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CLT UPDATE
Thursday, August 8, 2013
Tax repeal ballot questions are filed
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When asked how the tax is supposed to work,
Barbara Anderson was blunt.
“I have no idea because they have no idea,” she
said.
Anderson is executive director of the
Citizens
for Limited Taxation and is well known in Massachusetts for
leading the fight to implement Proposition 2½ back in the early
1980s. According to Anderson, small business owners were told
tech-based businesses will be taxed on the total earned gross of a
project, not simply the product the owner uses to complete the
project.
On a $10,000 project, the vendor would be taxed
$625, she said—a point underscored in a comment on a recent
Boston.com story, which cites a lack of outcry from the
Massachusetts tech community.
Anderson said her organization has been trying to
get specifics about the tech tax since the State House debate began.
She has come up empty.
Anderson said she has heard that legislators seek
to “tax the cloud,” which has extremely vague application.
“One of these [types of] companies isn’t very
well defined,” she said. “It’s taxing the cloud, as if they know
what the cloud is.”
The Framingham Patch
Friday, August 2, 2013
Lawmakers Unsure What New Tech Tax Will Actually Tax
But last week, Beacon Hill threw tech under a
truck. On Wednesday, with exactly seven days’ notice, a law went
into effect requiring anyone in the business of providing “computer
system design services” in Massachusetts to collect the 6.25 percent
sales tax from their in-state customers.
And what exactly does “computer system design
services” mean? It isn’t yet crisply defined, but it may cover
everything from the contractor who loads Microsoft Office onto the
PCs at your office, to the person who builds a mobile app using open
source components, to the team of consultants who customizes an
Oracle database.
The bargain between the tech sector and state
government has long been, “Leave us alone, and we’ll applaud
enthusiastically when you talk about what brilliant job creators we
are.” That bargain crumbled last week. And the tech sector learned
that sweet nothings from elected officials mean exactly nothing if
you don’t have lobbying muscle on Beacon Hill....
The decision to tax software services happened
fast, with very little input from tech businesses. “There was no
public hearing,” says Chris Anderson of the Massachusetts High
Technology Council. That’s a disgrace on the part of state
legislators — especially those who tout themselves as champions of
Bay State innovation. But it should also be a warning to other
industries about the perils of political disengagement....
We won’t know for a few weeks precisely how the
Department of Revenue will interpret the legislation that mandates
the new tax. But one thing is for sure. While techies have long “had
their heads down thinking about the next big thing,” in the words of
Angie O’ Connor, director of TechNet’s New England office, they’re
now going to need to apply some of that intellectual firepower to
politics.
The Boston Globe
Sunday, August 4, 2013
Tech firms learning a hard, costly lesson
A group of Republican state lawmakers and
activists said Tuesday that they hope to place a measure on the 2014
ballot that would repeal a state law triggering automatic increases
in the gas tax when inflation rises.
The activists described the law, which was
recently signed by Governor Deval Patrick, as a “forever tax,” since
increases in the tax would not need approval by the Legislature.
“Taxation without representation is not going to
stand,” said Representative Geoffrey G. Diehl, a Whitman Republican
who was among the two dozen supporters announcing the ballot effort
in front of the State House....
But the activists said they are only targeting
the part of the law that indexes the gas tax to inflation,
contending that it represents a particular outrage since it could
lead to automatic tax increases.
“This is a slippery slope that we’re on,” said
Representative Shaunna O’Connell, a Taunton Republican.
To qualify for the 2014 ballot, the activists
will need to gather 68,911 voter signatures by November.
They said they hope to enlist grass-roots support
from Tea Party movement groups, antitax activists, and members of
the Republican State Committee and do not plan on hiring paid
signature-gatherers.
The Boston Globe
Tuesday, August 6, 2013
GOP legislators seek to fight gas law with ballot effort
A coalition of business leaders from some of
Massachusetts’ biggest companies, including Staples Inc., BJ’s
Wholesale Club Inc., and Boston Scientific Corp., plans to ask
voters to repeal the newly imposed sales tax on computer software
services.
The political action is an abrupt turn for a
business community caught off guard by the new tax. Many executives
were unaware the tax had been working its way through the
Legislature for months.
Now, executives of established corporations are
joining with entrepreneurs from upstart technology firms to argue
the new tax unfairly targets one industry and threatens the state’s
economic growth....
About 20 executives, along with the Massachusetts
Taxpayers Foundation, the Massachusetts High Technology Council, and
other groups, will petition the state Thursday to begin putting the
repeal on the 2014 ballot.
That timing could make the tax a factor in the
upcoming governor’s race.
The legislation applies the state’s 6.25 percent
sales tax to a wide variety of computer services, such as modifying
software or building websites. State officials expect the tax would
yield some $160 million annually.
The businesses have hired the Boston public
relations and lobbying firm Rasky Baerlein Strategic Communications
to run the advocacy campaign for the next 15 months and help collect
the signatures needed to put the question to voters.
