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CLT UPDATE
Thursday, September 12, 2012
Oops — screwed up again . . .
"You just can't fool those lying eyes"
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The Massachusetts technology community just
achieved a political feat that many thought was impossible: getting
the governor to abandon his own tax increase before a dime was ever
collected.
Governor Deval Patrick’s decision Tuesday to call
for a repeal of the new tax on software services confers a newfound
political power on the state’s technology community, particularly
the younger generation of executives and software whizzes who had
all but ignored Massachusetts political life.
The Boston Globe
Thursday, September 12, 2013
Tech sector had the tools to fight new tax
The Massachusetts technology community just
achieved a political feat that many thought was impossible: getting
the governor to abandon his own tax increase before a dime was ever
collected.
Governor Deval Patrick’s decision Tuesday to call
for a repeal of the new tax on software services confers a newfound
political power on the state’s technology community, particularly
the younger generation of executives and software whizzes who had
all but ignored Massachusetts political life.
The Boston Globe
Thursday, September 12, 2013
What took Deval Patrick so long to fight the tech tax?
Bay State politicians are lining up to
reverse course on the controversial tech tax, while business
groups are gearing up for the final steps necessary to repeal
the tax and make sure their voice isn’t missed again.
“It’s kind of a wake-up call,” said Brian
Cardarella, a partner at DockYard, a Boston-based software
consulting firm that builds Web and mobile apps. “This was a
communication gap, and it was entirely our fault.”
Andrew Faria, vice president of the SPARK
Coalition, said the small business technology group is building
a tool that will monitor legislation for keywords that could
impact the industry, including “technology,” “computers” and
“innovation.”
“We’re going to be alerted instantly if they
mention any keywords connected to our industry,” Faria said.
The Boston Herald
Thursday, September 12, 2013
Tech tax was ‘wake-up call’
Casting the state as out of step with the
norm, the Massachusetts Taxpayers Foundation released an
analysis Monday of state approaches to taxing computer and
software design services showing Massachusetts’s new tax to be
larger and broader than anywhere in the country.
The analysis was performed as the foundation
and other business groups pursue repeal of the new tax either
through legislative channels on Beacon Hill or with a 2014
ballot question. Passed this summer, the new tax is a
cornerstone of the Legislature’s plan to inject hundreds of
millions of dollars into the transportation system.
Beacon Hill Republicans plan to introduce
legislation Monday repealing the so-called tech tax after a
summit hosted last week by Gov. Deval Patrick with legislative
and business leaders yielded no agreement to revisit the
controversial revenue source.
State House News Service
Monday, September 9, 2013
Analysis: Mass. Tech Tax "most burdensome" in the USA
Senate Majority Leader Stan Rosenberg said he
is not aware of any specific, current plan to change or repeal
the application of the sales tax to certain computer services.
“There have been lots of conversations going
on and I understand they’re going to continue as we go through
the week. There’s no specific plan that I’m aware of to do
anything other than stay the course for the moment,” Rosenberg
told the News Service after presiding over a short Senate
session Monday.
State House News Service
Monday, September 9, 2013
Rosenberg: Current plan is "Stay the Course" on Tech Tax
Democrats on Beacon Hill think the brand new
“technology tax” may turn out to be something less than the
stroke of genius they all insisted it was a matter of months
ago. But at the same time this tax-happy crowd is acting as if
the gears of government will grind to a halt if the state is
forced to get by without $160 million in revenue that it has
never had before — and that it has yet to collect....
Instead of working feverishly to find a new
tax that will be “easy and popular” — good luck with that
— the Patrick administration and Democrats in the Legislature
ought to scour the State House for some functioning red pens.
A Boston Herald editorial
Tuesday, September 10, 2013
Cuts a foreign concept
Gov. Deval Patrick on Tuesday said he no
longer supports a controversial sales tax on software design
services, calling it a “serious blot” on the state’s reputation
that should be repealed and replaced with another source of new
revenue to support transportation investments....
Asked to clarify his position on the tax,
Patrick said, “Do I still support? I’ve vetoed this, remember.
So, no. The question is what do we replace it with?”
Patrick actually first proposed the sales tax
on computer and software design services in his $1.9 billion tax
reform plan filed in January to finance transportation. Though
the Legislature did approve the final tax bill by overriding
Patrick’s veto, the governor said at the time that he rejected
the proposal because it was too small and revenue relied upon
from tolls could not be guaranteed after 2017.
