Harrisburg – October 22, 2012 – The selective tax credit plan pushed by Republicans in the General Assembly is regressive public policy that makes government pick winners and losers among businesses, state Senator Jim Brewster (D-McKeesport) said today.
The legislation allowing employers to keep 95 percent of the state personal income tax they withhold from new employees’ paychecks if the company reaches certain job-creation and job-quality benchmarks passed the Senate 33-16 and the House 111-80 on Wednesday.
Brewster voted against the plan.
“This legislation is poor public policy because it essentially is making an employee pay the employer to have a job,” Brewster said. “Plus, given today’s reported spike in the unemployment rate, it is clear that we need a comprehensive job creation strategy not a selective approach that helps some businesses at the expense of others.”
Brewster said Pennsylvania’s September unemployment rate of 8.2 percent is now 0.4 percent above the level it was in November of 2010 when Governor Corbett was elected. Since that time the national rate has declined by 2 a full percentage points.
“The bill creates the situation where one business is pitted against another in the pursuit of skilled labor,” Brewster said. “The firms that do not receive the tax credit are at a business disadvantage and may experience a deficit of skilled labor.”
The McKeesport lawmaker said that the tax credit legislation muscled through the General Assembly last week is somewhat duplicative since there is already a job creation tax credit program in place. Unfortunately, that program was slashed by the Corbett administration from $22.5 million to $10.1 million this year, he said.
Brewster said that the bill, while ill-advised public policy, was made much better through changes made in committee. The measure was altered to cap the total corporate benefit at $5 million per year, require businesses to create 250 jobs over 5 years and end the benefit in 2018.
“The Corbett administration’s failure to address job loss in a comprehensive fashion has compelled the General Assembly to address the issue on an individual and limited basis. That presents both short-term problems and even longer term issues and is not conducive to job creation,” Brewster said.
“We need an approach to job creation that combines tax credits, job training, infrastructure investment wrapped in a long-term strategy that builds on economic strengths and addresses weaknesses,” Brewster said. “Senate Democrats have put together a plan called PA Works that will create jobs and boost economic development.”
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