loopholes is a good idea, but this bill takes Pennsylvania in the wrong direction.

The bill implements new tax cuts for large, profitable corporations. It will reduce the corporate income tax rate by 30 percent over four years, allow companies unlimited write-offs of prior year operating losses in 10 years, and complete the state’s move to a single sales factor apportionment formula. When fully phased in, the tax cuts will cost $971 million annually. Based on an optimistic estimate of the legislation’s cost and its additional revenue, the bill will drain $654 million[1] to $732 million[2] from state services by 2019-20."