State House News Service
Tuesday, September 10, 2013
In major shift, Patrick backs tech tax repeal
Governor Deval Patrick abruptly changed
course Tuesday and said he no longer supports a controversial
new tax on computer software services that has triggered a
fierce backlash from the state’s technology community and
spawned numerous attempts to repeal it....
Patrick himself originally proposed the
computer software tax back in January to help pay for major
improvements to the state’s crumbling transportation systems.
But it received little notice in the months of debate on Beacon
Hill as he and legislative leaders instead wrangled over other
issues, such as the gas tax and highway tolls.
The Boston Globe
Wednesday, September 11, 2013
Governor Patrick calls for ending new tech tax
Gov. Deval Patrick said today he never
flip-flopped in his support of the controversial tech tax he
once floated but now wants vanquished, arguing he’s “evolved” in
his thinking since the business community lashed out against the
new measure.
“First of all, let’s be clear. What was
ultimately passed was something I opposed,” Patrick told
reporters at the State House today, referencing his veto of the
$500 million transportation financing bill that included the
6.25 percent tax on software services.
“You know that, everyone knows that. And some
of the people who have been advocating we reconsider this were
advocating then that it be passed and that is passed over my
veto,” he continued. “I think a lot of us have evolved. We’ve
done that by listening.”
Patrick, in discussing his backing of a
repeal of the tax, also had to fend off criticisms about his
version of history.
Patrick was the first to propose the tax as
part of his $1.9 billion plan in January, and even as he and the
Legislature haggled over the bill late into July, he never
publicly voiced concerns about it — instead debating its size
and what he argued was lawmakers’ lack of consideration for
disappearing tolls on the Mass Pike in 2017.
The Boston Herald
Wednesday, September 11, 2013
Gov. Patrick denies he flip-flopped on tech tax
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Chip Ford's CLT
Commentary
"Lying
Eyes" by The Eagles (1976)
City girls just seem to find out early
How to open doors with just a smile
A rich old man
And she won't have to worry
She'll dress up all in lace and go in style ...
You can't hide your lyin' eyes
And your smile is a thin disguise
I thought by now you'd realize
There ain't no way to hide your lyin' eyes
Like our current president of the United States
of America, Barack Obama, our Governor Mini-Me Deval Patrick
honestly believes that the most blatant lie works and is supreme.
Say it and it is true, believed.
"I did not draw that red line."
"I vetoed the tech tax increase."
Say it and it should be fact. Just lie boldly
—
most boldly as possible.
This is today's politics.
Well Obama didn't draw that nuisance damned 'red line' of his, and
Gov. Patrick now, according to him, didn't propose his obnoxiously
huge tax hikes — period. Both of their hands are clean at the
moment, if you will only believe them.
It didn't happen — anything
else is, well, blasphemy if not worse.
Omigod, how far we as Americans have fallen . . .
God bless the young upstart techies, who've
finally recognized that they too are threatened, that:
“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
May they always recognize those who came before them and fought for
their ability to function, profit, and persevere.
May they enjoy
their new-found discovery of how government can hurt them as it
hurts us, and
remain committed to fighting back as CLT members have been doing for
decades.
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Chip Ford |
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The Boston Globe
Thursday, September 12, 2013
Tech sector had the tools to fight new tax
By Michael B. Farrell and Michael Levenson
The Massachusetts technology community just achieved a political
feat that many thought was impossible: getting the governor to
abandon his own tax increase before a dime was ever collected.
Governor Deval Patrick’s decision Tuesday to call for a repeal of
the new tax on software services confers a newfound political power
on the state’s technology community, particularly the younger
generation of executives and software whizzes who had all but
ignored Massachusetts political life.
“They’ve taken advantage of their skills to mount this effort in a
new way,” said Michael Widmer, president of the Massachusetts
Taxpayers Foundation. “The response from the tech community was
absolutely critical to building this tidal wave against the tax.”
Using a combination of modern tools such as Twitter as a virtual
bullhorn to speak out against the tax and online forums to organize
meetups, these young technology executives joined with veteran
business leaders to turn the political tide against a tax that had
received scant attention in the months before it became law.
“It’s the power of social media and getting the word out to a
community of people who are paying more attention to the next cool
thing,” said Angela O’Connor, executive director of the New England
chapter of TechNet, a trade association.
