Corporate Welfare in 3 Charts
PROPOSED SPENDING FOR 2021 – 22
- The Governor’s Executive budget includes updated estimates for spending on corporate welfare, which is government favoritism of one sector or business over others. This favoritism is disquised under less innocuous terms such as economic development subsidies, investments, tax credits, etc.
- While down from last year, spending on corporate welfare in 2021 is projected to be about $864 million. Almost half of that—44%—is being spent in the form of industry tax credits.
HOW IS THE MONEY BEING SPENT?
- This year, tax credits will amount to almost $379 million spread across 13 different categories. In 2017, Act 48—known as the Performance-Based Budgeting and Tax Credit Efficiency Act—required the Independent Fiscal Office (IFO) to complete reports on existing tax credits.
The first year looked at the new jobs tax credits, and as a result of the findings, which showed 95% of jobs would have been created irregardless.
- Not all tax credits are considered corporate welfare. Educational tax credits, don’t qualify as corporate welfare because they are directed toward public education and are not designed to support a specific industry or to create jobs. Additionally, these programs saved school districts $3 billion from 2002–2017.
CORPORATE WELFARE REFORM TO PAY FOR TAX REFORM
- Passing legislation that builds on Act 48 and automatically sunsets programs that have less than a neutral return on investment would help to eliminate government waste. If all tax credits were cut, Pennsylvania could lower the Corporate Net Income Tax (CNIT) by more than half a percentage point and still remain revenue neutral. If industry-specific handouts are also eliminated, the tax rate could be reduced by over a full percentage point.
 Research and Development Tax Credit- ROI 0.16; Keystone Innovation Zone Tax Credit- ROI 0.27; Mobile Telecommunications Broadband Investment Tax Credit- ROI 0.15; Film Production Tax Credit- ROI 0.13
 Includes Agriculture Excellence, Council on the Arts, Grants to the Arts, and the Pennsylvania Racehorse Development Fund.