This page was last updated on July 20, 2011.
Corporations over people; Janet Hill; Beaver County Times; July 20, 2011.
According to Beaver County Reds, Ms. Hill is a member of “USW [United Steelworkers] staff and also a PDA [Progressive Democrats of America] member.” Previous letters of which I’m aware are “Corbett out of touch on unemployment” and “Abortion and breast cancer aren’t linked” (I didn’t critique this letter and it’s no longer on the BCT website.).
Below is a detailed critique of the subject letter.
“In response to state Rep. Jim Christiana’s letter ‘Budget priorities are on target:’
“A budget is about choices and priorities. The choices in this budget were clear -- corporations over people.”
[RWC] With a leadoff like this, you’d never guess Ms. Hill is a member of “USW [United Steelworkers] staff and also a PDA [Progressive Democrats of America] member.” The following list of Ms. Hill’s lefty talking points aren’t a clue either. <g>
“You can tax Marcellus Shale companies that are destroying roads and infrastructure in local communities so that companies not the community pays [sic] for repair.”
[RWC] “Marcellus Shale companies” pay taxes just as any other business. What PA is not doing is charging a royalty for extracted gas, a charge the Times finally conceded is “a tax that is paid by consumers.” As for the rest of the sentence, an “impact fee” is under consideration by the General Assembly and Gov. Tom Corbett. The stated purpose of the impact fee is to mitigate local impacts of drilling, such as increased bridge/road wear and tear and increased loads on water and sewerage systems. A PG story said, “Most of the money collected would still be reserved for local governments, and could be spent on roads, bridges and water and sewerage systems. Other revenues would go to statewide infrastructure projects, and starting in 2012, $1 million would be set aside for emergency responder training and equipment.”
“You can choose to close tax loopholes that are allowing many companies to do business in the state without paying any taxes. That gives them a free ride on the backs of taxpayers and is unfair to the small businesses that struggle to pay their taxes.”
[RWC] To begin, I oppose so-called “business taxes” for at least two reasons. First, corporation income taxes are double taxation. That is, the government taxes a corporation’s taxable income and then taxes the dividends (after-tax profits) shareholders [including pension plans, IRAs, and 401(k)s] receive. Second, business taxes are a scheme to hide true taxation from the ultimate taxpayers, you and me. In some cases, businesses are prohibited by law from itemizing taxes on their invoices. You see, businesses - like government - don’t have any money; it all belongs to the owner(s). One way or another, business taxes are paid by individuals - customers, employees, and owners. According to the Tax Foundation, the average U.S. taxpayer worked eight days in 2002 to pay federal income taxes levied on corporations. In addition, we worked a fraction of a day to pay other business taxes. Business taxes are approximately seven percent of our total personal tax burden. That is, seven out of 100 tax dollars we pay are business taxes.
Note Ms. Hill’s use of the term “loophole.” A loophole is a legal provision of the tax code you don’t like, usually because you don’t believe it benefits you personally. For example, if you didn’t like the home mortgage interest deduction because you rent or your house is paid for, you would call it a loophole because the deduction reduces the tax liability of taxpayers who can use it. You would claim the deduction (loophole) allows some taxpayers to escape paying their “fair share” of taxes. That’s what Ms. Hill is doing with legal provisions of the PA tax code. To increase collections, Ms. Hill wants to eliminate certain legal deductions and/or exemptions. What follows is some information Ms. Hill probably doesn’t know or chooses to ignore.
The reason provisions like the “Delaware Tax Loophole” mentioned in other letters exist is to help mitigate the problem of a high tax rate. At a flat 9.99%, PA’s Corporate Net Income (CNI) tax is second only to Iowa’s top rate of 12% for income over $250,000. In addition, PA corporations must also pay the Capital Stock and Franchise (CSF) rate of 2.9 mills, fifth highest in 2010. Pennsylvania is one of a minority of states imposing both CNI and CSF taxes. As of 2009, Pennsylvania and Massachusetts were the only two states that ranked in the top 10 for both taxes.
According to the Tax Foundation in 2010, “If Pennsylvania were its own country, it would have the highest overall corporate tax rate in the world at 41.5% (federal plus state, accounting for the state-local deduction).”
“You can choose to create jobs by investing in infrastructure or you can let it fall down around your ears.”
[RWC] Note: “Investing” and “spending” are not synonyms. I don’t know about all “infrastructure,” but the 2011-2012 budget for highways/bridges is only 3.8% lower than 2010-2011. I’ll guess Ms. Hill would pay for what she wants by increasing tax rates for the usual targets. Tax dollars taken from us means there is less money available for individuals and businesses to invest (the real definition). In any case, assuming the government can spend or invest money better than those who earn it is flat wrong. Ms. Hill didn’t learn the lessons of the Roaring Twenties and the Great Depression.
“And you can choose to not increase the budget for the most expensive state legislative [sic] in the country while others are sacrificing.”
[RWC] This happened. The enacted General Assembly’s 2011-2012 budget is 5.4% lower than 2010-2011 spending. You can argue it’s not enough, but it’s lower nonetheless.
“People are going to be hurt, and corporations and legislators’ budgets aren’t.”
[RWC] How would increasing tax rates for “corporations” help their employees and owners (pension plans, individual IRAs & 401(k)s, etc.)?
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