Harrisburg, January 29, 2020 – At the request of Senators Katie Muth (D-Berks/Chester/Montgomery) and John Blake (D-Lackawanna), the state Senate Democratic Policy Committee today held a public hearing on ways to make corporate taxes more equitable.
Much of the hearing focused on legislation Muth and Blake are working on that would establish “combined reporting” to require corporations to more accurately report revenues earned in Pennsylvania. Often referred to as the “Delaware loophole,” the accounting strategy enables huge corporations to declare certain types of revenue in the state where the company is incorporated rather than in the state where the business operates and the revenue is earned.
“Pennsylvania is in desperate need of tax fairness. It’s frustrating to see corporations sheltering profits through avenues like the Delaware loophole which then leaves small businesses and working people with the majority of the state’s tax burden,” Muth said. “This hearing is about combatting corporate tax-avoidance and ensuring corporations are paying their fair share.”
Blake added, “Since 1972, the corporate share of the state’s tax revenue has dropped from 30 to 15 percent. While I support efforts to lower and eliminate business taxes such as the corporate new income tax, we should not be allowing tax loopholes that enable huge corporations to skirt their share of the tax burden.”
Sen. Lisa Boscola (D-Northampton/Lehigh), who chairs the committee, said, “It is imperative that we protect the viability and competitiveness of Pennsylvania’s small businesses, which pay their fair share of taxes and employ people. These small businesses should not be competing against huge corporations that exploit loopholes that enable them to shield profits away from taxation.”
Senate Democrats have fought to eliminate the Delaware loophole for decades. Both Blake and Sen. Christine Tartaglione (D-Phila.) have previously sponsored bills that would require combined reporting. Half of the states with corporate taxes require combined reporting.
According to the Pennsylvania Budget and Policy Center report, 71 percent of companies operating in Pennsylvania that are subject to the corporate net income tax pay no tax.
“Tens of thousands of companies are avoiding Pennsylvania state taxes because their home office is a file drawer in an office building somewhere in Delaware,” the report states. “And those that are paying are paying less. In 1994, 75 percent of corporations paid $1,000 or less in corporate income taxes. By 2003, 84 percent of all corporations were paying that much – less than a Pennsylvania family earning $36,000 a year pays in annual income taxes.”
Calling it a very rough estimate, Department of Revenue Deputy Secretary of Tax Policy Amy Gill predicted that (using an average combined reporting rate) Pennsylvania could reap an additional 29 percent ($677 million) in corporate tax revenue.
Michael Mazerov, a senior fellow for the Center on Policy and Budget Priorities in Washington, D.C., said, “The enactment of combined reporting can make an important contribution to preserving Pennsylvania’s tax base from further erosion and ensuring that multistate and multinational corporations compete on a level playing field with their counterparts that do not seek to push the tax-avoidance envelope and with wholly in-state corporations.”
Jared Walczak, director of State Tax Policy, Tax Foundation, added, “Critics of combined reporting are right in that it increases compliance costs and does not always result in a more accurate apportionment of income. Proponents are also right, however, in observing that the current separate apportionment approach permits some companies to reduce or even eliminate their tax burdens in Pennsylvania despite engaging in producing economic activity here.”
Muth and Blake said the hearing was aimed at determining the best ways to structure corporate tax reform around consolidated reporting coupled with cuts to the Corporate Net Income tax. They said it is important that the legislation be supported by reliable data.
In addition to Boscola, Muth, Blake and Tartaglione, the following senators attended: Senate Democratic Leader Jay Costa (D-Allegheny), Maria Collett (D-Buicks/Montgomery), Art Haywood (D-Montgomery/Phila.), Pam Iovino (D-Allegheny) Tim Kearney (D-Delaware/Chester), Steve Santarsiero (D-Bucks), and Lindsey Williams (D-Allegheny).
Those testifying included:
Matt Knittel, Director, Independent Fiscal Office;
Amy Gill, Deputy Secretary for Tax Policy, PA Department of Revenue;
Bruce Fort, Senior Counsel, Multistate Tax Commission;
Jared Walczak, Director of State Tax Policy, Tax Foundation;
Marc Stier, Director, Pennsylvania Budget and Policy Center; and
Michael Mazerov, Senior Fellow, Center on Budget and Policy Priorities
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SCRANTON, May 16, 2012 – – Members of the Senate Democratic Policy Committee today met area human service providers at Lackawanna College to discuss current public policy issues and the adverse effect a proposed 20 percent state funding reduction would have on the people they serve.
Senate Democratic Policy Committee Chair Lisa Boscola (D-Northampton) said the committee has been gathering input from providers and advocates throughout the state on the impact the Governor’s proposed budget will have upon their ability to continue to provide adequate services in their communities.