The rear-guard action is forcing tech executives
to confront an unflattering reality about their role in
Massachusetts political life: that many simply ignore what’s going
on on Beacon Hill, to their great expense....
As defined by the Legislature, computer services
to be taxed include “the planning, consulting, or designing of
computer systems that integrate computer hardware, software, or
communication technologies and are provided by a vendor or a third
party.”
But business leaders complain the language of the
law is too vague and could apply to any number of technology
services that many different businesses regularly buy and sell. They
predict it will affect so many routine computer expenses that the
tax haul will amount to some $500 million a year.
Indeed, in response to the initial uproar and
confusion over the tax, the Massachusetts Department of Revenue has
augmented its initial guidance with 44 additional explanations on
how it would be applied.
The Boston Globe
Wednesday, August 7, 2013
Business leaders fight technology tax in Mass.
While some will likely be ruled ineligible for
the ballot and others will find signature-gathering hurdles too
high, a mid-summer deadline Wednesday gave Massachusetts voters a
taste of the issues they may be asked to decide in November 2014.
Sponsors of several proposed initiative petitions
submitted language and the initial 10 signatures required with
Attorney General Martha Coakely’s office, a necessary first step in
the long process of placing binding questions before the voters....
In addition to proposals to repeal a new computer
services tax and the new law indexing the gas tax to inflation,
activists filed proposals to add more types of beverages to the
bottle redemption law, to make casino gambling illegal, and to raise
the minimum wage to $10.50 an hour....
A petition was also filed to roll the sales tax
back to 5 percent, and another to give companies that hire new
employees a tax credit worth 5 percent of the new hire’s wages. The
software, gas and sales tax proposals all strike at the
underpinnings of the recently enacted law transportation financing
law intended to generate new revenue for public transit and
infrastructure....
Coakley next month will decide whether proposed
initiative petitions meet the requirements for ballot eligibility.
Certified measures will then be filed with the state and activists
who wish to push forward with the process then need to file locally
at least 68,911 voter signatures by late November and file certified
signatures with the state by Dec. 4.
Measures are then filed with the Legislature in
January 2014. Ballot question proponents usually press lawmakers to
act on their proposal to avoid a ballot fight before deciding
whether to gather 11,485 additional signatures needed by early July
to secure a ballot spot.
State House News Service
Wednesday, August 7, 2013
Petitioners take first step toward putting issues on the 2014 ballot
A higher minimum wage, a cut in the state sales
tax and a repeal of a new tax on computer software services are just
some of the issues that could be put before Massachusetts voters
next year.
Thirty-three questions were filed with Attorney
General Martha Coakley's office Wednesday proposing 18 new laws and
four constitutional amendments. Many of the questions were
variations of the same issue....
A number of questions take aim at tax policy.
One would reduce the state's sales tax rate from
6.25 percent to 5 percent, repealing an increase that went into
effect in 2009. Voters in 2010 rejected a question that would have
lowered the rate to 3 percent.
Another question would repeal a new law that
applies the sales tax to computer and software technology services.
Backers call the new tax "a grave danger to the future of the
innovation economy." The tax was part of a transportation financing
package.
Another question seeks to undo another portion of
the transportation law that automatically links future hikes in the
gas tax to increases in the rate of inflation.
Associated Press
Wednesday, August 7, 2013
Mass. voters could face slew of ballot questions
Businesses shouldn't be required to guess what
they must pay taxes on. Yet that’s exactly where Massachusetts’
software-services industry finds itself several weeks after state
legislators passed a bill to put a 6.25 percent sales tax on
“computer system design services” to fund transportation projects.
But implementation of the so-called “tech tax” isn’t the problem.
It’s the irresponsible policymaking that underlies it that is now
jeopardizing one of the state’s fastest-growing sectors. Opponents
are filing a 2014 ballot initiative to repeal the levy. Legislators,
however, should step in to provide a faster fix....
Massachusetts now has the highest tax on computer
and software services in the country. Just three other states tax
such services, and none at more than 4 percent. For most Bay State
firms, particularly small businesses, their only choice will be to
pass the added cost along to customers. This complicated process
will almost guarantee Massachusetts’ high-tech companies will lose
business to out-of-state competitors. That’s an especially foolish
move for a state that values its innovation economy.
A Boston Globe editorial
Thursday, August 8, 2013
‘Tech tax’ causes confusion, and best fix would be repealing it
Listen to politicians for any amount of time
and one will soon hear enough double-talk to set the head
spinning.
But even the most cynical listeners must be
astounded to hear the whopper that two local freshman Democratic
state legislators are trying to sell.
State Sen. Kathleen O’Connor Ives,
D-Newburyport, and state Rep. Diana DiZoglio, D-Methuen, want
voters to believe that the vote they took that allowed an $800
million tax hike to become law does not mean they support higher
taxes. Oh no, no. They say they voted to override Gov. Deval
Patrick’s veto of the transportation funding bill to save
taxpayers from an even bigger increase that might have been
negotiated had the veto been sustained....
