Pa. Is Not Alone! The U.S. Has a Swiss Cheese Corporate Tax System Too

I'm shocked! The U.S. corporate tax system has enormous numbers of loopholes, according to The New York Times.

One hundred and fifteen of the biggest 500 companies paid a total corporate tax rate — federal, state, and local — of less than 20%  over the last five years, even though the federal corporate tax rate alone is 35% for most companies. There are also wide variations in the tax rates that companies pay within the same industry.

Pennsylvania Big Winner in 2010 Job Growth, New Jersey “The Biggest Loser”

There is some good news to be found for Pennsylvania in new data sizing up job performance in 2010.

While far too many Pennsylvania families are struggling in the aftermath of the worst recession in decades, the state’s economy is rebounding better – and faster – than most states.

In 2010, the Commonwealth added more than 65,000 jobs, ranking third among the 50 states in the number of jobs created. On a percentage basis (adjusting for the size of each state’s economy), Pennsylvania’s job growth was 1.2% — exceeding three-fourths of all states.

Switching Places ... or Not: Intragenerational Mobility

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Over the last several decades, income inequality in the United States has increased dramatically. Back in the early 90s, conservatives were looking for ways to demonstrate that inequality had not gotten worse. Glenn Hubbard (who later was one of the architects of the 2003 Bush tax cuts), while on leave from an academic post, released a study from the U.S. Treasury's Office of Tax Analysis which purported to show that:

86 percent of households in the bottom fifth in 1979 had climbed out of poverty by 1988.

Here is Paul Krugman from 1992 explaining the "strange procedure" that produced this result:

Here's what Hubbard's report did: it tracked a group of individuals who paid income taxes in all ten years from 1979 to 1988, and compared their incomes not with each other but with those of the population at large. The restriction to individuals who paid taxes in all years immediately introduced a strong bias toward including only the economically successful; only about half of families paid income taxes in all ten years.

What Obama Should Say to the U.S. Chamber

President Obama addresses the U.S. Chamber of Commerce today as part of his post-election effort to improve relations with U.S. business.

What part of U.S. business does the Chamber represent? Mostly big business and corporate CEOs — people who make many millions, often without risking any of their own money. That’s the only way to explain that the extension of the Bush tax cuts for the very rich was the top Chamber priority last year — even though this won’t benefit the vast majority of businesses.

It's the Recession!

So just what has been the primary cause of Pennsylvania’s fiscal challenges? Some would have you believe it is overspending, but the facts tell a different story.

In the Pennsylvania Budget and Policy Center's latest February Fiscal Facts, we find that every state (except North Dakota) has faced budget deficits in the past few years. The primary culprit: loss of state tax revenue.

Strengthening the middle class

On Thursday, Derek Thompson, an associate editor at the Atlantic, wrote a guest post at Ezra Klein’s blog discussing how to rebuild the middle class.  Below is his list of possible interventions to cure what ails the middle class:

The Pinto leaves you with that warm feeling

Tom Ridge is in the Pittsburgh Tribune-Review this morning talking about economic policy:

The shale gas industry is like the auto business — it might hurt some people, but the jobs it brings to a struggling economy make it worthwhile, gas industry pitchman and former Gov. Tom Ridge said Thursday.

'You don't quit building automobiles because some people are going to crash and kill themselves,' said Ridge, who spoke at Carnegie Mellon University. 'You have to manage the risk. Capitalism and entrepreneurialism is risk management.'

Anybody remember the Ford Pinto?

Anti-health Law Bill Would Be Tremendous Setback for Small Businesses, Uninsured Pennsylvanians

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The effort to rollback health care reform is in full swing, nationally and in Pennsylvania. In one of its first acts, the U.S. House of Representatives passed a bill to repeal the Affordable Care Act on January 19, although the bill is not expected to get a hearing in the Senate, and the President has vowed to veto it.

The Pennsylvania House of Representatives is careening down the same track as its Congressional counterparts. State Representative Matt Baker, the incoming chairman of the House Health Committee, has scheduled his repeal bill, House Bill 42, for consideration by the committee on Monday, February 7.

Health reform opponents have seized on the individual responsibility provision as a key point of attack, and the Baker bill would prohibit Pennsylvania from enacting or enforcing any penalties on individuals who do not purchase insurance.

The real danger is that the bill will prevent the state from moving forward with key provisions, including establishment of health insurance exchanges that will make it easier for individuals and small businesses to shop for affordable insurance, and that will administer subsidies. Pennsylvania is already behind the curve on this one, lagging behind liberal bastions like Texas and Indiana that are moving aggressively to implement reform and take advantage of federal grants.

Introducing Fiscal Facts: PA's General Fund Spending Lower than National Average

There has been a lot of talk about Pennsylvania's high rate of spending over the past few years. The facts tell a different story. General Fund spending in Pennsylvania is below the national average and has been for 18 of the last 20 years.

In the weeks leading up to Governor Corbett's budget address on March 8, the Pennsylvania Budget and Policy Center will be releasing a series of briefs shining a light on specific budget topics in what we hope is an interesting way. We launched February Fiscal Facts this week with a brief comparing the state's General Fund spending over time to the U.S. average.

Teachable moments

Brad Bumsted of the Pittsburgh Tribune-Review leads the latest news on Pennsylvania tax collections with the following:

Kenneth Gailey of Midland doesn't like the idea of raising state taxes or cutting benefits.

The 50-year-old contractor, who spent 16 years as a carpenter for
PennDOT, said he believes state government can make a huge dent in an
estimated $4 billion deficit by eliminating or cutting high-end salaries
for management and making government more efficient.

'Do we need more taxes? Do we need cuts in the few benefits we have?
What we need is fewer people on the high end of that pay scale.'

Is this true? 

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