“This is a great opportunity for committee members and service providers alike to share ideas and continue the discussion about what their policy and funding needs are,” Boscola said. “It is imperative that the legislature continues to fight for programs and services that are proven successful, especially for the people who need our help the most.”
Last week, the Senate passed an updated version of the state’s 2012-13 spending plan that would increase state funding to human service providers by $84 million over Gov. Corbett’s initial budget proposal.
State Sen. John Blake (D-Lackawanna) spoke about how the continued budget cuts not only affect local social service organizations, but also the levels of service they can provide to individuals and their families who rely so heavily on quality services from providers in Northeastern Pennsylvania.
“It was very important for my Senate colleagues to visit my district and hear entreaties from our local human service providers about the challenges they are facing on the front lines with limited resources and increased demand,” Blake said. “As we work towards a final state budget, we must be diligent in our negotiations so that those who need our help the most, including seniors, persons with intellectual disabilities and autism, and those struggling with their health or mental illness, are able to receive the care and support they deserve.”
Also participating in the discussion, state Sen. John Yudichak (D-Luzerne/Carbon/Monroe) said that the legislature “must be mindful of the human impact and the negative consequences of reducing funding to programs that are an essential lifeline to families and individuals across the Commonwealth.”
Participants told the Senators about their current struggles to keep pace with the increasing demand for their services and the significant risk of reducing state support any further.
“The proposed budget cuts, even at the 10 percent level, would put many programs and services that we and others provide in serious jeopardy and if these programs go—they’re gone,” William P. Conaboy, President, Allied Services Health Integration System said. “A lot of these programs will be in jeopardy and these are programs that we need more than ever.”
Gary Drapek, President, United Way of Lackawanna and Wayne Counties echoed those concerns.
“There has been no other time where we need the state’s help more than we do now – — and it feels like the rug is being pulled out from under us,” Drapek said. “This is about more than lines and numbers on a spread sheet, there are real lives and real people being affected.”
Other participants in the roundtable discussion included representatives from the Women’s Resource Center, The ARC of Northeastern PA, United Way of Lackawanna and Wayne Counties, Allied Services Health Integration System, United Cerebral Palsy of Northeastern PA, Northeast PA Center for Independent Living, and the Lackawanna-Susquehanna Behavioral Health, Intellectual Disabilities, Early Intervention Program.
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HARRISBURG, April 13, 2011 – – State Sen. John P. Blake today announced that the Senate Democratic Policy Committee will host a public hearing in Scranton on energy, economic development and job creation initiatives.
The hearing will be held at 12:30 p.m. on Wednesday, April 20 in the Nazareth Student Center at Marywood University.
Blake will be joined at the hearing by Policy Committee Chair Lisa Boscola (D- Northampton/ Lehigh/Monroe), Senate Democratic Leader Jay Costa (D-Allegheny) and other Senate Democrats.
“I am excited to bring my Senate colleagues and our legislative proposals to Lackawanna County,”
Blake said. “This public hearing will be a great opportunity for legislators to not only discuss with our residents the pressing budget issues we are facing in Harrisburg, but also a great opportunity for our community and business leaders to share their experience and to discuss important, energy-related business opportunities in Northeastern Pennsylvania.”
The Blue-Green Jobs and Energy hearing will feature testimony from community leaders from the economic development, labor, job training and academic community.
“As chair of the Senate Democratic Policy Committee, I am constantly looking for opportunities to take our committee around the state to hear local concerns on pressing issues,” Boscola added. “This hearing is another opportunity for the public to influence our policy decisions and goals as we move forward with state budget negotiations.”
Blake said that the Policy Hearing participants include:
- R. Chadwick Paul, president and CEO of Ben Franklin Technologies;
- Eric Esoda, executive director of Northeastern Pennsylvania Industrial Resource Center, Inc.;
- Kurt Bauman, Government Services Manager, NEPA Alliance;
- Gregory K. Hunt, founding dean, Marywood University School of Architecture
- Dr. Ann Pipinski, president of Johnson College;
- Paul Casparrow, electrical training educator for International Brotherhood of Electrical Workers;
- Jim Teeple, vice president of Global Operations, Weiler Corporation
- James Palumbo, president of Quad 3
- Lew Grant, general manager of Valmont Industries
The hearing will start with a presentation by Sen. Blake highlighting the Senate Democrats’ budget priorities and the PA Works job creation initiative. The six-point plan is projected to create tens of thousands of jobs in Pennsylvania while reducing state spending and encouraging private investment throughout the state.
“As the legislature continues to look for innovative and fiscally responsible ways to close the $4 billion budget gap, it is imperative that job creation remain our number one priority,” Senate Democratic leader Jay Costa said. “Our PA Works program will not only create much-needed jobs throughout the state, but it will also promote a business-friendly environment and expand business opportunities. As we continue to work our way out of this recession, we know that jobs and smart, well-focused investment will put Pennsylvania back on track.”
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