Many Pennsylvanians will grumble today as they race to file their tax returns on time. Others will be laughing all the way to the bank.
Who’s laughing, you ask? Those well-connected few corporations and top earners who benefit from federal and state tax loopholes that drain revenue and shift the cost of services onto the rest of us.
In an op-ed in Friday’s Pittsburgh Post-Gazette, I shared the example of General Electric, the nation’s largest corporation. As such, you would expect G.E. to have a pretty sizeable tax bill, right? Think again.
Many Pennsylvanians will grumble today as they race to file their tax returns on time. Others will be laughing all the way to the bank.
Who’s laughing, you ask? Those well-connected few corporations and top earners who benefit from federal and state tax loopholes that drain revenue and shift the cost of services onto the rest of us.
In an op-ed in Friday’s Pittsburgh Post-Gazette, I shared the example of General Electric, the nation’s largest corporation. As such, you would expect G.E. to have a pretty sizeable tax bill, right? Think again.
Despite worldwide profits of $14.2 billion (including $5.1 billion in U.S. profits), G.E. owed Uncle Sam nothing in federal taxes. In fact, the company got $3.2 billion back in tax benefits.
At a time when Washington is cutting a wide array of critical services — from food for nursing women and infants to heating assistance for seniors — policy makers continue to look the other way when it comes to tax loopholes.
These loopholes allow corporations to shift foreign profits into accounts in Ireland, the Netherlands and Bermuda to avoid U.S. corporate taxes. These gimmicks are so well known they have nicknames — the Double Irish and the Dutch Sandwich — and they have a huge cost, as much as $90 billion a year.
And it’s not just a federal tax problems. Loopholes and giveaways are alive and well in Pennsylvania’s tax system too.
If your family earned more than $33,000 this year, congratulations! You paid more in income taxes than 85 percent of Pennsylvania corporations. Seventy-four percent of Pennsylvania corporations did not pay one dime in income taxes.
So what can be done about it? Policies aren’t carved in stone. Lawmakers can choose to close loopholes and make the tax system fairer.
Lawmakers have a choice. If they choose to keep costly loopholes for the well-connected, the rest of us will pay more — in higher property taxes, higher college tuition and a weakened economy.
Pennsylvania’s economy will be better off when companies thrive because of innovation and a strong marketplace rather than their ability to avoid taxes. Smaller Pennsylvania-based businesses without high-priced accountants shouldn’t have to compete against — and pick up the tab for — big businesses adept at gaming the tax system.
Many of us will grumble as we prepare to file our tax returns on Monday, but let’s do more than that. Let’s declare April 18 Close the Loopholes Day in Pennsylvania. Let’s send a message to our lawmakers: Before cutting schools, ending full day kindergarten or reducing rape crisis services, ask everyone to pay their fair share. We will all be better off for it.