Who Will Help CF Save You Money?

Organizations that love to lobby for your tax dollars and special handouts for their special interests are posturing against Gov. Tom Corbett’s corporate welfare package to lure Shell’s new ethane processing plant—often called a “cracker” plant—into Pennsylvania.

Have the Pennsylvania Budget and Policy Center, PennFuture and PennEnvironment had a change of heart on corporate welfare policies, or is this a case of the pot calling the kettle black?

The Commonwealth Foundation invites these organizations to join us in supporting the elimination of all of tax breaks and handouts for “job creation” to create across-the-board tax rate reductions that would benefit all Pennsylvanians.

Here are a few, but almost certainly not all, the various welfare programs Pennsylvania offered corporations and economic development groups last year.

Corporate Welfare Grant & Loan Programs 2011-12 Budget (Thousands)
General Fund
Ben Franklin Tech Development Authority Transfer $14,500
Commonwealth Financing Authority Transfer $82,019
Pennsylvania First $25,000
Partnerships for Regional Economic Performance $11,880
Discovered in PA Developed in PA $9,900
Infrastructure and Facilities Improvement Grants $19,409
Industry Partnerships $1,613
Capital Budget
Redevelopment Assistance Capital Program Bonds $270,000
Independent Agencies
Commonwealth Financing Authority Borrowing $125,000
Pennsylvania Economic Development Financing Authority N/A
Pennsylvania Industrial Development Authority N/A
Tax Credits
Film Tax Credit $75,000
Job Creation Tax Credit $22,500
Research and Development Tax Credit $40,000
Keystone Opportunity Zone $18,700
Keystone Innovation Zone $25,000
Alternative Energy Production Tax Credit $5,000
Total Spending and Credits $745,521

The tax credit Gov. Corbett proposes for Shell is $67 million per year (totaling $1.7 billion over 25 years). As concerned as these groups are over this, they ought to be furious about the $745 million in total corporate welfare that Pennsylvania allotted last year.

As we’ve pointed out previously, a Legislative Budget and Finance Committee in 2010 on Pennsylvania’s tax credit programs found there is little hard evidence that these incentives create more jobs on net.

Instead, we should ditch “economic development” spending and eliminate targeted tax breaks to reduce tax rates across the board. Such reforms would do much more to create opportunities—and jobs—across the Keystone State.