Is Corporate Welfare for Shell Cracker Good for PA?

Astute readers may remember that last month Pennsylvania earned the dubious distinction of the highest taxes for mature businesses and the second highest taxes for new businesses. So how did Pennsylvania just beat out Ohio and West Virginia for the Shell Oil Co. cracker plant that is estimated to create more than 10,000 construction and 10,000 permanent jobs?

The Post Gazette has the answer, “Gov. Tom Corbett and his closest advisers spent months wooing the company.” In other words, corporate welfare.  Pennsylvania’s corporate taxes are so awful that the Corbett administration had to wine and dine company officials and hand over special tax exemptions and subsidies to seal the deal.

Eventually the administration discovered some Shell executives were fans of the Steelers and treated them to a game at Heinz Field. The Post Gazette reports executives were even given a glimpse of the locker room. Good thing West Virginia doesn’t have an NFL team and the Cleveland Browns. . . well we all know that story.

On the policy side, the General Assembly voted in February to expand Keystone Opportunity Zones (areas which exempt businesses from taxes) for businesses that invest at least $1 billion and create at least 400 permanent, full-time jobs.  Legislators also implemented a natural gas impact tax, about $10 million of which will be used to subsidize projects like the Shell plant.

While the Shell decision seems like good news, the truth is tax breaks and corporate welfare merely mask and exacerbate the problems with our business taxes and regulations.

If Governor Corbett and the General Assembly want to attract jobs they need to stop making exceptions for large corporations and improve the 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.