But that new power will be put to the test, as the technology lobby
must now persuade House Speaker Robert DeLeo and Senate President
Therese Murray to go along with Patrick’s request to repeal the tax.
The two legislative leaders had fought bitterly with the governor
over the original legislation, and already the initial reaction from
Beacon Hill suggests lawmakers are unhappy about the position
Patrick has put them in: finding a replacement for the software tax
that doesn’t include another broad-based tax increase.
“Some people feel like they’ve been thrown under the bus,” said
Senator Stephen M. Brewer, the chamber’s budget chief. Brewer also
said he was mystified how Patrick could now oppose a tax that he
originally proposed in January.
“I’m having a hard time connecting the dots,” Brewer said.
Indeed, neither Murray nor DeLeo gave an indication Wednesday
whether they would go along with Patrick’s request, as both
legislative leaders declined to comment.
Patrick himself said Wednesday that he did not have a specific
proposal for replacing the money the software tax is supposed to
raise.
“There are a lot of options that folks have considered,” Patrick
said. “There are some good ones and some not so good ones, and there
is no perfect one. If there were, I think it would have been done by
now.”
The software tax was but one of several funding sources included in
a larger bill the Legislature passed in July to finance
transportation and education projects. The measure applies the
state’s 6.25 percent sales tax to a variety of computer
software-related services, including such common practices as
modifying off-the-shelf software, configuring programs, and
developing websites.
State officials had projected the tax would raise some $160 million
annually, but technology executives complained that it was so
broadly written it would end up taxing many more services and cost
businesses as much as $500 million a year.
While Patrick’s abrupt reversal on the tax is a stunning achievement
for a tech community that just a few months ago didn’t even know
about the measure, business executives said there is no time to bask
in their success or devise a broad agenda for the future.
“We are pushing even harder for repeal than before,” said Andrew
Faria, chief executive of iMedia Solutions LLC, a small Dartmouth
software development firm, and vice president of the Spark
Coalition, which represented small tech firms in the tax debate.
Faria and others have not yet floated proposals for replacing the
tech tax money. But on Beacon Hill several possibilities have
emerged: using surplus funds from last year’s spending accounts,
which are slated to be salted away in the state’s Rainy Day fund;
or, as one liberal policy group suggested, repealing tax breaks for
large corporations.
Should the tax debate hit a stalemate, business executives said they
have another powerful weapon ready to use: a ballot initiative
asking voters to repeal it during the 2014 statewide elections.
Unlike the revolt that originated over social media, the ballot
campaign is being led by executives of several of the state’s major
corporations, including Staples Inc. and Boston Scientific Corp.,
and will be run by veteran operatives of Massachusetts politics.
In the meantime, the tech community is acknowledging several lessons
from the tax debate: that it can’t afford to ignore state politics
anymore, and the echo chamber of social media can take them only so
far. Indeed, Patrick himself said the turning point came when he sat
down last week for a face-to-face meeting with several technology
and business executives to hear their complaints. On Tuesday Patrick
said that meeting persuaded him the tax had become a “blot” on the
state’s reputation as a haven for innovation.
But one young tech executive worries that members of his community
will bury themselves back in work life if and when they get the
Legislature to repeal the software tax.
“I fear that our engagement will go back to what it was prior to
late July and we will once again be in a position to be taken
advantage of,” said Brian Cardarella, a principal at DockYard, a
Boston software firm, and organizer of the tax protest.
“We need to learn from this and be part of the conversation from now
on,” he said. “Exactly what form that takes is not clear, but we can
no longer afford to live in our bubble.”
The Boston Globe
Thursday, September 12, 2013
What took Deval Patrick so long to fight the tech tax?
By Shirley Leung
The Massachusetts technology community just achieved a political
feat that many thought was impossible: getting the governor to
abandon his own tax increase before a dime was ever collected.
Governor Deval Patrick’s decision Tuesday to call for a repeal of
the new tax on software services confers a newfound political power
on the state’s technology community, particularly the younger
generation of executives and software whizzes who had all but
ignored Massachusetts political life.
The techies rebooted and proposed a reasonable amendment that would
cap the tax at $161 million, instead of the $500 million they
estimated it would cost companies.
Nothing. What was there to think about? Was our lame duck governor
too busy wondering who’s playing at Tanglewood?
By the first week of August, CEOs from the state’s biggest companies
went ballistic and banded together to launch a ballot initiative to
repeal the tax.
