Sharon Ward – 5/22/13

This page was last updated on May 23, 2013.

Not time for corporate tax cut bill; Sharon Ward - Pennsylvania Budget and Policy Center (PBPC); Beaver County Times; May 22, 2013.

Ms. Ward is Executive Director of the PBPC. PBPC is a “project of the Keystone Research Center” (KRC). KRC is a member of the Economic Analysis and Research Network (EARN). “EARN is coordinated by the Economic Policy Institute (EPI).” Whew, got all that? All of these organizations are leftist advocacy groups. Heck, even the Pittsburgh Post-Gazette concedes PBPC and KRC as “liberal research groups.”

A previous PBPC letter I critiqued was “State should end tax collection discount.”

Below is a detailed critique of the subject letter.

“This month many school boards are deciding which programs to cut and how many staffers to lay off. In Harrisburg, lawmakers may make matters worse with sweeping new tax cuts for profitable corporations.”

[RWC] PBPC spammed this letter to papers throughout Pennsylvania.

When comparing the current budget of $63.3 billion (2012-2013) with then-Gov. Rendell’s final budget of $66.4 billion (2010-2011), you will find tax cuts to date amount to 4.7% of the total budget. The portions of the budgets dedicated to “education and social services” were 79.2% and 79.8%, respectively. For “PreK-12 Education” and “Medical Assistance/Long-Term Living,” their portions of the budget are marginally higher in the current budget than in the final Rendell budget.

The portions of tax revenue provided by so-called business taxes were 14.3% and 15.2%, respectively. If that’s not enough, please read “Location Matters: A Comparative Analysis of State Costs on Business” by the Tax Foundation (a reference used by the BCT). For “Mature Firms,” Pennsylvania ranks 50th (worst). PA did “better” with “New Firms,” ranking 49th.

As for Ms. Ward’s use of “corporations,” most (all?) leftsters use “corporation” as a synonym for “business,” though I’m sure they would disagree in public. As with all leftyspeak, it allows lefties to mislead people by implying one thing (big, evil company) but meaning another [all businesses (except those union-owned and labor unions), whether big or “mom & pop”]. FYI, a Pennsylvania corporation can be as small as one person.

“The House adopted a bill that supporters say closes loopholes. House Bill 440 takes the easy way out. It does little to close tax loopholes, leaving the rest of us paying more – including businesses that focus on their customers rather than tax avoidance schemes.”

[RWC] You have to appreciate the chutzpah. Ms. Ward works for a tax-exempt business and she complains that taxpaying businesses aren’t paying enough.

I suspect Ms. Ward’s definition of a “loophole” is a legal provision of the tax code she doesn’t like, probably because she believes it doesn’t benefit her personally or professionally. 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. When Ms. Ward files her personal income tax returns, does anyone believe she doesn’t take advantage of every deduction, exemption, etc. (aka loophole) the tax laws allow her to use?

I wonder if Ms. Ward understands her employer’s tax-exempt status is one of those “loopholes” she allegedly dislikes. According to the KRC website, “The Keystone Research Center is a 501(c)(3) organization. Contributions to Keystone may be deducted for federal income tax purposes.” Where’s the IRS office of tax-exempt entities when you need it? <g>

“Tax avoidance scheme” is leftyspeak for legally minimizing your tax liability by following tax law. Remember, tax “evasion” is illegal; tax “avoidance” is what we all do when filing our tax returns.

Ms. Ward appears to believe focusing on customers (whatever she means by that) and tax avoidance are mutually exclusive activities. Taxes are a business expense. The less a business spends on non-productive overhead, like taxes, the more the business has to “focus on their customers.” When a business pays more taxes than it must, that is money not available to spend on things like research, product development, improvements, employee training, et cetera, all activities that benefit customers. A business that does not legally minimize its tax liabilities hurts its competitiveness and risks its existence.

“The bill is now before the Senate. If passed, it will give away $7 in new tax cuts for every $1 it brings in, once it is fully implemented. That means less for our children’s education, roads and bridges and health care.

“We all want a stronger economy, but after 10 years of cutting corporate taxes, our unemployment rate is above the national average and has been since last fall. State funding cuts over the past two years have cost 20,000 teachers, language specialists, counselors and other jobs in public schools.”

[RWC] I recommend you check the PBPC data for both accuracy and context. As I noted above, “PreK-12 Education” in the budget is marginally higher in the current budget than in the final Rendell budget.

Despite Ms. Ward’s alleged “10 years of cutting corporate taxes,” the Tax Foundation reports PA’s “Corporate Tax Rank” for 2013 is 46 (one is best, 50 worst). At 9.99%, PA’s corporate income tax rate is second only to Iowa (12%). The “Property Tax Rank” is 42.

“Pennsylvania needs real tax reform that levels the playing field for all businesses without undermining our future or shifting more costs onto property taxpayers.”

[RWC] You’ll find “real tax reform” is not about “level[ing] the playing field for all businesses,” whatever that means; it’s leftyspeak for increasing tax rates. You won’t find PBPC advocate that any alleged inequities should be fixed by lowering tax rates for “businesses that focus on their customers rather than tax avoidance schemes.”

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).”