Recent Research
MARCH 17, 2011 | Commentary by KATRINA CURRIE, NICHOLAS FETT
Retaining the Film Tax Credit: Two Thumbs Down for Taxpayers
Behind the lens of Gov. Tom Corbett's budget the focus is largely on putting taxpayers first and fostering economic growth. But at a time when the director should be yelling, ‘cut,' to all handouts, retaining Pennsylvania's $60 million film tax
JANUARY 20, 2011 | Commentary by KATRINA CURRIE, NATHAN BENEFIELD
Fixing Rendell's Mess
Penn's Woods are darker and deeper in red ink than ever before thanks to the tax-borrow-and-spend agenda of the Rendell Administration and some General Assembly members who failed to put Pennsylvania back on a path to prosperity. To add insult to injury last month, the U.S. Census Bureau announced that Pennsylvania would lose another C
JANUARY 17, 2011 | Commentary by MATTHEW BROUILLETTE
How Corbett can Balance the Budget without Raising Taxes
Even before Gov.-elect Tom Corbett raises his right hand high Tuesday swearing to tackle the problems left from the previous administration's tax-borrow-and-spend agenda, doubters are lining up to take potshots at the notion that Harrisburg can close Pennsylvania's a potential $5 billion budget gap without a tax increase.
Recent Blog Posts
JANUARY 31, 2012
Corporate Welfare Not Needed to Get a Cracker
The Pittsburgh Tribune-Review reports that Pennsylvania lawmakers are pushing a special tax deal to attract a "cracker" plant to the state. The proposed Shell cracker—which breaks down natural gas into ethylene, used in plastics—has been much talked about, with the Keystone State reportedly a finalist with Ohio and West Virginia. The plant would create thousands of jobs, at least by internal estimates.
The proposal would expand Keystone Opportunity Zones, exempting certain businesses from taxes (primarily targeted to the cracker). What's wrong with a KOZ? Well for one thing, tax breaks for a few require higher taxes, spending being equal, on all other businesses. Further, a Legislative Budget and Finance Committee report finds that the KOZ program has little accountability, and the promised jobs often failed to materialize. Most importantly, tax breaks and corporate welfare don't actually generate economic growth, they simply shift resources.
Rather than expanding corporate welfare, here is what lawmakers need to do to make Pennsylvania more attractive:
- Enact a natural gas policy that removes the political uncertainty stemming from the Frack Attack, and provides predictability for the gas industry.
- Improve Pennsylvania's business climate for all businesses. Indeed, lawmakers should take the lesson from the Keystone Opportunity Zones—that businesses are attracted to lower taxes—and apply it statewide.
posted by NATHAN BENEFIELD | 01:31 PM | 0 comment
DECEMBER 19, 2011
Time to End Borrowing for Corporate Welfare
The Pa. House is expected to vote this week on SB 1054, legislation to authorize $1.66 billion in state borrowing for the "capital budget." The annual cost of this bill would be $115 million per year for 20 years in annual interest and principle payments. In a memo to legislative leaders urging passage, Budget Secretary Charles Zogby claims the additional debt is needed to finance projects the commonwealth is already contractually obligated to fund.
Of this borrowing, $270 million would be for Redevelopment Assistance Capital Projects (RACP). Borrowing for RACP is one of the drivers of Pennsylvania state debt—a growing problem as interest payments continue to rise, while taxpayers' debt continues to grow year after year.
RACP borrowing has been used to fund everything from corporate headquarters to sports stadiums to the Arlen Specter Library. Most recently, RACP was the source of a $3 million grant to the Second Mile, the charity founded by accused child molester Jerry Sandusky.
In response, Rep. Rosita Youngblood (D-Philadelphia) is holding a press conference tomorrow to call for reforms to the RACP program to promote greater transparency and accountability. These reforms are much-needed, but better yet would be to eliminate future RACP borrowing altogether and stop accruing debt for corporate welfare.

posted by NATHAN BENEFIELD | 05:10 PM | 0 comment
NOVEMBER 22, 2011
Green Fiascoes and Boondoggles
Economist Mark Hendrickson, a member of CF's Council of Scholars, looks at the failure of government funded "green energy" projects in his latest column for the Center for Vision and Values. He identifies key lessons from these government fiascoes, for which the Solyndra scandal is only the most famous of many examples at the federal and state level.
There are at least four important reasons why we should stop funding "green" government programs:
First lesson: government-appointed experts are incompetent economic planners—a fact of life that any intelligent adult should know after the spectacular failure of central economic planning in the socialist experiments of the 20th century. No matter how brilliant and how well-intentioned government planners may be, they do not and cannot know what consumers want and how much they are willing to pay for it. Only free markets can solve this challenge. If electric cars are to be a viable industry, private companies will make them so.
Second lesson: The government's involvement in Solyndra raises troubling questions about possible corruption. While I think the Solyndra deal stinks to high heaven, I wonder whether any laws have been broken. Where is the dividing line between influence peddling, legitimate lobbying, political deal-making, and actual crime? Many farm-state Republicans have supported the uneconomical ethanol boondoggle for decades in exchange for generous support of their electoral campaigns, so the practice is bipartisan.
Third lesson: Government job programs are a blatant failure. They have never been economically beneficial. In the 1930s, Franklin Delano Roosevelt had the department of agriculture hire 100,000 Americans to monitor how much acreage American farmers were cultivating. These federal jobs produced no wealth. Their jobs made no more economic sense than paying people to dig holes and then fill them up.
Today's green workers are economically nonsensical, too. True, they sometimes produce something, but the economic value is invariably less than the amount of tax dollars needed to subsidize their job. In other words, federal jobs make us poorer.
Fourth lesson: Finally, we simply can't afford these green boondoggles. Uncle Sam's official debt is now $15 trillion, and when you include off-budget items and unfunded liabilities, the situation is far worse. Given this fiscal reality, it is the height of irresponsibility to throw taxpayer dollars at any special interests, and it is particularly egregious to subsidize enterprises that are plainly uneconomical.
posted by NATHAN BENEFIELD | 11:00 AM | 0 comment

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