If O’Connor Ives and DiZoglio really opposed
any tax increases that would harm Merrimack Valley retailers and
taxpayers, they could have voted to sustain the veto and then
worked on a new transportation bill that did not rely on new
revenues. Republicans had such a plan; Democrats chose to ignore
it.
O’Connor Ives and DiZoglio may not like the
“flip-flopper” label. But when the time came to defend the
interests of Merrimack Valley retailers and taxpayers, they
flopped.
An Eagle-Tribune editorial
Thursday, August 8, 2013
Local lawmakers flopped on tax hike
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Chip Ford's CLT
Commentary
“Just because you do not take an
interest in politics doesn't mean politics won't take an
interest in you.”
—Pericles (495 - 429 B.C.)
“One of the penalties for refusing to participate in
politics is that you end up being governed by your
inferiors.”
—Plato (428 - 347 B.C.)
What has been will be again,
what has been done will be done again;
there is nothing new under the sun.
—Ecclesiastes 1:9
“Those who cannot remember the past
are condemned to repeat it.”
—George Santayana (1863-1952);
The Life of Reason, 1905
The whopping half-billion-dollars-plus tax
increase has been imposed by Bacon Hill. Now after the fact some are
just waking up to what its actual costs will be, what the
unintended-or-not consequences will wreak.
I wonder where Michael Widmer (of the so-called
Massachusetts Taxpayers Foundation) and the high-tech industry
were when
we were fighting against the hike when it mattered most, back in
April?
The deadline for filing petitions has just
expired; thirty-three have been filed with the Attorney General's
office. (Find
them here.) It's going to be an interesting election next
year — with the tax-hikers in the
Legislature campaigning for reelection against the tax-repeal ballot
questions they made necessary.
CLT is looking at the question to repeal the
state's first "Perpetual
Tax Hike," the automatic gas tax hike, and how we can assist.
Of course CLT supports repeal of the computer services sales tax:
How can the Bacon Hill pols pass something which they have no idea
what it'll do or how much it will extract? (“One of the penalties
for refusing to participate in politics is that you end up being
governed by your inferiors.”)
All this was so unnecessary
— or should have been. But here we are, again
— even with The Best Legislature Money Can
Buy.
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Chip Ford |
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The Framingham Patch
Friday, August 2, 2013
Lawmakers Unsure What New Tech Tax Will Actually Tax
A new state sales tax began Wednesday, but lawmakers don’t know what
exactly is included.
By Bret Silverberg
Are you about to pay taxes on computer services? No one is really
sure, including the Massachusetts Department of Revenue.
State House and Senate legislators, after months of wrangling,
passed a $500 million transportation finance bill into law via a
veto override vote. The law includes a new sales tax on technology
and computer software-based transactions.
The new tax is expected to generate $161 million, or slightly less
than a third of the total revenue raised. And no one knows how this
tax will work.
What technology? What services? Which vendors? Which customers?
Those details were not included in the approved legislation.
The Details
A Department of Revenue technical information release defines the
new addition to sales tax as:
"'Computer system design services’, the planning, consulting or
designing of computer systems that integrate computer hardware,
software or communication technologies and are provided by a vendor
or a third party.”
The document goes on to define “services” as: “telecommunications
services, computer system design services and the modification,
integration, enhancement, installation or configuration of
standardized software.”
Got that?
A vendor must now collect the state's 6.25 percent tax on the above.
But even state lawmakers who wrote the bill can’t explain what the
legalese above means.
Setting Definitions on the Fly
Ann Dufresne, director of communications for the Department of
Revenue, said the department is working to determine who is impacted
by the new law.
"We're getting to the nitty gritty now," she said.
Dufresne added that tax return filings are not due until the 20th of
the month, so those who find that they're accountable for the new
addition to sales tax have some time before they have to file.
The Department of Revenue is soliciting comments and feedback from
those who will be impacted by the new law and will publish a
Frequently Asked Questions fact sheet on the Department of Revenue
website as early as Wednesday.
Dufresne said the Department of Revenue will issue amendments on
sales tax regulations for the computer industry within three months.
Tax Watchdogs Wary of Vague Wording
When asked how the tax is supposed to work, Barbara Anderson
was blunt.
“I have no idea because they have no idea,” she said.
Anderson is executive director of the Citizens for Limited
Taxation and is well known in Massachusetts for leading the
fight to implement Proposition 2½ back in the early 1980s. According
to Anderson, small business owners were told tech-based businesses
will be taxed on the total earned gross of a project, not simply the
product the owner uses to complete the project.
On a $10,000 project, the vendor would be taxed $625, she said—a
point underscored in a comment on a recent Boston.com story, which
cites a lack of outcry from the Massachusetts tech community.
Anderson said her organization has been trying to get specifics
about the tech tax since the State House debate began. She has come
up empty.
Anderson said she has heard that legislators seek to “tax the
cloud,” which has extremely vague application.
“One of these [types of] companies isn’t very well defined,” she
said. “It’s taxing the cloud, as if they know what the cloud is.”
