New PA. budget includes many new special interest tax breaks

[JPZenger]

http://pennbpc.org/2013-14-Tax-Code

The PA. Constitution requires uniform methods of taxation. That is why PA. has a flat income tax, unlike the progressive income tax rates of almost all of the neighboring states. However, in PA, some animals are more equal than others.

The Repubs found room in the budget for many new special interest tax breaks. Meanwhile, the Repubs kept saying they would love to provide more money for rural and city school districts, but the money "just isn't there."

They are making a half-hearted attempt to close the Delaware Loophole in the future. That loophole allows many multi-national corporations to avoid taxes on the profits they made in Pennsylvania. If they had made a full-scale effort to close the loophole, it could have generated $80 million last year and $80 million this year.

These matters are in the Fiscal Code, which carries out the budget, and which is about to be adopted.

Excerpt:

"The bill, however, is filled with new special interest tax breaks for private aircraft owners, banks, gas drillers, satellite TV companies and wireless companies like Verizon and Sprint. These items were added at the last minute, in some cases with no public debate.

Overall, it is expected to increase tax revenue by only $52 million in 2013-14 and $162 million in 2014-15 (with no measure on the future impact). While this is a modest improvement, the bill leaves a great deal of money on the table and weighs the Tax Code down with more special interest tax breaks that will drain revenue for years to come."

...The tax bill would close the “Delaware Loophole” by requiring corporations to “add back” to their income payments they have made to related companies in Delaware and other states to avoid paying Pennsylvania taxes. Three-quarters of states with corporate income taxes have passed laws to end this and other tax avoidance practices. Pennsylvania’s new rules are loosely based on a Virginia law, itself one of the weakest in the nation, and is much weaker than laws in neighboring New Jersey and Maryland. The provisions do not go into effect until 2015 and are expected to generate $40 million to $60 million per year in revenue in 2015."