Enough Already: Don’t Penalize Pennsylvania’s Businesses With More Punitive Taxes
2016 is a pivotal year in Pennsylvania where we have found ourselves, yet again, to be a presidential battleground state. Over the months, we have seen presidential candidates crisscross our state and, inevitably, this activity will only escalate in the months ahead. In addition, our junior senator, Pat Toomey, a champion of Pennsylvania’s business community, finds himself in a challenging re-election where his positions on the economy, education, taxes, health care and other issues will be tested.
In both races, there is no greater issue to Pennsylvania voters than taxes. Pennsylvania’s business community has an obligation this year to urge our elected officials to ensure taxes are reduced, our tax code is simplified, and all sectors throughout our economy are treated equally.
In Pennsylvania, our tax climate has suffered in recent years. The nonpartisan Tax Foundation found that our state’s corporate rate ranks second highest among states levying a corporate income tax. Pennsylvania’s state and local corporate income tax collections in 2012 were $168 per person, which ranked 14th highest nationally. This data is indeed dismal and has worsened by the unfair and complicated tax fights our state and country currently face.
One example of punitive taxes facing our state is Governor Tom Wolf’s proposed tax on natural gas drillers to 6.5 percent of production. This tax is intended to bring in revenue for the state, but since the state’s natural gas production has slowed in recent years, this tax would not bring in as much revenue as the governor expects. In proposing this tax, Governor Wolf also has ignored the simple mantra that when you tax something, you get less of it — and that’s exactly what the outcome would be with this natural gas tax.
In addition to this state tax facing our natural gas sector, President Barack Obama proposed to levy a new $10 per barrel tax on crude oil as part of the White House’s final budget, which was submitted in February. President Obama and Governor Wolf both evidently believe that everyday taxpayers are not paying enough for gasoline at the pump or enjoying low energy prices a little too much, which might explain their obvious discrimination against this industry. Yet the real victims here are not the oil and gas industry, but Pennsylvania’s middle class, which would be forced to shoulder the burden of nearly $5 more for every trip to the gas station.
This proposal would not only negatively affect middle class Pennsylvania motorists, but will further burden Pennsylvania’s agriculture industry, which uses gasoline and diesel for operations. Additionally, retailers and shippers in the Keystone State responsible for transporting goods to consumers will also suffer from such a tax.
This tax isn’t the first time Pennsylvania residents have seen the Obama administration attempt to raise punitive taxes on our energy sector. Last fall, Obama and his Senate Democratic allies attempted to repeal tax deductions on the oil and gas industry even though virtually all of the S&P 500 companies take these tax deductions. The Obama administration operated under the false presumption that the industry receives subsidies, but this claim is false. As the National Taxpayers Union has explained, “a subsidy is a direct payment from the government to a corporation with the goal of boosting its prospects. A deduction enables a business to write off its legitimate expenses and calculate its tax liability based on net income.” It is, therefore, irresponsible to penalize this thriving sector of the economy under the allegation they receive subsidies.
What’s ultimately needed is comprehensive tax reform. Such reform will help simplify the tax code from the complicated mess it is today, ensure taxpayers spend less on compliance costs, and prevent the government from picking winners and losers with tax policy. The private sector, businesses and manufacturers — the true job creators — need comprehensive tax reform, regulatory reform, energy reform and a stop to out-of-control government spending, so that they can thrive and survive both domestically and in the global market.