Who Won't Get Taxed
The document lists other exceptions from applying the tax, which are
typical of other sales tax applications, according to Dufresne.
If, for example, a purchaser of services can prove “multiple points
of use” outside of Massachusetts, the purchases will not be on the
hook for the Massachusetts sales tax. In other words, if the
purchaser is not sourced in Massachusetts, Massachusetts state sales
tax should not apply.
The Boston Globe
Sunday, August 4, 2013
Tech firms learning a hard, costly lesson
By Scott Kirsner
Back in March, I had a chance to interview Governor Deval Patrick on
stage at a Boston hotel, in front of several hundred tech workers.
The Massachusetts innovation economy, he boasted, was “one of the
reasons why we are growing jobs faster than most other states,” and
why the state had regained all the jobs lost in the recent
recession.
Earlier that month, a group of legislators led by state Senator
Karen Spilka, Democrat of Ashland, formed the Tech Hub Caucus, to
help “shine a spotlight on tech’s far-reaching economic importance,”
according to the press release announcing it.
But last week, Beacon Hill threw tech under a truck. On Wednesday,
with exactly seven days’ notice, a law went into effect requiring
anyone in the business of providing “computer system design
services” in Massachusetts to collect the 6.25 percent sales tax
from their in-state customers.
And what exactly does “computer system design services” mean? It
isn’t yet crisply defined, but it may cover everything from the
contractor who loads Microsoft Office onto the PCs at your office,
to the person who builds a mobile app using open source components,
to the team of consultants who customizes an Oracle database.
The bargain between the tech sector and state government has long
been, “Leave us alone, and we’ll applaud enthusiastically when you
talk about what brilliant job creators we are.” That bargain
crumbled last week. And the tech sector learned that sweet nothings
from elected officials mean exactly nothing if you don’t have
lobbying muscle on Beacon Hill.
The Legislature estimated that the tax will raise about $160 million
a year, but the Massachusetts Taxpayers Foundation, a
business-financed research organization, predicts it could yield
$500 million or more.
Will we see a mob of T-shirt-clad coders dumping laptops into Boston
Harbor, shouting “No Taxation of our Applications”? I doubt it. But
here are the implications of this new tax, not just on software
consultants, but on the broader business community.
• This tax increases the cost of buying semicustomized software by
6.25 percent. (Buying prewritten software, like Quickbooks
accounting software, has always been taxable. And the new law isn’t
intended to cover software that is entirely custom written.) That
means there’s less incentive for small retailers to invest in a
software project that might help them understand which products they
should order, or for inns to undertake website improvements that
could attract more tourists.
Plus, says Mark Kasdorf, founder of the Cambridge software
consultancy Intrepid Labs, it affects start-up companies, which
often hire firms like his to help with initial versions of their
products. “Start-ups need to move fast, and it can be slow for them
to hire their own people, so they spend a lot of their money on
contractors,” says Kasdorf. “This makes life 6 percent more
expensive for them.”
• I remember noting a while back that the trade group Massachusetts
Technology Leadership Council (then known as the Massachusetts
Software Council) had let go its longtime lobbyist. Other tech trade
groups, like MITX and TechNet, have never been a notable presence on
Beacon Hill. I think that will change, with members willing to pay
to play a bigger role in policy creation.
As Jeremy Weiskotten puts it, “This is jarring for our industry.
These kinds of things don’t usually happen to us.” Weiskotten is a
director of Terrible Labs, a nine-person software consultancy in
Boston that’s trying to figure out how and whether the new tax
applies to its work.
• Writing and installing software is exactly the kind of
high-skilled, highly paid, environmentally friendly job we should
cultivate in this state. Why would we make it less appealing to
start a software firm in Massachusetts, move a business here from
another state, or open a branch office here? “Other states offer
incentives for these kinds of companies to set up shop,” says Tom
Hopcroft, president of the Massachusetts Technology Leadership
Council. “We’re creating a disincentive.” (Of 15 similar
innovation-oriented states, only one, Texas, applies the sales tax
to computer design services, according to the Massachusetts High
Technology Council, another trade group.)
• If Beacon Hill has decided to tax software developers — a
white-collar professional service — does that mean other
professional services could be next? Management consultants?
Interior designers? Other states have gone in that direction, as
services continue to grow as a portion of the overall economy.
• Will the state’s Department of Revenue have to staff up on
software specialists to audit code to determine whether it qualifies
as totally custom (i.e., nontaxable), or a modification of
prewritten software (taxable)? Will software experts need to train
state auditors?
• Small software developers and big systems integrators now get to
deal with the fun administrative work of collecting and remitting
sales tax to the state. For a small company like Boston-based
Dockyard, with 13 employees and about $1 million in revenues last
year, that can add significant overhead costs, says principal Brian
Cardarella.
• The decision to tax software services happened fast, with very
little input from tech businesses. “There was no public hearing,”
says Chris Anderson of the Massachusetts High Technology Council.
