One five letter word has the power to determine elections, transformed the Tea Party into one of the strongest political movements in the country, and continues to strike fear in the minds of millions of Americans.
That word is taxes.
Raising or lowering taxes has become a key issue in the midterm election debates. With federal stimulus funding set to end after this fiscal year, states will be forced to address massive deficits.
Pennsylvania alone is expected to face a $5 billion deficit in 2011. Balancing a budget appears to be black and white: you can either cut spending or raise revenue.
Unfortunately over the past two years, legislators in Harrisburg have made drastic cuts to essential community services that benefit working families and our most vulnerable citizens. These programs include mental health services, child care assistance and autism prevention services.
Simply cutting the budget by $5 billion is not the answer. Layoffs to the public sector will only further weaken the commonwealth. Pennsylvania is the sixth-most-populous state yet already has fewer state employees than most states.
Many people complain about the quality of our roads, the poor quality of our public education and the terrible quality of our public transportation. Six thousand bridges in the state are considered structurally deficient and need immediate attention.
It’s like listening to a 5-year-old complain non-stop – no one seems willing to find the funding for these programs yet can find everything wrong with them.
Legislators must look at revenue enhancements.
But taxes shouldn’t be raised on the middle class – instead we should look at updating our tax structure so that big corporations like Wal-Mart, Best Buy, and ExxonMobil pay their fair share as well.
70 percent of corporations in Pennsylvania do not pay one penny in income taxes simply by creating a subsidy in a tax haven state like Delaware and shifting their address there. Twenty-three other states have closed this loophole by enacting combined reporting which has corporations file their taxes based on their income nationwide.
In Wilmington, DE there is a non-descript one-story building that holds the address of more than 2/3’s of Fortune 500 companies. There isn’t one representative from these companies; it’s simply a mailbox for them to use to avoid paying taxes in the state.
Combined reporting hasn’t dampened the economic prosperity of these states either. Ninety-seven percent of Pennsylvania’s largest private employers operate in other states that have enacted combined reporting.
According to Michael Wood of the Pennsylvania Budget and Policy Center, the state loses between $400 million and $1 billion by not closing this loophole.
These companies are using our roads, bridge and receive millions of our tax dollars in subsidiaries. It’s time to close the loopholes so that corporations are held accountable for the services they use and preserve our state programs.