Energy companies are reporting record profits. They don't need more tax breaks
On their way out of town last week, our lawmakers in Harrisburg rushed through a raft of tax credits aimed squarely at big business and wealthy individuals.
You can argue the merits of various components of the massive bill: It covers a wide swath of special interests, giving away $15 million in tax breaks for milk processors and $20 million to semiconductor and biomedical manufacturers. That's probably why it passed both chambers with wide bipartisan support.
But make no mistake. This legislation does vanishingly little for ordinary Pennsylvanians who need not worry about estimating their tax payments — another component of the bill that makes life easier for high-income residents.
Indeed, this legislation lines the pockets of corporations that are already raking in record profits.
The most galling proposals are the $50 million per year in annual tax breaks to create a program to convert fracked natural gas into hydrogen and an additional $30 million per year in tax breaks for petrochemical and fertilizer manufacturers. That's on top of the existing $27 million in tax breaks these companies enjoy.
Shell, which is eyeing the Pittsburgh area for just the kind of "hydrogen hub" that would benefit from the former tax credit, brought in near-record profits thanks to higher energy prices all of us are experiencing.
On Thursday, Shell reported third-quarter earnings of $9.5 billion, its second-highest quarterly profit on record. Simultaneously, it announced a plan to increase its shareholder dividend by 15 percent and to buy back $4 billion worth of shares.
The company is so profitable it can freely spend those earnings to boost its stock price and pay back investors. And Shell is hardly alone. Exxon Mobil and Chevron also recently announced record profits.
All of this new corporate welfare comes at a time when Pennsylvania's minimum wage has languished at $7.25 since 2008.
So ... why is Pennsylvania giving handouts to Shell and other energy companies?
For one thing, the natural gas industry spent a combined $70 million on lobbying in Harrisburg between 2007 and mid-2018 and at least another $11 million on campaign contributions over the same period, according to data analysis by the Conservation Voters of Pennsylvania. Shell alone accounted for $1.6 million of those lobbying expenditures.
Working class people can't possibly compete against that kind of political clout.
Former state Environmental Secretary Patrick McDonnell, now the head of environmental group PennFuture, called the raft of tax credits "a polluter's dream come true."
State Sen. Katie Muth, D-Montgomery County, attempted to amend the bill with a provision forcing lawmakers to disclose any financial ties that could allow them to personally benefit from the tax credits. She also pitched a change that would require an Independent Fiscal Office study of the long-range impact of these giveaways.
Alas, Muth's attempt to force some accountability into the process was easily swatted down.
She described the tax credits — and the opaque legislative process that led to their swift and largely unscrutinized passage — as fiscal negligence.
Now, the bill sits on the desk of Gov. Tom Wolf. We strongly urge him not to sign it.