That’s a disgrace on the part of state legislators — especially
those who tout themselves as champions of Bay State innovation. But
it should also be a warning to other industries about the perils of
political disengagement.
• At least for the short term, there will be plenty of work for tax
attorneys and accountants to help clients understand the ins and
outs of the new tax. And those professionals, unlike software
developers, aren’t required to tack 6.25 percent onto their invoices
. . . yet.
We won’t know for a few weeks precisely how the Department of
Revenue will interpret the legislation that mandates the new tax.
But one thing is for sure. While techies have long “had their heads
down thinking about the next big thing,” in the words of Angie O’
Connor, director of TechNet’s New England office, they’re now going
to need to apply some of that intellectual firepower to politics.
The Boston Globe
Tuesday, August 6, 2013
GOP legislators seek to fight gas law with ballot effort
By Michael Levenson
A group of Republican state lawmakers and activists said Tuesday
that they hope to place a measure on the 2014 ballot that would
repeal a state law triggering automatic increases in the gas tax
when inflation rises.
The activists described the law, which was recently signed by
Governor Deval Patrick, as a “forever tax,” since increases in the
tax would not need approval by the Legislature.
“Taxation without representation is not going to stand,” said
Representative Geoffrey G. Diehl, a Whitman Republican who was among
the two dozen supporters announcing the ballot effort in front of
the State House.
The Patrick administration has argued that linking the gas tax to
inflation guarantees that the tax does not lose its purchasing
power.
The law that Patrick signed also increases the gas tax by 3 cents a
gallon, the cigarette tax by $1 a pack, and boosts taxes on computer
services.
But the activists said they are only targeting the part of the law
that indexes the gas tax to inflation, contending that it represents
a particular outrage since it could lead to automatic tax increases.
“This is a slippery slope that we’re on,” said Representative
Shaunna O’Connell, a Taunton Republican.
To qualify for the 2014 ballot, the activists will need to gather
68,911 voter signatures by November.
They said they hope to enlist grass-roots support from Tea Party
movement groups, antitax activists, and members of the Republican
State Committee and do not plan on hiring paid signature-gatherers.
Diehl pointed out that many of those pushing the ballot measure were
part of a volunteer drive that helped Michael J. Sullivan, former US
attorney, quickly gather the 10,000 voter signatures he needed to
qualify for the Republican primary for US Senate earlier this year.
The Boston Globe
Wednesday, August 7, 2013
Business leaders fight technology tax in Mass.
Seek ballot item to end state’s levy; say computer sector mistreated
By Michael B. Farrell
A coalition of business leaders from some of Massachusetts’ biggest
companies, including Staples Inc., BJ’s Wholesale Club Inc., and
Boston Scientific Corp., plans to ask voters to repeal the newly
imposed sales tax on computer software services.
The political action is an abrupt turn for a business community
caught off guard by the new tax. Many executives were unaware the
tax had been working its way through the Legislature for months.
Now, executives of established corporations are joining with
entrepreneurs from upstart technology firms to argue the new tax
unfairly targets one industry and threatens the state’s economic
growth.
“It’s a frightening tax because of the precedent to single out
technology-related companies for a source of revenue,” said Pete
Nicholas, chairman of Natick’s Boston Scientific and a leader of the
new ballot initiative. “It really acts against the impulses of
people who want to grow and flourish in the state.”
About 20 executives, along with the Massachusetts Taxpayers
Foundation, the Massachusetts High Technology Council, and other
groups, will petition the state Thursday to begin putting the repeal
on the 2014 ballot.
That timing could make the tax a factor in the upcoming governor’s
race.
The legislation applies the state’s 6.25 percent sales tax to a wide
variety of computer services, such as modifying software or building
websites. State officials expect the tax would yield some $160
million annually.
The businesses have hired the Boston public relations and lobbying
firm Rasky Baerlein Strategic Communications to run the advocacy
campaign for the next 15 months and help collect the signatures
needed to put the question to voters.
The rear-guard action is forcing tech executives to confront an
unflattering reality about their role in Massachusetts political
life: that many simply ignore what’s going on on Beacon Hill, to
their great expense.
“I’m not in tune with what’s happening in the Legislature,”
acknowledged Joshua Opper, managing partner of a small Newton
information technology consulting firm, Utility Datacenter.
Conversely, Opper said that judging by how the tax was written,
lawmakers aren’t in tune with how the information technology
industry works, either. “It’s so behind the times that you might as
well just throw it out and start over,” he said.
Another bitter lesson, these business people said, is that
politicians are all too willing to pay the tech industry lip service
when it boosts their own credentials.
“There isn’t a speech that any politician gives in which they don’t
mention the innovation economy,” said Michael Widmer, president of
the Massachusetts Taxpayers Foundation, “and the fact that we are
placing the most sweeping tax on the innovation economy is
stunning.”
The Patrick administration, which originally pushed the computer tax
with the Legislature as part of the governor’s transportation bill,
noted its proceeds will be used to repair and upgrade the state’s
roads and transportation systems — investments that will benefit the
business community.
