Corporate taxes did NOT drive Harley out of Pennsylvania
When anything bad happens to a Wisconsin company, the anti-tax/anti-government crowd are sure to blame combined reporting.
But Harley-Davidson’s apparent decision to keep open its York, Pa., factory shows the fallacy in their blame game.
Combined reporting is the corporate tax reform enacted in Wisconsin earlier this year. It closes a great number of loopholes that allowed large firms to avoid paying state income tax.
After combined reporting became law, cynics said it would destroy business here.
An example of the over-reaction was FoxPolitics.net’s outcry, “Who next will WI tax laws chase out?” In this piece, Jo Egelhoff argued that Milwaukee-based Harley-Davidson was looking to close its York, Pa., factory, because–among other things–Pennsylvania is likely to adopt combined reporting.
She wrote: “Wisconsin is a brand new combined reporting state and in Pennsylvania, it’s very likely coming. Perhaps combined reporting is the decision Harley is waiting for in making its decision whether or not to move from York – ??”
The answer is No. Harley has announced a tentative agreement with its York union, in which union concessions will lead to a new seven-year contract and a long-term commitment by Harley to its York site.
It turns out that what Harley was saying all along was the truth: It was labor costs, not taxes, that were motivating the York closing.
Just as Mercury Marine stayed in Fond du Lac because of union concessions–which had nothing to do with Wisconsin taxes–so Harley will stay in York because of union concessions–and nothing to do with Pennsylvania taxes.
The critics should stop crying about Wisconsin’s tax reforms and start focusing on things like ensuring the continuing quality of education in our state.
P.S. For a good overview of combined reporting, see Michael Mazerov’s report for the Center on Budget and Policy Priorities. Also see the report from the Institute for Wisconsin’s Future.