Around the same time, Florida Governor Rick Scott, sensing the
frustration boiling more than 1,000 miles away, sent letters to 100
business leaders in Massachusetts, urging them to book “one-way”
tickets to a state where software services grow tax free. Meanwhile,
some local companies pondered relocating to New Hampshire. That’s as
desperate a move as any.
At this point, the universe couldn’t have handed Patrick a better
opportunity to save face and make nice to an industry that has been
a pillar of the Massachusetts economy.
Again nothing. I guess it’s because it was August? Patrick didn’t
schedule a single public event that month. But this isn’t Europe.
Not everybody goes on holiday. (His administration insists that
Patrick was talking to tech titans, DeLeo, and Murray.)
As summer faded, techies organized a protest, dubbed the Beacon Hill
Blitz, flooding legislators with calls and tweets. The movement
gained its own Twitter account, @RepealTechTax. Republicans
introduced legislation to repeal the tax. Last week, Patrick and
legislative leaders took a meeting with technology executives.
When prodded at an event Tuesday in Worcester, Patrick finally said
something: “I think it’s a serious blot on our reputation as an
innovation center,” he told reporters at the event. And then the
governor tried to soothe the wounds he created: “We’ve worked
really, really hard, together with many of the people who were in
that room to raise our profile and to earn our reputation as an
innovation hub and we should be concerned about anything that
blemishes that.”
But there was no mea culpa. Instead he tried to change history,
implying he didn’t support the 6.25 percent sales tax on a variety
of computer software-related services. He reminded everyone he
vetoed the first bill.
What he forgot to add was that his administration proposed the tax,
and he vetoed the bill over a disagreement with legislators
unrelated to the tax. It is now up to Patrick and legislative
leaders to come up with an alternate source of revenue.
So, maybe after all these years, it is true. The tech industry has
been that unloved stepchild under Patrick, who in his first term
showered the biotech industry with a much ballyhooed $1 billion
initiative. The message: You save lives, you get tax breaks and
grants. If you just make lives better with technology, who cares.
It wasn’t always like this. Or so I thought.
Four years ago, the governor created what has become the
Massachusetts Technology Collaborative in an effort to recapture our
high-tech glory days, when Wang Laboratories and Digital Equipment
Corp. made us the computing epicenter of the world. His
administration also created tech internships to grow and retain
talent, launched a big data initiative, and set up a $50 million
research and development fund for new technologies such as robotics.
Just last August, the Patrick administration stepped in to reverse a
state ban on Uber, a cutting-edge online car service, even giving us
a heads up via tweet: “With all @massgovernor has done for the
innovation economy, we’re not shutting down @uber_bos. Working on a
swift resolution.’’
When the ban was lifted, Patrick tweeted: “Problem solved. @Uber_BOS
is all set. Thx for your patience.’’
How cool is our governor?
Fast forward a year later, and I don’t think that anymore. But
hopefully this is the week that Patrick begins to get his tech cred
back.
The Boston Herald
Thursday, September 12, 2013
Tech tax was ‘wake-up call’
By Jordan Graham
and Matt Stout
Bay State politicians are lining up to reverse course on the
controversial tech tax, while business groups are gearing up for the
final steps necessary to repeal the tax and make sure their voice
isn’t missed again.
“It’s kind of a wake-up call,” said Brian Cardarella, a partner at
DockYard, a Boston-based software consulting firm that builds Web
and mobile apps. “This was a communication gap, and it was entirely
our fault.”
Andrew Faria, vice president of the SPARK Coalition, said the small
business technology group is building a tool that will monitor
legislation for keywords that could impact the industry, including
“technology,” “computers” and “innovation.”
“We’re going to be alerted instantly if they mention any keywords
connected to our industry,” Faria said.
SPARK will send out an email alert to its members, which will allow
the industry to speak out about possible legislation before it is
signed into law, Faria said.
“It would be proactive instead of reactive,” he said. “We are now
watching like hawks, and we are not ever going stop.”
The 6.25 percent tax on software services was part of the $500
million transportation financing bill passed in July. It caused an
almost immediate outcry from the state’s tech industry, which has
filed ballot initiatives to repeal it.
In a major shift, Gov. Deval Patrick on Tuesday called for the tax
to be repealed and replaced. Yesterday, Patrick said he never
flip-flopped in his support of the controversial tech tax he once
floated but now wants eliminated, arguing he’s “evolved” in his
thinking since the business community lashed out.