“The governor supported this plan to invest in the future of the
Commonwealth — and this particular avenue for raising revenue —
because the people and the businesses of the Commonwealth want and
deserve a reliable, modern transportation system,” his aides said in
a statement.
As defined by the Legislature, computer services to be taxed include
“the planning, consulting, or designing of computer systems that
integrate computer hardware, software, or communication technologies
and are provided by a vendor or a third party.”
But business leaders complain the language of the law is too vague
and could apply to any number of technology services that many
different businesses regularly buy and sell. They predict it will
affect so many routine computer expenses that the tax haul will
amount to some $500 million a year.
Indeed, in response to the initial uproar and confusion over the
tax, the Massachusetts Department of Revenue has augmented its
initial guidance with 44 additional explanations on how it would be
applied.
One of the Legislature’s top tax authorities, Senator Stephen Brewer
of Barre, the Democratic chairman of the Senate Committee on Ways
and Means, said Massachusetts has to fund transportation upgrades
somehow, and the computer tax is not out of line with how other
states tax the industry.
“I would be curious to know where the alternatives are,” Brewer
said. “Where do they want to get revenue to improve transportation?”
However, Brewer said that if the tax ends up costing businesses more
than $160 million, he and other legislators would instruct the state
revenue department to narrow the scope of collections.
State House News Service
Wednesday, August 7, 2013
Petitioners take first step toward putting issues on the 2014 ballot
By Michael Norton, Colleen Quinn and Matt Murphy
While some will likely be ruled ineligible for the ballot and others
will find signature-gathering hurdles too high, a mid-summer
deadline Wednesday gave Massachusetts voters a taste of the issues
they may be asked to decide in November 2014.
Sponsors of several proposed initiative petitions submitted language
and the initial 10 signatures required with Attorney General Martha
Coakely’s office, a necessary first step in the long process of
placing binding questions before the voters.
Twenty-five petitions were filed in all, some of which were simply
varying versions of the same question designed to maximize the
chance of qualifying legally for the ballot. The proposals ranged
from tax questions to an effort to make daylight savings time the
year-round time of the Commonwealth and to guarantee commercial
fishing techniques are safe for whales.
In addition to proposals to repeal a new computer services tax and
the new law indexing the gas tax to inflation, activists filed
proposals to add more types of beverages to the bottle redemption
law, to make casino gambling illegal, and to raise the minimum wage
to $10.50 an hour.
Another proposal aims to ensure workers can earn up to 40 hours of
paid sick time. And nurses say patient safety is at the root of a
push for staffing standards.
“Today working families begin the process of standing up and putting
an end to the historic inequality in our Commonwealth,” said
Massachusetts AFL-CIO President Steven Tolman, of the “Raise Up
Massachusetts” campaign to increase the minimum wage and guarantee
employee earned paid sick time. “The Massachusetts AFL-CIO is proud
to be part of an effort in the legislative process and on the ballot
if necessary to help working families raise up their quality of
life. These initiatives are asking for basic fairness and the bare
minimum.”
A petition was also filed to roll the sales tax back to 5 percent,
and another to give companies that hire new employees a tax credit
worth 5 percent of the new hire’s wages. The software, gas and sales
tax proposals all strike at the underpinnings of the recently
enacted law transportation financing law intended to generate new
revenue for public transit and infrastructure.
Backers of expanding the state’s 5-cent bottle redemption deposit to
water, juice, sports drinks and other non-carbonated beverages said
Wednesday it is time for the public to decide the decade-long fight.
Since it went into effect in 1983, the 5-cent deposit has only
applied to beer and carbonated beverages.
Janet Domenitz, executive director of MASSPIRG, said
environmentalists have waited long enough for the change they say
will increase recycling and cut down on liter. Critics of broadening
the deposit law argue it is a tax on consumers and will hurt
retailers forced to collect more containers.
A perennial proposal on Beacon Hill, it won support in the Senate
twice - once this year in the fiscal 2014 budget and last year in an
economic development bill. It has never passed in the House of
Representatives.
Other ballot questions are pushing for tax breaks.
A 22-year-old recent college graduate filed two petitions to reduce
the state’s 6.25 percent sales tax to 5 percent, and to give
companies a tax credit for every new employee they hire.
Owen Becker, a Rowley resident, said he thinks lowering the sales
tax will encourage people to shop in Massachusetts. Becker said he
sees people who live on the North Shore too often heading to New
Hampshire to shop buying gas, coffee, and meals while they’re over
the border.
“A whole lot of economic input is getting dumped into New
Hampshire,” he said.
Becker also wants to give 5 percent of a new hire’s wages back to
companies as long as their salary is less than $100,000. Salaries
over $100,000 would not qualify, under Becker’s proposal.
Becker said he has no estimates for how much the tax credit or
lowering the sales tax would cost the state, but argued that the
economic impact of spurring job growth would outweigh costs.
