The idea is simple: If a corporation makes profits in Pennsylvania, it should pay its fair share of taxes in Pennsylvania.
But the "Delaware loophole" allows large corporations to use fancy accounting gimmicks to funnel profits made in Pennsylvania into Delaware, where profits go largely untaxed. Partly by setting up fake subsidiaries in Delaware, 73 percent of corporations that do business in Pennsylvania pay nothing in net income taxes in the state, according to the Pennsylvania Department of Revenue.
Last month, UK-based Camelot Global Services won the highest bid to buy the Pennsylvania Lottery, and now awaits Attorney General Kathleen Kane's signature to finalize the contract. The deal hasn't even been finalized, and the new Camelot Global Services PA LLC already filed papers to list Delaware as its corporate headquarters.
We cannot afford to keep this loophole open and allow corporations to avoid paying state income taxes while forcing ordinary taxpayers to pick up the tab. Pennsylvania should protect taxpayers and close this loophole now.
PennPIRG Program Associate