Tax break to lure Oracle to Pa. awaits Corbett’s signature

Posted: October 23, 2012

HARRISBURG - A proposed tax incentive designed to attract software giant Oracle to the Pennsylvania State University area and worth millions to other businesses that hire Pennsylvania workers is awaiting Gov. Corbett's signature after clearing the state House and Senate in the waning days of the 2011-2012 session.

The bill would allow employers that hire 250 new workers to keep 95 percent of the workers' state income taxes, money that would otherwise be sent to the state treasury.

Supporters say the program would stimulate job creation, while critics say it would unfairly penalize existing companies that are not expanding and create border wars between states.

"It's another tool for the state to attract quality jobs," said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), a supporter of the measure.

The bill, which was among scores of pieces of legislation that moved quickly through the General Assembly before it adjourned last Wednesday, received bipartisan support in both chambers, but it remains unclear Corbett will sign it.

Through a spokeswoman, Corbett said the measure, which is scheduled to become effective immediately after his signature, was "still under review."

To receive the tax incentive, an employer would have to be a for-profit entity that provides its full-time employees with health insurance and pays at least half the premium.

In addition, the company would have to hire 250 workers over five years and pay them salaries higher than the county average.

There is a $5 million annual cap on the total amount participating companies can keep, small compared with other states that give up hundreds of millions, and the program would end in 2018.

High-ranking legislative sources say 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.

Oracle did not return a call seeking comment.

Critics say such a program would unfairly reward some companies that bring on new workers, while, in effect, penalizing others such Oracle's main competitor, SAP America, which employs 2,500 at its Newtown Square headquarters without a tax break. SAP had no immediate comment.

Oracle is among 300 companies that have taken advantage of a similar program in New Jersey since its creation in 1996.

Sharon Ward, executive director of the liberal-leaning Pennsylvania Budget and Policy Center, says the program changes the way the state offers economic deals and provides a bonus only for creating jobs that may have been taken from another state, rather than offering incentives for doing something extra, such as cleaning up a toxic waste site in an industrial zone or rebuilding infrastructure in the inner city.

"Instead of credit against taxes paid, it allows employers to pocket employees' withholding taxes, while fueling border wars to entice companies," Ward said. "It's a line we don't want to cross."

In a floor debate last week, Sen. Jim Ferlo (D., Allegheny) called such a program a Wild West approach to doling out tax gifts to businesses.

"All of sudden we're waylaying those employees' wages, almost akin to Jesse James robbing a bank, and we're going to put it back in the pockets of one company, in one locale, in one county, in one job site," Ferlo said.

Good Jobs First, an organized-labor-affiliated organization in Washington, said in a report issued in April that similar programs in the 16 other states last year provided incentives to 2,700 corporations totaling almost $700 million.


Contact Amy Worden at 717-783-2584 or aworden@phillynews.com or follow @inkyamy on Twitter.

Staff writer Joseph DiStefano contributed to this article.

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