What do our taxes go to

what do our taxes go to

Table of Contents

With the deadline for filing state and federal tax returns upon us, the Pennsylvania Budget and Policy Center has put together the following resources to help you understand what your tax dollars support and why it is so important that we close corporate tax loopholes at the state and federal level.

Where Do Our Federal Tax Dollars Go?

The federal government collects taxes in order to finance various public services, including Social Security, national defense, and health care services. As federal policymakers and citizens weigh key decisions about revenues and expenditures, it is instructive to examine what the federal government does with the money it collects. The two charts below are from the Center on Budget and Policy Priorities.

Where Do Our State Tax Dollars Go?

Pennsylvania Budget and Policy Center

Center on Budget and Policy Priorities

Time to Close Corporate Tax Loopholes

Corporate tax loopholes at the federal level allow corporations to shift foreign profits into accounts in Ireland, the Netherlands, Bermuda, and other tax havens to avoid U.S. corporate taxes. These gimmicks are so well known they have nicknames — the Double Irish and the Dutch Sandwich — and they have a

huge cost, as much as $90 billion a year.

Corporate tax loopholes are a problem at the state level, too. Large multi-state corporations like Wal-Mart and Home Depot use state tax loopholes to shift income earned in Pennsylvania to tax-haven states like Delaware, leaving little or no income on the books in the commonwealth. The Delaware Loophole alone costs Pennsylvania taxpayers $500 million a year.

A state law passed last year to close corporate tax loopholes in Pennsylvania failed to get the job done, leaving companies free to continue to avoid paying income taxes. New tax credits and other policy changes mean that corporations are paying a smaller share of taxes overall in Pennsylvania, leaving other taxpayers to contribute more.

This erosion of corporate tax revenue threatens Pennsylvania’s ability to make investments in the future, including funding increases proposed by the governor for public schools, a new college scholarship program, domestic violence prevention, and other human services. Business tax cuts have also done very little to bring new jobs to Pennsylvania. Job growth in the commonwealth has lagged well behind most other states, ranking 48th out of the 50 states in 2013.

Pennsylvania Budget and Policy Center

Institute on Taxation and Economic Policy

Source: pennbpc.org

Category: Taxes

Similar articles: