Corporations

Some Hope for PA Revenue in January but Corporate Taxes Still Lag

A blog post by Michael Wood, originally published at Third and State.

Pennsylvania’s revenue performance has been pretty uneven this fiscal year due in part to a stubbornly slow growing economy and to policies that have cut the tax bills of big profitable corporations. After months of significant revenue shortfalls, however, January provided some hope.

General Fund collections came in close to estimate in January – falling $10.2 million, or 0.5%, short of monthly targets. This is a marked improvement over the previous several months, when revenues fell between 3% and 6% short of estimate. Get my full analysis of the January revenue numbers here.

January is an uneventful month for most revenue streams, with personal income tax collections being the exception. January is second only to April, when tax returns are due.

Corporate collections continued to fall significantly short of estimate in January and account for more than half of the General Fund’s revenue shortfall so far in 2011-12.

Revenue collections for the 2011-12 Fiscal Year are $497 million, or 3.5%, below the Corbett administration’s revenue estimates. The administration is now projecting a year-end revenue shortfall of $719 million, although the Independent Fiscal Office (IFO) believes this to be too pessimistic, based on recent economic trends. The IFO expects the year-end shortfall to be in the $500 million range.

PA Tax Loophole Bill a First Step, More to Be Done

A blog post by Chris Lilienthal, originally published at Third and State.

Pennsylvania Representatives Dave Reed and Eugene DePasquale rolled out legislation today that would take an important first step towards closing corporate tax loopholes in Pennsylvania.

Corporate tax loopholes have been a problem for a long time in Pennsylvania. They don’t create jobs but do drain needed resources from good schools, health care and infrastructure.

Representatives Reed, a Republican, and DePasquale, a Democrat, deserve credit for recognizing this is a problem and taking steps to address it.

The bill, however, takes a limited approach and leaves many loopholes open for companies to exploit. It should be strengthened to ensure that big profitable corporations cannot use other artificial means to shift profits out of state and dodge taxes.

Matthew Gardner of Citizens for Tax Justice tells Philadelphia Inquirer columnist Joe DiStefano that combined reporting would be a better approach to closing loopholes. Under combined reporting, corporate net income tax would be assessed against income earned in Pennsylvania from a parent company and all of its related businesses.

As Gardner says:

Even if you’re successful in closing one [loophole], you’re doing nothing to stop the emergence of additional loopholes. Combined reporting ends the Whack-a-Mole game by taking away the incentive for companies to artificially shift income from one state to another.

Syndicate content