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Union, citizens object to Comcast’s use of a tax loophole

Jeff Himler

Members of a coalition including representatives of the Pennsylvania State Education Association and Service Employees International Union Local 668 demonstrated in front of the Comcast office in Blairsville Wednesday arguing that the cable provider is not paying its fair share of state corporate income taxes.

More than a dozen demonstrators displayed signs that demanded, “Close the loophole,” referring to the so-called “Delaware tax loophole” that allows Comcast and other corporations to shift profits to holding companies based in Delaware, which has a tax structure more favorable to businesses than Pennsylvania’s.

The group also handed out leaflets to passers-by and presented an enlarged “change of address” form to a local representative of the Philadelphia-based company. “We’re urging them to change their address to Pennsylvania instead of utilizing the Delaware loophole to avoid paying taxes,” said Brenda Seevers, an SEIU organizer.

Similar afternoon demonstrations were staged simultaneously at other Comcast offices throughout Pennsylvania, following state Rep. Phyllis Mundy’s (D-Kingston) introduction of legislation that is meant to close the loophole. House Bill 1396 would enact combined-reporting guidelines that would require a corporation and its various subsidiaries across state lines to jointly file one tax report and pay taxes according to the amount of business conducted in Pennsylvania. The bill also would lower Pennsylvania’s corporate tax rate from 9.99 percent to 7.4 percent over three years.

SEIU spokeswoman Leah Wright said Comcast was targeted by the protestors because it is widespread in Pennsylvania, made $3.6 billion in profits last year…and has many subsidiaries, including The Philadelphia 76ers and the Philadelphia Flyers sports teams.

Barb Henning of Indiana, PSEA regional field director, said the state could realize an additional $500 million or more in annual revenue if the Delaware loophole would be eliminated for Comcast and similar corporations. That would just about offset the cuts in basic funding to public education that Gov. Tom Corbett has proposed for the 2011-12 state budget, she pointed out.

With those additional funds, “Public education would no longer be at risk,” she said. “When you’re talking about slashing public education and possibly eliminating kindergarten and music classes and things like that, then it’s time for us to look and be sure we’re getting all the revenue we possibly could.”

Bettina Cornell of Penn Hills voiced her support for ending the Delaware loophole. Operator of a small home cleaning business, she expressed concern for the future of her three school-age children and resentment that corporations can use the loophole to avoid taxes while she can’t.

“If we slash our education budgets, where are these businesses going to get their future employees?” she asked.

Comcast spokesman Bob Grove referred questions to Gene Barr, vice president of government and public affairs for the Pennsylvania Chamber of Business and Industry.

Barr said yesterday’s demonstrations are the latest round in a continuing eight-year debate over the Delaware loophole. He argued that advocates of measures such as Mundy’s proposed legislation want to eliminate the loophole to fuel “rapid growth in state government spending.”

He said Pennsylvania companies that don’t have a presence in Delaware would be unfairly burdened with higher taxes under the legislation and added that corporations are merely acting prudently in taking advantage of the legal loophole to avoid Pennsylvania’s high tax rate of 9.99 percent.

Mundy has said her proposed reduction of that rate to 7.4 percent would place Pennsylvania “in the middle of the pack” among states that have a corporate net income tax.

Barr said that’s not so, that Pennsylvania would still have a rate well above the average.


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