Lawmakers might be aiming too low with a proposal that would let companies hiring a set number of new employees to keep 95 percent of the workers' state personal income tax as an incentive.
House Bill 2626, introduced by state Rep. Kerry Benninghoff, R-Centre, originally was targeted at companies that moved to Pennsylvania but has since been amended to include existing companies in the state.
To qualify for the credit, the new employees can work as little as an average of 20 hours for a year and be paid at least the annual average wage for people in the same occupation in the county. In addition, the company must offer full-time employees health insurance and pay 50 percent of the premium.
Retailers, utilities, food service companies and public administration of educational services would not qualify under the current proposal, PA Independent reports.
It would be difficult to find any Pennsylvanian who
doesn't believe the Keystone State needs more jobs. There were 525,000 Pennsylvanians without work in August, according to the state Department of Labor and Industry. The state's seasonally adjusted August unemployment rate was 8.1 percent, up from 7.9 percent in July.
But how many jobs need to be created to warrant those incentives?
HB 2626 sets the bar pretty low, especially considering they can be part-time workers.
Under the legislation, in small counties such as Bedford, Clearfield and Huntingdon, a company creating as few as five jobs within two years would be eligible to keep 95 percent of their employees' state income tax payments.
In mid-sized counties, including Blair, Cambria and Centre, the required number of new jobs would be 10, and in the most populous counties, only 15 new jobs would be needed to qualify.
It would take a tremendous influx of hiring at five to 15 jobs each to impact the unemployment rate in the state. Targeting larger operations of 50 or 100 new jobs or more would make more sense.
And as others have noted, the proposal could pit new small businesses against similarly existing employers that might be struggling. Unless the state manages to keep all of the current workers at other companies on the payroll, Pennsylvania might just be trading one job, for which the state gets all of the personal income tax, for another, in which it only gets 5 percent of the money.
Another factor that must be considered is a proposal being batted around in Harrisburg to replace school property taxes with higher income and sales taxes. How would HB 2626, if enacted, affect those plans?
Benninghoff's proposal deserves more discussion. Unfortunately, time for such debate will be in short supply, given the upcoming election.
For that reason, it would be best to hold off serious consideration on the plan until next year.
While Pennsylvania needs jobs now, the state doesn't need something rushed through the Legislature that has negative consequences because the law wasn't fully vetted.