Our leaders are gunning for a corporate tax cut. What about the rest of us?


Give a politician a surplus and they'll quickly find a way to use it.

And that spending rarely trickles down to the people who need it the most.

Pennsylvania is flush with cash right now thanks to $7.3 billion in taxpayer money President Joe Biden's administration sent the state last year as part of a COVID-19 stimulus.

Thus far, the Legislature has taken its time spending that money. As of late March, just shy of $5 billion had been spent or earmarked, according to the state treasurer's office.

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Democrats eyed the remainder to help fund educational and housing programs or to provide direct stimulus to low-income families. Republicans lobbied variously for more criminal justice spending or corporate tax relief.

It seems the business interests have won out.

On Tuesday, the state House overwhelmingly voted for HB1960, which reduces the state's corporate net income tax  rate from 10% to 9% and calls for future cuts based on the level of budget surplus over time.

At this point, the bill is a fait accompli. In the House, eight progressive Democrats objected to it. It has bipartisan support in the Senate. And Gov. Tom Wolf, perhaps looking for compromise to bolster his larger education-heavy spending plan, has signaled his support.

We don't begrudge corporations their tax cuts, but why are they always the first to sidle up to the trough when 12% of Pennsylvanians are living below the federal poverty line?

There's something deeply cynical in a government that can justify such blatant injustice — never mind that the COVID aid that delivered us this surplus was designed to help those hurt by, you know, COVID.

In the short-term, HB1960 would reduce tax revenues by $128 million in fiscal year 2022-23, according to a House Republican fiscal analysis. Not terrible, considering the larger surplus.

But look further out and the policy's impact compounds.

Each 1% decrease in the corporate net income tax translates to between $400 million and $450 million in lost revenue per year, according to the analysis. If the bill's relatively low bar — a $500 million surplus in 2023-24 — is met, that could translate to a net tax revenue loss of between $800 million and $900 million per year by 2025.

The argument for reducing the tax is that Pennsylvania's is the second highest — behind New Jersey's 11.5% — in the nation. Our neighbors in New York, Virginia and West Virginia have corporate net income taxes in the 6%-to-7% range. Ohio doesn't have a corporate net income tax but does collect a 5% gross receipts tax, which isn't directly comparable.

Cutting corporate taxes could hypothetically make Pennsylvania more attractive to business — and thus put more Pennsylvanians to work.

But we humbly submit that Pennsylvania doesn't have an employment problem — with the current unemployment rate at a pre-pandemic level of 4.9%.

We have a quality of life problem (that 12% poverty rate).

The best way to fix that is to leave more money in the pockets of working people, not the corporations that employ them.

And there's already a bill sitting in committee — the so-called Fair Share Tax Plan (SB555) — that would do just that. It would split the state's personal income tax — currently a flat 3.07% — into two separate taxes: laborers would pay 2.8% of their wages while business profits, capital gains and estates would be taxed at 6.5%.