Delaware Loophole

A bill to close the so-called Delaware loophole while lowering other taxes on corporations has passed the state House by a vote of 129 to 65.

The measure aims to capture revenue from companies that have transferred money from commonwealth subsidiaries to corporations in Delaware – a state without corporate taxes.

House Democratic leaders criticized the proposal for using an approach they say wouldn’t actually close the loophole.

A bill crafted to close a corporate tax loophole in Pennsylvania in a way that’s most palatable to businesses is teed up for consideration by the state House.

The so-called Delaware loophole has bedeviled legislators and governors for years. Its name comes from the practice of corporations that transfer money from commonwealth affiliates to a company in Delaware — a state with no corporate taxes.

There are different ways to go about closing the loophole, and therein lies much of the conflict over a bill that’s passed a committee vote.