Pennsylvania may force workers to pay taxes to their employers

By Stephen C. Webster
Wednesday, October 24, 2012 11:56 EDT
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A bill that landed on Pennsylvania Gov. Tom Corbett’s (R) desk this week would give companies that hire more than 250 new workers a gobsmacking tax incentive: 95 percent of those workers’ state income taxes would be paid to the employer, and not the state.

It’s a bizarre strategy meant to attract companies from other states, specifically designed to lure California-based software maker Oracle into Pennsylvania. It’s also, as Philadelphia City Paper put it, “lavish corporate welfare” writ large across state government.

The bill, HB 2626, passed on October 17 with bipartisan support. Just 80 members of Pennsylvania’s House of Representatives, most of the Democrats, voted in opposition.

Employers that hope to take advantage of the incentive program must hire 250 or more new full time employees and provide health insurance for them, in addition to paying a wage that’s above the county average wherever they’re located. Once those conditions are met, the proposed law would allow companies to absorb as much as $5 million of their employees’ income taxes every year.

As state struggle with one another in an effort to lure companies with special tax rates and incentives, millions are given away every year to thousands of companies that otherwise earn more than enough to continue being profitable.

Worker advocacy group Good Jobs First said earlier this year that 16 other states have tax incentive programs that allow bosses to keep some, or in a few cases, all of their workers’ state income taxes, including one in New Jersey called the “Business Employment Incentive Program,” which the Pennsylvania bill was modeled after.

The group added that more than $700 million is given away by states every year in the continual hunt to “blackmail” other states out of highly-coveted jobs.

Gov. Corbett’s office did not respond to Raw Story‘s request for comment. A spokesperson reportedly told The Philadelphia Inquirer that the bill was “still under review.”

Photo: Shutterstock.com, all rights reserved.

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
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