If revenue collections keep pace, or improve a bit, it is not unrealistic that the deficit could drop below the $300 million point. From there, we expect some lawmakers to make the case that basic and higher education, along with human services funding, could actually be held close to level-funded if the state stops the planned phase-out of the CS&F Tax, worth an estimated $275 million annually. Add in the $75 million the state saves by ending the sales tax discount, and you are outta town. Even counting only a half-year of savings by freezing the CS&F, that $140 million and the aforementioned $75 million don’t only get you in the ballpark, they get you somewhere between third base and home plate.
The bad news is, there's not a chance in hell the Governor of Pennsylvania and his legislature will do this.
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.
Over the past 10 years, state lawmakers have cut business taxes by $2.4 billion with the hope of creating jobs. Instead, these tax breaks have contributed to cuts to critical services for families trying to manage in the recession and to the loss of 14,000 jobs in public schools and colleges in 2011.
Real talk here: Republicans simply believe that if you give more breaks, give more money, and let the rich do whatever they want, they'll hire people. It's true that if you take all their money away, the rich won't hire, but it's not true that if you give them all the money you can, they'll hire. That's just not how people behave.
If you give money to poor and middle income people, they will spend it, because they make choices that limit themselves on spending everyday, leaving things they want and need out there. If you spend on services that they can take, they will use those services too, because that's how they behave when offered something. Rich people do not do the same thing, nor does (or should) a corporation. A corporation's first interest is not in hiring more people- it's to make more money. It's obligation is to shareholders, and it is run by people who receive a lot of compensation in bonuses, for which they get more for making the shareholders more. This means that if you give them more money, but you decrease demand or even hold it steady, they will not go hiring people to produce more good or service to sell on a diminishing or similar market, at a similar or lower price. So if you cut jobs and services, which decreases public demand, and you give more money to the rich and corporations, they will either pocket the money or invest it in themselves, not hire more people. Pennsylvania's current philosophy on taxes and spending cannot, and will not work.
For the last thirty years, really up until now, we have had this "give them more and they'll hire more" ideology running government at some or all levels. It can't work. We need to drop it and move on.
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