Pennsylvania Gov. Josh Shapiro defended his support for “aggressive” corporate tax cuts, a position that could rankle some of his fellow Democrats but which has won him support from the state’s business community. “We needed to have a more advantageous tax environment for our businesses, and it was one component of an overall strategy in order to grow jobs and create more economic opportunity in Pennsylvania,” Shapiro told reporters at an event in Philadelphia with Treasury Secretary Janet Yellen. “I am competitive as hell” with other states, he said. That is “why I’ve been so aggressively working to cut business taxes.”
Shapiro had joined Yellen to announce that Pennsylvania, a key election battleground, will be the next state to get access to the IRS’ new free tax filing system. With Vice President Kamala Harris set to select her running mate some time in the next 10 days, the event offered Shapiro his latest opportunity to showcase his moderate economic policy record.
Economic Strategy and Tax Cuts
Shapiro is on a narrowing shortlist in Harris’ veepstakes, along with Minnesota Gov. Tim Walz, Arizona Sen. Mark Kelly, Illinois Gov. JB Pritzker, Kentucky Gov. Andy Beshear and Transportation Secretary Pete Buttigieg. North Carolina Gov. Roy Cooper took himself out of the running Monday night. For Harris, the popular Pennsylvania governor could help to deliver a key swing state. His well-articulated stump speeches and high-dollar donor connections could also be assets to the Harris campaign as she sprints to Election Day in less than 100 days.
As Shapiro goes through the closed-door VP vetting process, voters are evaluating his policy stances. The economic positions he laid out Tuesday sought to walk the line between pro-worker and pro-consumer, mirroring the Biden-Harris administration, while also staying business-friendly. On Sunday, Shapiro is set to attend a lunch with big-ticket Democratic donors in the Hamptons, CNBC reported Monday.
Like Shapiro, Yellen fielded several questions about the economic priorities of a potential Harris administration. On tax cuts, Yellen said she expects Harris to largely stay in line with President Joe Biden’s pledge to avoid tax hikes for middle-income families. She also said Harris would likely support child care issues like paid leave and an expanded child tax credit. “I wouldn’t want to try to specify more than that about what her priorities will be but these are certainly things she’s focused on and been committed to over the last three and a half years,” Yellen added.
The White House has repeatedly touted the IRS’ Direct File system, which allows users to file taxes directly, free of charge. It is part of the Biden administration’s broader goal of fixing what it has often called a broken tax system that favors the wealthy. Direct File ran as a pilot in 12 states during the 2024 tax filing season. According to Yellen, over 140,000 taxpayers used it, saving them $5.6 million in federal filing fees and issuing them $90 million in tax refunds.
It is set to become available in all 50 states starting in 2025. The IRS currently partners with a host of private tax companies through its Free File program to provide free tax filing to some Americans. The IRS has regularly been a point of contention in Capitol Hill budget conversations as Democrats say the agency has been underfunded while some Republicans view it as a pocket of overspending. “The Internal Revenue Service has been underfunded. That means that taxpayers have not gotten the support they deserve,” Yellen said.
