Closing the loophole: Why some businesses pay less in corporate taxes and how Democrats want to fix it

Closing the loophole: Why some businesses pay less in corporate taxes and how Democrats want to fix it

Currently, businesses and corporations in Pennsylvania can shift their earnings to states with lighter tax burdens to pay less in corporate net income taxes.

 

It’s a strategy that is commonly referred to as the “Delaware loophole” since Delaware does not levy a corporate net income tax on business subsidiaries holding intangible assets. This allows multi-state businesses to transfer money to their Delaware-based subsidiary through transactions and other maneuvers to avoid paying the CNIT in other states, including Pennsylvania.

Wednesday, July 17, 2019/Author: Justin Sweitzer
Categories: News and Views
Combined reporting hearing: partisan or educational?

Combined reporting hearing: partisan or educational?

The House Finance Committee held a hearing on the issue of combined reporting Wednesday that some are calling partisan, while others have defended it as educational.

Combined reporting would require multi-state corporations with a Pennsylvania presence to pay Pennsylvania taxes on the combined income of all entities, regardless of whether they are headquartered in Pennsylvania.

Currently, under the so-called Delaware Loophole, corporations with their headquarters in Delaware can avoid paying Pennsylvania corporate taxes despite having a presence in the Commonwealth.

Wednesday’s hearing was brought together as a result of Gov. Tom Wolf proposing to lower Pennsylvania’s current corporate net income tax of 9.99 percent to 4.99 percent so long as combined reporting is adopted.

Wednesday, April 15, 2015/Author: Jason Gottesman
Categories: News and Views
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