Corbett signs bill to close 'Delaware loophole'
Gov. Tom Corbett on Tuesday signed legislation that closes the so-called “Delaware loophole” — gaps in Pennsylvania laws that allow a corporation to keep its headquarters in a state with favorable business taxes, such as Delaware, while doing business in Pennsylvania.
The law, championed for more than two years by state Rep. Dave Reed, R-Indiana, decreases Pennsylvania’s corporate net income tax from 9.9 percent — one of the highest rates in the nation — to 6.9 percent, thus making the state much more attractive to businesses.
The national median Corporate Net Income Tax rate is about 7 percent.
“I am very pleased to see that my plan to close the Delaware loophole has been signed by the governor and enacted into law,” Reed said in a release.
“Until now, Pennsylvania was the only state with a corporate income tax that took no steps to address this tax planning practice.
Moving this measure through the House during the last two sessions proved that a reasonable and targeted approach to address the Delaware loophole could be embraced with bipartisan support. Now, with the enactment of the plan, we have in place a responsible solution to the issue that will ensure all of our state’s businesses play by the same rules. The plan, which was part of a broad package of critical reforms to improve our tax structure, represents a strong step toward making Pennsylvania a more fair and competitive place to do business.”