“I think a lot of us have evolved. We’ve done that by listening,” he
said.
Both Democrats and Republicans have filed legislation aimed at
reversing the measure, and Patrick yesterday said he thought there
was “consensus” in the leadership on Beacon Hill that it should be
replaced.
Cardarella said the lack of consultation between the industry and
the Legislature should change, a sentiment state Sen. Linda Dorcena
Forry (D-Dorchester), whose district includes Boston’s Innovation
District, agreed with.
Forry, who has reconsidered her stance on the tech tax, said more
outreach to the tech industry should have been done before it was
finalized.
“No one really caught it,” she said. “We did not hear from the tech
industry. We thought it was fine.”
State House News Service
Monday, September 9, 2013
Analysis: Mass. Tech Tax "most burdensome" in the USA
By Matt Murphy
Casting the state as out of step with the norm, the Massachusetts
Taxpayers Foundation released an analysis Monday of state approaches
to taxing computer and software design services showing
Massachusetts’s new tax to be larger and broader than anywhere in
the country.
The analysis was performed as the foundation and other business
groups pursue repeal of the new tax either through legislative
channels on Beacon Hill or with a 2014 ballot question. Passed this
summer, the new tax is a cornerstone of the Legislature’s plan to
inject hundreds of millions of dollars into the transportation
system.
Beacon Hill Republicans plan to introduce legislation Monday
repealing the so-called tech tax after a summit hosted last week by
Gov. Deval Patrick with legislative and business leaders yielded no
agreement to revisit the controversial revenue source.
“Repealing the tax would return Massachusetts to the mainstream of
the 50 states. With Massachusetts losing 3,000 jobs since January,
placing the highest tax burden in the country on innovation and
technology – the state’s greatest economic strength – is simply bad
policy,” MTF President Michael Widmer said in a statement.
The report found that no other state taxes as many computer and
software design services at such a high rate as Massachusetts does
now under a new law enacted to generate $161 million for
transportation by applying the state’s 6.25 percent sales tax to the
services.
Four other states - Hawaii, New Mexico, South Dakota and Connecticut
- tax computer and software services at lower rates. Hawaii, New
Mexico and South Dakota actually tax all professional services,
which are exempt from sales taxes in Massachusetts, while
Connecticut taxes select professional services at 6.35 percent but
applies a reduced 1 percent tax rate to computer services.
Of the 40 other states with a sales tax, none tax computer system
design services.
Making the case for repeal, the report also highlights other states
that have abandoned similar technology taxes after walking the same
path Massachusetts lawmakers are pursuing. Maryland tried to
implement a computer services tax, but it was repealed before taking
effect less than a year after becoming law due to public opposition,
according to the report.
Pennsylvania repealed a similar tax in 1997, and states like Hawaii
and New Mexico that do tax computer and software services also offer
high technology tax incentives.
The new Massachusetts tech tax applied the sales tax to 10 new
categories of computer and software services, including computer
system design services; services related to the planning,
consulting, design, and integration of computer hardware and
software; and services to modify, integrate, enhance, install, or
configure software.
Patrick said recently that he has spoken with tech industry leaders
who were relieved after the Department of Revenue issued guidance
explaining that the “cloud” and open source software would not be
taxed under the new law, but acknowledged the potential hit to
Massachusetts’ reputation as a growing hub of tech innovation was
“worrisome.”
Massachusetts has also taxed upgrades to prewritten software since
2006, which is the only application of the sales tax that most other
states – at least 23 – also levy on the technology services
industry, according to the foundation.
In defense of the computer services tax, Democrats in the
Legislature have said revenues from the new tax will pay for
investments in education and local aid, promised to limit the scope
of the tax if it produces more than $161 million, and said the new
tax is smaller in scope than one proposed by Patrick.
State House News Service
Monday, September 9, 2013
Rosenberg: Current plan is "Stay the Course" on Tech Tax
By Andy Metzger
Senate Majority Leader Stan Rosenberg said he is not aware of any
specific, current plan to change or repeal the application of the
sales tax to certain computer services.
“There have been lots of conversations going on and I understand
they’re going to continue as we go through the week. There’s no
specific plan that I’m aware of to do anything other than stay the
course for the moment,” Rosenberg told the News Service after
presiding over a short Senate session Monday.
