Who Ate Half Our Pie? Advocates Highlight Cost of Corporate Tax Cuts

Local Government Officials and Advocates Speak Out About the Cost of Corporate Tax Cuts

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Half a PieAdvocates delivered half a pie to every Pennsylvania legislator today to remind them that a decade of large tax cuts for businesses has left schools, health care services, and local communities with a smaller share of the budget pie.

Pennsylvania needs a budget that returns to tried-and-true investments in education and the public infrastructure that promotes long-term economic growth, said speakers at a Capitol press conference today. After a long economic downturn, that is the path to more jobs, stronger communities, and a brighter future for our children. 

Special tax breaks, however, are coming at the expense of these critical investments. Too often, these tax cuts are put in place with very little accountability or obligation for companies to create jobs.  

“We can fund corporate tax cuts or we can fund our children’s schools, but increasingly we can’t do both,” said Better Choices for Pennsylvania coalition co-chair Stephen Drachler said. “Giving larger slices of the pie to profitable corporations means less money in the classroom, fewer early childhood programs, and less support for local services. We need a more balanced, more equitable approach than we have now. 

“We need real tax reform that levels the playing field for businesses that play by the rules, and stops giving away dollars that are essential to helping our children and families succeed,” Drachler added. “Only then will we be able to invest in a world-class public education and the community assets that build a stronger economy.”

Tax cuts enacted since 1999 have drained close to $3 billion this year alone from state coffers. The cost of the tax cuts has more than tripled since 2002, with little to show for it. Pennsylvania ranked 27th in job growth in 1999-2000 and 34th in 2011-12. View a Pennsylvania Budget and Policy Center policy brief on the cost of corporate tax cuts. 

Budget cuts fueled by large business tax cuts also pass the buck to school districts and local governments – and onto local taxpayers, according to speakers at today’s press conference. 

“Tax cuts sound good, but read the fine print,” said Harrisburg School Board member Brendan Murray. “A business tax cut costs Harrisburg schools, and then our school board has to decide how much we’re going to raise property taxes to maintain our schools and keep our kids in the classroom.”

The group expressed opposition to a new round of tax cuts that are proposed for 2015 and beyond and will cost as much as an additional $1 billion. The proposal includes no plan to close tax loopholes that allow companies to hide profits and avoid paying their share of taxes. 

Advocates said no new tax breaks should be enacted until the commonwealth has closed loopholes, improved accountability, and put an end to special tax breaks, including the artificially low tax rate on natural gas drilling. 

“We have tried unaccountable tax breaks and they don’t work,” said Joe Bard, executive director of the Pennsylvania Association for Rural and Small Schools. “Schools and services have been cut, local property taxes have gone up, and we’re still waiting on the jobs.” 

The group also opposed enacting long-term tax reductions in a single statute. “Our children have to go to the back of the line, while business tax cuts get the first dollar,” said Sharon Ward, director of the Pennsylvania Budget and Policy Center. “It’s time to put our kids first.”