Closing ‘Delaware loophole’ means $90 million more for Pa., lawmaker says

    A bill to close the “Delaware loophole” while lowering other taxes on corporations has passed the Pennsylvania House.

    The measure aims to capture revenue from companies that have transferred money from commonwealth subsidiaries to corporations in Delaware, which doesn’t have corporate taxes.

     House Democratic leaders criticize the proposal, saying it won’t actually close the loophole.

    But the bill’s sponsor, Rep. Dave Reed, R-Indiana, points out several Democrats ended up voting for it.

    “You can also take the word of the Democratic Auditor General Eugene DePasquale, who helped draft this particular add-back provision when we worked together on this same exact language,” Reed said Monday.

    And Reed said they aren’t acknowledging the conservative estimate that Pennsylvania would collect up to an $90 million more annually due to the change.

    “If we’re not closing the Delaware loophole, then I would ask the members where is that money coming from?” he said. “I don’t think folks are just showing up at our doorsteps dropping off bags of cash.”

    The measure also contains tax overhaul proposals put forth by Gov. Tom Corbett, including a reduction to the corporate net income tax rate by three percentage points over 10 years.

    The Senate Republicans’ spokesman says his caucus is still studying the bill and hasn’t finished considering what tax changes should be part of the upcoming budget.

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