Pennsylvania families are working harder than ever to make ends meet.

Every budget season, lawmakers say they want to make Pennsylvania more affordable.

But while working families pay what they owe, some of the largest multistate and multinational corporations can still use accounting tricks to shift profits out of Pennsylvania on paper and lower their state taxes.

As lawmakers negotiate this year's budget, they have an opportunity to take an important first step toward closing corporate tax loopholes by adopting water's-edge combined reporting, a reform already used by 28 other states and the District of Columbia.

Water's-edge combined reporting helps ensure corporations pay taxes based on where they actually do business, not where they can shift profits on paper. It would bring Pennsylvania into line with what most other states already do to reduce corporate tax avoidance.

The Pennsylvania Policy Center’s latest research estimates that previous corporate tax changes are already costing the Commonwealth between $2.21 billion to $2.99 billion every year.  

These corporations benefit every day from Pennsylvania's educated workforce, roads and bridges, public safety, utilities, and other public investments. They should contribute their fair share toward the public services and infrastructure that help them succeed.

At the same time, Pennsylvania entered this budget cycle already facing a projected $6.4 billion structural budget deficit. Rather than advancing proven recurring revenue solutions like combined reporting, lawmakers have continued advancing additional recurring tax cuts without identifying sustainable replacement revenue, making the Commonwealth's budget challenges this year even harder to solve.

Earlier this year, the Pennsylvania House passed bipartisan legislation to adopt water's-edge combined reporting. Yet when the Senate advanced its recent tax package, it chose not to include this proven reform, leaving an important recurring revenue solution on the table.

Ultimately, worldwide combined reporting would go even further by closing additional international profit-shifting loopholes. But because water's-edge combined reporting is already used by 28 other states and the District of Columbia, adopting it this year is an important and achievable first step toward a fairer, more sustainable corporate tax system.

It's not too late. HB 1610 has already passed the House and is now awaiting action in the Senate Finance Committee. Companion legislation, SB 1208, was introduced in the Senate and also remains before the Senate Finance Committee. Advancing either bill would move Pennsylvania one step closer to closing corporate tax loopholes, but ultimately both the House and Senate must approve the same legislation before it can become law.

Tell your legislators to support including water's-edge combined reporting in this year's state budget.