Corbett signs bill to allow companies to pocket state income tax
Gov. Tom Corbett has signed a bill that would allow companies that create 250 new jobs to keep virtually all of the personal income tax paid by their employees.
Corbett signs bill to allow companies to pocket state income tax
Gov. Tom Corbett has signed a bill that would allow companies that create 250 new jobs to keep virtually all of the personal income tax paid by their employees.
The bill, known as the Promoting Employment Across Pennsylvania Act, was designed to encourage economic development and new job creation in the state, the Corbett administration said.
“As Governor, I am committed to ushering in an economic environment where the private sector can grow and create jobs,” Corbett said. “I commend the General Assembly for their work on this initiative to grow new jobs in Pennsylvania.”
The deadline for the governor to sign the bill was Sunday.
Under the act, a qualified company that enters into an agreement with the Department of Community and Economic Development (DCED) will be eligible to retain 95 percent of the qualified company’s withholding taxes for individuals employed in new jobs created by the company. Qualified companies must create at least 250 new jobs in Pennsylvania within a five year period, 100 of which must be created within the first two years.
The act also allows for an alternate process of which an employer may remit all of the personal income tax witheld from its employees, and then receive a rebate of that personal income tax from the commonwealth.
The program is capped at a total of $5 million per year and is set to expire on January 1, 2018.
Legislative sources told the Inquirer the bill was designed to lure software giant Oracle to Centre County, home to Penn State.
Sen. Jake Corman (R., Centre) on Wednesday said he didn't have any direct talks with Oracle, but like the concept of the bill because the tax diversion would ensure local jobs. Critics say such a maneuver amounts to employees paying their employers.
See more on the background of the bill in my story here.
Roxbury News captured the frantic back room lawmaking in action as the House Rules Committee (made of leaders in both parties), meeting in House Majority leader Mike Turzai's office, rushed through the final version of the bill on the day of its passage.
Read the full text of the bill (HB2626) at http://www.legis.state.pa.us.
Click here for Philly.com's politics page.
A more aggressive version of this program originated in Democrat held states, and has met some success, and praise by both D's and R's. However, PA is a very backward state, so it will not be well received here.— Tony Stark- PA is indeed a backwards state. Especially when when those socialists bastions known as Philthadelphia and Allegheny County consume almost 60% of the states revenues and only contribute 35-40% of the State Revenue.
Democrats kill Democracy.— Professor1982 - Without Philadelphia, pennsyltucky would be an irrelevant backwater. Philadelphia county receives the lowest per capita state spending of any county in the state by a wide margin, and the tax revenue "shortfall" is almost entirely because so many Philadelphia workers pay their income taxes in other counties. Delaware, Montgomery, Berks, and Chester counties are Pennsylvania's wealthiest, because the majority of Philadelphia's wealth goes there.
It might also surprise you to know that 22 Pennsylvania counties have lower per capita income than Philadelphia, and are substantial "takers" of state spending and welfare funds.— Pelti - Really like this bill. Can't wait for the sheep to come on here and moan because Corbett did ANYTHING. What better way to grow the economy than letting the actual job creators expand and hire more workers instead of giving more of our tax dollars to the government who we all know need some help in efficiency and integrity. I'm sure the sheep would rather have the income taxes go to the central planners aka democratic government. now let's sit back and watch the imbeciles come on here and pretend they have a brain of their own LOL— 420Phillie
- Wow! Maybe they should reconsider replacing all the toll workers with EZ pass if they care this much about jobs!— berni
- To Berni, ever see the lines and lines of cars that back up at the cash lanes? I guess efficiency and improvement are lost on the pro-union simpletons in this country.— 420Phillie
- OK, so the employees still have to pay (state) income tax but the company gets a rebate on the withholding of their employee's income tax. So if I'm right, the company gets money based on what their employees pay in state income tax, which is really employees money to begin with. I'm not sure why this is fair because the state is basically transferring the employee's money to their employer.— meteo30
- Loophole 101 - Just increase your deductions so your employer does not withhold any state tax. You don't owe any state taxes and your jerk of an employer doesn't pocket your own money. Oh, and this basically equates to your company taxing you to work there.— gtown_teach
- Two problems with this. There are very few state deductions so increasing your number of deductions will have little or no effect on state withholding (you may end up paying penalties on your Federal tax, though). But even if you could, in April you'd have to pay the difference between the state tax you owe and the amount withheld (or not) from your paycheck during the year -- and possibly some penalties. — Don_M
- Tax credits like this are NOT proven to create new jobs. Opinions differ. They are, on the contrary, proven to benefit the bottom lines of corporations and further impoverish the public treasury. Why may it be that they do not create jobs? Here's the answer that a real-live business owner, Jay Goltz in Chicago, gave the New York Times last year: “Businesses don’t hire people if they don’t need them, whether there’s a tax break or not. If companies don’t have work for new hires to do, they aren’t going to hire them even if they’re on sale for 6.2 percent off. Or even 20 percent off.” This logic implies that if Oracle -- or any other employer -- has work that needs doing in Pennsylvania, that corporation will hire people to do the work irrespective of tax subsidies. So why does the state want or need to pay Oracle off to set up here? I suspect that the answer to that question isn't just about job creation, but may have a lot to do with political contributions.— Dave Clemens
- Tax credits probably don't create jobs, but they may be in Texas (or other states with zero income tax) rather than Pennsylvania. — Don_M
- This is all a mere band aid not a real solution. More than anything I see what a bunch of total incompetents run this country. America gets by despite its leaders not because of them.— ghostinthemachine99
- Crony capitalism at its finest. Once again the little guy gets burned. How is this fair for small businesses or established businesses who now must pick up the slack? In reality we should just eliminate the state income tax.— LibertyNow
- How exactly is this "crony capitalism" where the "little guy gets burned"?!? It encourages JOBS and EMPLOYMENT which is more than I can say for Obummer and his job killing Democrats. — Professor1982
- I do not believe that ANY company decides to "create a job" based on what their personal income tax rate is or the existence of a state tax rebate mechanism. Smith and Son meat market hires a new butcher because more people are coming the front door to buy meat, not because Mr. Smith the proprietor just had his personal income tax rate cut or is allowed to keep 95% of the person's state tax. Tax credits in lieu of purchases of additional cutting equipment/coolers--things that might lead directly to needing additional employees--sound like a better idea. This just sounds like more money for the sacred, virtuous, heroic, patriotic and always victimized under Democrats, "job creators."— mick-of-the-moment
