State Sen. Christine M. Tartaglione talks about closing the "Delaware Loophole" as part of a Senate Democatic plan to improve Pennsylvania's job climate.

HARRISBURG, February 23, 2011 – State Sen. Christine M. Tartaglione today molded her years-long effort to close the “Delaware Loophole” into a wider Senate Democratic plan to help small businesses compete, reduce corporate tax rates and get Pennsylvanians back to work.

“Over the years we have seen small neighborhood businesses replaced by mega-corporations that answer only to stockholders,” Tartaglione said. “While Wall St. has already recovered from the recession, the streets of Northeast Philadelphia have not. By reforming the tax system, training workers and giving small businesses a boost, we intend to make sure the recovery reaches every working family.”

At a news conference in Harrisburg today, Senate Democrats outlined a six-point plan intended to spur creation of thousands of jobs, trim millions in state spending, and create a workforce ready to thrive in the new economy.

The plan, called PA Works, focuses on six key areas: small business, workforce training, critical state investments, clean energy, infrastructure investment, and tax reform.

Tartaglione said she will focus on what has become an eight-year effort to close the “Delaware Loophole” and lower the state’s corporate net income tax to allow small businesses to prosper and grow. Nearly three quarters of Pennsylvania corporations pay no corporate income tax, partly because they can set up Delaware subsidiaries that license logos, trademarks, copyrights and other “non-tangible” – and therefore not taxable – assets.

“Pennsylvania is years behind in updating tax laws to keep up with corporate accounting tricks,” she said. “These big chains have been killing our mom-and-pop stores for years and we’ve been helping them do it. If there were ever a time to summon the political courage to take on corporate lobbyists, now is the time.”

In addition to closing the tax loophole, PA Works uses innovative ideas that will spur job creation, promote a business-friendly environment, and expand business opportunity.

The PA Works plan includes:

Putting Small Business First:

  • Increase flexibility under Small Business First Fund
  • Encourage financial institutions to be more aggressive small business lenders
  • Regulatory relief to promote expansion
  • Expand tax credit incentives

Real Training for Real Jobs

  • Consolidate job training programs under single state agency by creating an integrated “one-stop” system of workforce investment and education services
  • Redirect federal resources to create on-the-job training program modeled after Georgia Works
  • Shared Work program to relieve the stress on UC (Model Missouri’s Shared Work)
  • Provide “Green Workforce” training grants


Funding What Works, Fix What Doesn’t:

  • Recapitalize Business In Our Sites to create new shovel-ready sites for development
  • Create a new dedicated fund for key investment programs
  • Refocus job creation tax credit program
  • Prioritize MBE and WBE incentives
  • Give taxpayers a return on successful investments

Clean Energy:

  • Expand green building investment programs
  • Enact Marcellus Shale Drilling Plan
  • Strengthen synergy between universities and private energy investments
  • Encourage smaller municipalities and rural communities to make energy efficiency investments
  • Guarantee more contracts for PA supplier companies

Business Tax Reform

  • Reduce CNI to 7.5% by closing DE Loophole
  • Increase single sales factor and NOL Ceiling for home-based PA firms
  • Explore other tax options to create a modern and fair business tax system


Infrastructure Investment:

  • Find Transportation alternatives such as public private partnerships, new tolling options and bonds as short term solutions
  • Water and Sewer investments such as finished CFA H2O and new Marcellus alternatives
  • PUC oversight new-investment plans