A wave of concern about the tax from Republican lawmakers and the
business and high-tech community was not enough to prevent Democrats
in the Legislature from including the new tech tax and increases in
gas and tobacco taxes in a $500 million tax bill approved this
summer. Top Democrats in the Legislature have said they will closely
monitor the Department of Revenue to ensure the tax does not become
overly broad or raise more than the planned $161 million called for
in the legislation.
Last week, House and Senate leaders met with Gov.
Deval Patrick, tech industry executives and Massachusetts Taxpayers
Foundation President Michael Widmer, an opponent of the new tax, and
attendees said there was no discussion at the meeting of how to
proceed forward. The Senate has a formal session scheduled for
Thursday, and Rosenberg said he doesn’t know what will be before the
upper chamber then. Republican lawmakers on Monday afternoon plan a
press conference to discuss new legislation to repeal the tech tax.
The Boston Herald
Tuesday, September 10, 2013
A Boston Herald editorial
Cuts a foreign concept
Democrats on Beacon Hill think the brand new “technology tax” may
turn out to be something less than the stroke of genius they all
insisted it was a matter of months ago. But at the same time this
tax-happy crowd is acting as if the gears of government will grind
to a halt if the state is forced to get by without $160 million in
revenue that it has never had before — and that it has yet to
collect.
“It’s not an easy question,” Secretary of Housing and Economic
Development Greg Bialecki said last week, acknowledging that the new
tax might need to be “replaced.” “There are no taxes or other ways
to raise revenue that we can think of that are easy and popular.”
And that, ladies and gentlemen, is the default position of too many
people with access to the state’s purse strings. Tax revenue that
didn’t exist six weeks ago, except in the wallets of the individuals
who earned it, is now so vital to the operation of government that
if it goes, other taxes must be imposed to “replace” it.
Silly question, but has the concept of *reducing spending* never
occurred to any of these people?
Yes, the state has a borderline crisis in funding its transportation
system. But the tech tax was one part of a much larger tax hike
package (at least $500 million in all) — and frankly was never the
appropriate source of revenue to cover new transportation funding
anyway.
Meanwhile the argument in favor of eliminating the new tech tax
grows stronger by the day. Of the four states that levy similar
taxes on technology and software services, the Massachusetts
Taxpayers Foundation announced yesterday that ours will be — you
guessed it! — the highest.
“We’re No. 1 in the nation in exactly what we don’t want to be,” MTF
president Michael Widmer said.
Instead of working feverishly to find a new tax that will be “easy
and popular” — good luck with that — the Patrick
administration and Democrats in the Legislature ought to scour the
State House for some functioning red pens.
State House News Service
Tuesday, September 10, 2013
In major shift, Patrick backs tech tax repeal
By Matt Murphy
Gov. Deval Patrick on Tuesday said he no longer supports a
controversial sales tax on software design services, calling it a
“serious blot” on the state’s reputation that should be repealed and
replaced with another source of new revenue to support
transportation investments.
The decision by the governor to seek a repeal and replacement of the
computer services sales tax comes amid a fierce and organized push
from the business community and some lawmakers to get the
Legislature to reconsider the tax. In the face of opposition,
lawmakers earlier this summer made the new tax a cornerstone of
their $500 million tax package aimed at financing transportation and
infrastructure spending and budget initiatives.
As the state struggles to add jobs and with unemployment rising,
Patrick last week hosted a summit in his office with legislative and
tech sector leaders to discuss concerns over the new tax’s impact on
the business climate, and some business leaders left the meeting
saying there was no commitment from those in the room to revisit the
tax.
After an event Tuesday at Worcester Technical High School, Patrick
told reporters he would be working with the Legislature and business
leaders to identify a new source of revenue to replace the $161
million counted on in the budget from the new sales tax.
“We had a really good meeting last week and I think that that
meeting was useful for some of the folks that were thinking about
whether the solution was a narrower interpretation. And I think that
the consensus in the room probably was that replacing with something
was the better way to go. And I think the hard part now is to figure
out what to replace it with,” Patrick said, according to a
transcript of his remarks provided by his office.
House Speaker Robert DeLeo and Senate President Therese Murray could
not immediately be reached for comment, but issued a joint statement
after last week’s meeting in Patrick’s office saying they would
continue the conversation with lawmakers in both branches.
If legislative leaders are serious about replacing the software
services tax revenue with another source of funding, DeLeo and
Murray would have to reopen a debate on taxes that dominated the
first seven months of the year on Beacon Hill and led to a major
rift with the governor, who sought $1.9 billion in new taxes.