Another petition relates to the U.S. Supreme Court decision in the
Citizens United case. The high court held that the First Amendment
prohibits the government from restricting political independent
expenditures by corporations, associations, or labor unions.
Nicholas Bokron, an iron worker from Nahant, filed an initiative
petition to amend the state Constitution to define that
“corporations are not people, money is not speech.” Bokron said he
is concerned about the affects political contributions from
corporations and other groups have on elections.
“We just consider unlimited amounts of money by corporations
detrimental to the common good,” Bokron told the News Service
Wednesday.
Coakley next month will decide whether proposed initiative petitions
meet the requirements for ballot eligibility. Certified measures
will then be filed with the state and activists who wish to push
forward with the process then need to file locally at least 68,911
voter signatures by late November and file certified signatures with
the state by Dec. 4.
Measures are then filed with the Legislature in January 2014. Ballot
question proponents usually press lawmakers to act on their proposal
to avoid a ballot fight before deciding whether to gather 11,485
additional signatures needed by early July to secure a ballot spot.
In 2010, voters passed initiative petitions legalizing marijuana for
medical purposes and requiring auto makers to share certain
information needed to make vehicle repairs.
Other petitions filed Wednesday address shared parenting,
genetically modified food and Constitutional amendments relating to
the National Guard and to make access to affordable quality health
coverage for medically necessary, preventive, acute and chronic
health care and mental health care services, prescription drugs and
devices a right of all legal citizens in Massachusetts.
Associated Press
Wednesday, August 7, 2013
Mass. voters could face slew of ballot questions
A higher minimum wage, a cut in the state sales tax and a repeal of
a new tax on computer software services are just some of the issues
that could be put before Massachusetts voters next year.
Thirty-three questions were filed with Attorney General Martha
Coakley's office Wednesday proposing 18 new laws and four
constitutional amendments. Many of the questions were variations of
the same issue.
Other questions would repeal the state's casino law, require labels
on genetically modified foods and create nurse-patient staffing
ratios.
One proposal — dubbed The Massachusetts Family Sunshine Protection
Act — would make daylight saving time the year-round standard time
for the state.
The minimum wage question would raise the wage from $8 to $10.50 per
hour over two years. Lead petitioner U.S. Sen. Elizabeth Warren says
a higher minimum wage is a matter of fairness.
"Hardworking men and women who are busting their tails in full-time
jobs shouldn't be left in poverty," Warren said.
Critics say a higher minimum wage would burden small businesses and
tighten the job market.
The state's other Democratic U.S. Sen. Edward Markey is the lead
petitioner of a question that would create a statewide earned sick
time policy.
A number of questions take aim at tax policy.
One would reduce the state's sales tax rate from 6.25 percent to 5
percent, repealing an increase that went into effect in 2009. Voters
in 2010 rejected a question that would have lowered the rate to 3
percent.
Another question would repeal a new law that applies the sales tax
to computer and software technology services. Backers call the new
tax "a grave danger to the future of the innovation economy." The
tax was part of a transportation financing package.
Another question seeks to undo another portion of the transportation
law that automatically links future hikes in the gas tax to
increases in the rate of inflation.
Environmentalists are pushing another question that would expand the
types of bottles covered by Massachusetts' 1982 bottle bill.
The original law created a 5-cent deposit on carbonated beverages.
The question would expand the law to include non-carbonated
beverages such as water, tea and sports drinks. Critics say the
measure would drive up the costs of beverages for working families.
Other questions seek to protect whales and sea turtles from
commercial fishing gear and require labels on all foods sold in
Massachusetts that contain genetically modified material.
Filing the questions with the attorney general's office is just the
first step on a long road to the 2014 ballot.
If Coakley determines that a question passes constitutional muster,
activists have until Dec. 4 to collect the signatures of 68,911
certified voters — although they typically collect significantly
more.
That gets the question before lawmakers. If they fail to take
action, another 11,485 new certified signatures are needed by early
July to secure a spot on the 2014 ballot.
For the 2012 election, 31 initiative petitions were submitted. Only
three made the ballot.
The Boston Globe
Thursday, August 8, 2013
A Boston Globe editorial
‘Tech tax’ causes confusion, and best fix would be repealing it
Businesses shouldn't be required to guess what they must pay taxes
on. Yet that’s exactly where Massachusetts’ software-services
industry finds itself several weeks after state legislators passed a
bill to put a 6.25 percent sales tax on “computer system design
services” to fund transportation projects. But implementation of the
so-called “tech tax” isn’t the problem. It’s the irresponsible
policymaking that underlies it that is now jeopardizing one of the
state’s fastest-growing sectors. Opponents are filing a 2014 ballot
initiative to repeal the levy. Legislators, however, should step in
to provide a faster fix.
Tax officials, for their part, have made a valiant effort to inform
businesses about the new tax and how to collect it: When the bill
containing the levy passed in mid-July, guidance on its
implementation was available the same day. The Department of
Revenue’s website features 44 frequently asked questions and
potential scenarios, and customer-service agents have been trained
to answer additional queries via a hotline and email. Regular forums
will soon start to provide one-on-one advice. Nonetheless, companies
are still scrambling to figure out what, if anything, they owe.
