While debating their myriad of tax increases (which was eventually approved by the chamber), Pennsylvania House Democrats continued to demonize “Big Oil” and “Big Tobacco” to justify higher taxes (for some of this debate, check out Matt Brouillette or me on Twitter).
Specifically, they want companies drilling in the Marcellus shale region to not only pay the Corporate Income Tax (or Personal Income Tax for small businesses), Capital Stock and Franchise Tax, plus their lease payments and royalties, and bonds to pay for road upgrades, but also a Natural Gas Severance Tax. They also pushed a 25 cent increase on the state Cigarette Tax and a 30% tax on other tobacco products – though these products are already subject to the state sales tax. The rhetoric of “Big Oil” and “Big Tobacco” were used to make these tax hikes seem as though they would be absorbed by corporations – or at least ‘fat cat’ CEOs – and not passed on to consumers via higher prices or workers through lower wages or fewer jobs.
But at the same time, House Democrats were defending tax exemptions for “Big Hollywood” and “Big Helicopter.” Gov. Rendell and many legislators continue to support Pennsylvania’s film tax credit, claiming it creates jobs, though this is shoddy economics. Of course, the film tax credit exempts Hollywood companies from paying the same taxes natural gas firms (and every other business in Pennsylvania) is subject to.
House Democrats also voted to create new sales tax exemptions for Helicopter sales and parts – also claiming these exemptions would ‘create jobs.’ In reality, this exemption was probably created just to secure the vote of Rep. Tom Houghton of Chester county, as reported by Capitolwire:
After the session, Rep. Tom Houghton, D-Chester, also released information about the sales-tax exemption for the helicopters and their parts that was approved in Friday’s tax code vote. Houghton stated that exemption would bring 300 jobs to his southeastern district.
I shouldn’t have to point out (but apparently I do) the hypocrisy of suggesting business will absorb higher taxes without any lost jobs or higher costs for consumers, while other businesses need tax breaks in order to ‘create jobs.’