Saturday, February 6, 2016

Which is worse: A tax on the arts or a break for big business?

Don’t get mad about the new tax on arts and cultural organizations.

Which is worse: A tax on the arts or a break for big business?


Don’t get mad about the new tax on arts and cultural organizations.

Get mad that it was necessary in part because of a big tax break for corporations…one that will cost you and other taxpayers nearly $100 million, the same amount to be generated by the so-called “culture tax.”

The “Single sales factor “ is essentially a technical change that will mean big bucks for corporations like Hershey Foods and U.S. Steel – companies based in Pennsylvania that do most of their business elsewhere.

In fact, according to an analysis by the Pennsylvania Budget and Policy Center, the change will be a huge windfall for a relatively small number of companies. These businesses would overwhelmingly be national corporations. Local and regional companies would suffer.

Why would lawmakers give tax breaks to big corporations during a recession and make up the money by taxing the arts? Welcome to the crazy world of state budget negotiations.

Since the start of the budget process, Gov. Rendell has argued that the state needed more revenue to deal with the deficit. One of his ideas was to temporarily halt a planned phase-out of the Capital Stock and Franchise Tax, which would have saved more than $800 million over two years.

At first, Republicans balked at the idea of halting the planned tax reduction. When it became clear that Gov. Rendell was digging in his heels, the GOP offered a compromise. They would agree to freezing the phase-out if Rendell would consent to re-writing the tax code for the benefit of big businesses. Desperately seeking compromise, Rendell traded the $100 million for the $800 million.

There was just one problem: He now needed $100 million to avoid additional cuts. And so, to avoid making more cuts, lawmakers turned to taxing the arts. Essentially, our arts and culture community will be paying the price so big businesses can get a tax break. Another great idea from Harrisburg.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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