Meanwhile, the question remains as to why lawmakers chose to fund
transportation improvements with a technology tax in the first
place. Raising the gas tax by an additional 5 cents — which would
yield roughly the same amount of revenues as the tech tax is
projected to produce — would have been a more sensible approach. The
Legislature made matters worse by not seeking any public comments
before passing the bill. Critics argue that the state’s projection
that the tax will raise $160 million could be wildly off. Given the
law’s ambiguous language, corporate technology users — the state’s
largest employers and promising start-ups alike — may pay as much as
$500 million in additional taxes, according to the Massachusetts
Taxpayers Foundation. Amy Pitter, the state’s tax commissioner,
stands by her agency’s original analysis, and says she plans to
interpret the law as narrowly as possible.
Even so, Massachusetts now has the highest tax on computer and
software services in the country. Just three other states tax such
services, and none at more than 4 percent. For most Bay State firms,
particularly small businesses, their only choice will be to pass the
added cost along to customers. This complicated process will almost
guarantee Massachusetts’ high-tech companies will lose business to
out-of-state competitors. That’s an especially foolish move for a
state that values its innovation economy.
The Eagle-Tribune
Thursday, August 8, 2013
An Eagle-Tribune editorial
Local lawmakers flopped on tax hike
Listen to politicians for any amount of time and one will soon hear
enough double-talk to set the head spinning.
But even the most cynical listeners must be astounded to hear the
whopper that two local freshman Democratic state legislators are
trying to sell.
State Sen. Kathleen O’Connor Ives, D-Newburyport, and state Rep.
Diana DiZoglio, D-Methuen, want voters to believe that the vote they
took that allowed an $800 million tax hike to become law does not
mean they support higher taxes. Oh no, no. They say they voted to
override Gov. Deval Patrick’s veto of the transportation funding
bill to save taxpayers from an even bigger increase that might have
been negotiated had the veto been sustained.
The denials from O’Connor Ives and DiZoglio come straight from the
Vietnam War era: They had to destroy the Merrimack Valley in order
to save it.
The freshmen legislators would have looked less ridiculous had they
simply accepted the “flip-flopper” labels state Republicans tried to
hang on them. For flip-floppers they are.
DiZoglio and O’Connor Ives were bit players in a old political game.
The governor and his Democratic friends in the Legislature all
wanted a big tax increase on Massachusetts citizens, despite the
state’s struggle to emerge from years of recession and job
stagnation. After all, politicians have no power but for the money
they can hand out to favored constituencies. And they have no money
to give but that which they take from the rest of us.
But legislators, who must face the voters every two years, know they
cannot be seen to be so blatantly grasping. So their friend the
governor makes some ludicrous request — for Patrick, it was $1.9
billion in tax hikes for transportation and education. That allows
legislators to submit a more modest tax hike proposal of their own —
couched in terms of compromise and concern for taxpayers, but a tax
hike nonetheless.
The $500 million transportation bill agreed to by the House and
Senate will rake in $800 million in revenue annually from taxpayers
by 2018. Included in the tax package are a 3 cents per gallon hike
in the gas tax, making the increases permanent by linking them to
inflation, a $1 per pack bump in the tax on cigarettes and the
extension of the 6.25 percent sales tax to computer and software
services.
The cigarette and gas taxes are particularly damaging to local
retailers as shoppers easily hop the border to New Hampshire, where
those taxes are substantially lower.
DiZoglio and O’Connor Ives twice voted against the tax plan as it
moved through the House and Senate, ostensibly in defense of
Merrimack Valley retailers.
“I live in a border community and we’re constantly battling to keep
shopping local, and it’s too easy for someone to cross the border
and buy these things,” DiZoglio told reporter Douglas Moser.
But it was easy for the two local legislators to vote against the
bill in its early stages. With the support of the House and Senate
leadership, it was certain to pass.
The tough vote came after the veto by Patrick. Override the veto and
the tax package becomes law. Sustain the veto and it’s back to the
negotiating table. O’Connor Ives and DiZoglio voted to override.
O’Connor Ives told Moser that going back to square one would have
meant an even larger tax package.
“The important thing I’d like to convey is my vote to override the
governor’s veto was a vote to draw line in the sand and prevent a
measure for an even higher gas tax,” she said. “I didn’t support any
gas tax.”
Yet her vote helped that tax hike become law.
If O’Connor Ives and DiZoglio really opposed any tax increases that
would harm Merrimack Valley retailers and taxpayers, they could have
voted to sustain the veto and then worked on a new transportation
bill that did not rely on new revenues. Republicans had such a plan;
Democrats chose to ignore it.
O’Connor Ives and DiZoglio may not like the “flip-flopper” label.
But when the time came to defend the interests of Merrimack Valley
retailers and taxpayers, they flopped.
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
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