Many large profitable companies pay no PA. corporate income tax

[JPZenger]

Last edited Fri May 2, 2014, 11:03 AM - Edit history (7)

https://pennbpc.org/blog-some-major-corporations-pay-little-or-nothing-state-income-taxes

"What do Pennsylvania-based companies PPL, H.J. Heinz, Airgas, Allegheny Technologies, Hershey, and Comcast have in common? They each pay little or nothing in state income taxes, according to a new report from the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ).

The new study documents how corporate loopholes, tax breaks, and crafty accounting have allowed many Fortune 500 companies to avoid paying state income taxes. In all, researchers looked at 269 Fortune 500 companies, including 16 based in Pennsylvania, that were profitable every year between 2008 and 2012. Of those, 90 companies avoided state income taxes altogether in one or more years."
----

http://pennbpc.org/2014-15-Budget-Analysis

Despite a projected billion dollar deficit, Corbett is proposing another $62 million reduction in corporate taxes in next year's budget. Business taxes will have decreased by $1.2 billion during the Corbett years.

The half-hearted attempt last year to close the Delaware corporate tax loophole has largely failed. This loophole allows large national and international corporations to divert their profits to their Delaware subsidiaries (often using a PO box), while shifting their costs to PA.

http://pennbpc.org/HB-440-Addback-Analysis

"The best known strategy is the infamous “Delaware loophole,” of which the Toys “R” Us Geoffrey Giraffe case is the most widely known example. Toys “R” Us set up a holding company in Delaware to hold the trademark for the Geoffrey Giraffe logo. The holding company charges Toys “R” Us retail stores across the country a royalty to use the trademark. The retail stores deduct this payment to the holding company as a business expense, reducing their income in other states and, in turn, their taxes. This is legal, even though there is no need for a company to sell the use of a trademark to itself – and no reason to grant an expense deduction. Because royalty income is not taxed in Delaware, the Geoffrey holding company (owned by Toys “R” Us) gets to keep the money tax free."

If loopholes can be closed, then the corporations that do pay their fair share of state corporate taxes could enjoy a lower rate. A similar situation exists at the federal level, where a few corporations pay very high corporate taxes, while other profitable corporations pay almost nothing.

A change in bank taxes that he approved last year has resulted in $88 million less in state taxes from banks this year.

[Curmudgeoness]

1. The truly sad part of this is that all of us have to step up

and pay more taxes than we should to cover what these companies are not paying. And as stated in the OP, many companies end up with higher taxes than they would have to pay if it was equitable. The state will get the money they need somewhere, and why they would want to screw so many companies and individuals to cater to a few others is beyond me.