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By Jamar Thrasher, Third and State

A few weeks ago, the Pennsylvania General Assembly fast-tracked a bill in the waning days of the legislative session to allow certain private companies to keep most of the state income taxes of new employees. News reports to follow indicated the new tax giveaway was designed to lure California-based software firm Oracle to State College.

Well, it turns out the CEO of Oracle, which will benefit from the largess of Pennsylvania taxpayers, recently bought his very own Hawaiian island, as CNN reported back in June.

Oracle CEO Larry Ellison, the third richest man in the U.S., purchased about 98% of Lana'i, the sixth largest of the Hawaiian islands. Forbes reported that the deal was rumored to be worth $500 million.

As CNN tells us:

The island includes two luxury resorts, two golf courses, two club houses and 88,000 acres of land, according to a document filed with the Public Utilities Commission.

Which bring us back to Pennsylvania, where Governor Corbett recently signed House Bill 2626, allowing qualifying companies that create at least 250 new jobs within five years to pocket 95% of the personal income taxes paid by the new employees. 

Legislative sources told The Philadelphia Inquirer that “the bill was designed to lure California-based Oracle, the world's third-largest software maker with $37 billion in revenue last year, to open a facility in the Penn State region, which would provide a pool of highly educated job seekers.”

We've already blogged about why this bill is a bad deal for Pennsylvanians, but Larry Ellison’s island provides us with yet another reason. 

Oracle should not be pocketing the withholding taxes of new employees in State College, especially at a time when the state is cutting investments in schools and underfunding infrastructure. 

And especially when the boss is doing well enough to afford an island in the sun.

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Comment Preferences

  •  Those employees will be paying a fee for their job (3+ / 0-)
    Recommended by:
    Thestral, Brian B, Mostel26

    I get giving incentives to entice employers but I really don't like allowing employers to keep their employees' state income tax.

    This turns it into the employee paying a fee to their employer over and over for their job.

    Is the tax ever sent to the state and somehow returned to the employer? I ask because I wonder if it simply remains with the employer could it be invalidated for purposes of deducting the state tax on the employees' federal income tax return?

    I hope my fellow Pennsylvanians wake up and vote out these Republicans. They have been a disaster for the state.

  •  Basic economics here, guys. (0+ / 0-)

    Larry Ellison's compensation has nothing to do whether new jobs in Penn are economic or not.  He could work for free, and it'd still only make sense to hire in Penn with the tax breaks.

    The size of your corporate profits has no bearing whatsoever on business decisions.  You don't decide to take actions that don't lead to a positive return just because your profits are high.

  •  Another Tom Corbett obscenity... (1+ / 0-)
    Recommended by:
    Mostel26

    Employees paying taxes to their employer.

    And to think...a large part of Corbett's victory can be attributed to anger over the drink tax put in place by his opponent Dan Onorato in Allegheny County.

    I'd rather pay 7% on a beer...same as I already did on a Coke...than pay taxes to my employer.

    "I don't give them Hell. I just tell the truth about them and they think it's Hell."

    by Notthemayor on Thu Nov 08, 2012 at 09:40:10 AM PST

  •  What happens if they only create 200 (0+ / 0-)

    new jobs at the end of five years?  Do they have to give the money back?

    ....House Bill 2626, allowing qualifying companies that create at least 250 new jobs within five years to pocket 95% of the personal income taxes paid by the new employees.
    I'm not quite clear on what the '95% of the personal income taxes paid by the by the new employees' would amount to.

    Time is a long river.

    by phonegery on Thu Nov 08, 2012 at 09:49:26 AM PST

    •  Recapture of Withholding Taxes (0+ / 0-)

      The Act includes a provision allowing the state to recapture withholding taxes, if the company does not comply with the law's requirements:

      (A)  COMPLIANCE WITH TERMS AND CONDITIONS.--IF THE QUALIFIED COMPANY FAILS TO COMPLY WITH THE TERMS AND CONDITIONS SET FORTH IN THE AGREEMENT OR FAILS TO COMPLY WITH THIS ACT, THE DEPARTMENT SHALL IMMEDIATELY TERMINATE THE AGREEMENT. THE QUALIFIED COMPANY SHALL NOT BE ENTITLED TO ANY FURTHER BENEFITS PROVIDED FOR UNDER THIS ACT AND SHALL BE REQUIRED TO REMIT TO THE COMMONWEALTH AN AMOUNT EQUAL TO THE AGGREGATE WITHHOLDING TAXES RETAINED BY THE QUALIFIED COMPANY UNDER THIS ACT AS OF THE DATE THE AGREEMENT IS TERMINATED.

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