Though Patrick suggested there is still some question about the
impact of the tax on technology companies, he said damage to the
state’s reputation is a real threat. The Massachusetts Taxpayers
Foundation released a report this week identifying the tech tax as
the broadest and highest tax on software services in the country and
asserting that the levy jeopardizes the state’s competitive edge for
business development.
“I think it’s a serious blot on our reputation as an innovation
center. And we’ve worked really, really hard, together with many of
the people who were in that room to raise our profile and to earn
our reputation as an innovation hub and we should be concerned about
anything that blemishes that,” Patrick told reporters.
Asked to clarify his position on the tax, Patrick said, “Do I still
support? I’ve vetoed this, remember. So, no. The question is what do
we replace it with?”
Patrick actually first proposed the sales tax on computer and
software design services in his $1.9 billion tax reform plan filed
in January to finance transportation. Though the Legislature did
approve the final tax bill by overriding Patrick’s veto, the
governor said at the time that he rejected the proposal because it
was too small and revenue relied upon from tolls could not be
guaranteed after 2017.
House and Senate Republicans on Monday announced that they would be
filing legislation this week to repeal the tech tax that mirrors a
proposal being pushed by the Massachusetts Taxpayers Foundation and
other business groups to put a question on the 2014 ballot repealing
the tax if the Legislature fails to act.
Senate Minority Leader Bruce Tarr and House Minority Leader Brad
Jones said replacing the revenue was “unnecessary,” but suggested it
could be found through savings-minded government reforms, future
gaming revenues, the legalization of online gaming or other
mechanisms that don't require raising taxes.
Tarr even suggested he would be open to tapping into the state's
main reserve fund as an "insurance policy" against future economic
growth if necessary to win support for repeal.
A number of Democratic lawmakers have also endorsed repeal or
expressed concerns about the new tax, including Sen. Karen Spilka
who filed similar repeal legislation in the Senate.
The Boston Globe
Wednesday, September 11, 2013
Governor Patrick calls for ending new tech tax
By Michael B. Farrell and Michael Levenson
Governor Deval Patrick abruptly changed course Tuesday and said he
no longer supports a controversial new tax on computer software
services that has triggered a fierce backlash from the state’s
technology community and spawned numerous attempts to repeal it.
While mostly silent in the weeks since the tax was adopted by the
state Legislature, Patrick said Tuesday that after hearing
complaints about it directly from technology executives, he
concluded the new tax had become “a serious blot.”
“It’s time for it to go,” he said in an interview with the Globe.
“I’m persuaded that the impact to our reputation is too problematic.
We’ve worked really, really hard to establish ourselves as an
innovation hub in the world, and we ought not do anything that
compromises that.”
Patrick himself originally proposed the computer software tax back
in January to help pay for major improvements to the state’s
crumbling transportation systems. But it received little notice in
the months of debate on Beacon Hill as he and legislative leaders
instead wrangled over other issues, such as the gas tax and highway
tolls.
One of the executives who met with Patrick last week welcomed his
new position.
“He’s taking the right position. He sees the reputational problem
that Massachusetts faces by targeting the tech industry,” said Andy
Singleton, president of Assembla Inc. of Needham. “Almost everyone
who has looked closely at this law now realizes it’s a bad law.
Everyone realizes the tax needs to be repealed. It can’t be
replaced.”
Singleton had been among the most vocal members of the technology
community over the tax. Within days of its passage, many executives
said they had no idea lawmakers were even considering it and
complained they felt blindsided by a political establishment that
often touts their industry as a cornerstone of the Massachusetts
economy.
The measure applies the state’s 6.25 percent sales tax to a variety
of computer software related services, including such common
business practices as modifying off-the-shelf software, configuring
programs, and developing websites.
People in technology companies complained that it was so broadly
written that it would end up taxing many services that had become
key to Massachusetts’ economic growth, and would cost businesses far
more than the $160 million annually estimated by the state.
With employees at smaller tech start-ups deploying social media
tools to broaden the opposition, a coalition of leaders from large
companies, including the heads of Staples Inc. and Boston Scientific
Corp., launched a ballot initiative to ask voters to repeal the tax
in the 2014 statewide election. Several lawmakers had also filed
bills to repeal it.
A turning point in the nascent revolt appeared to come last week,
when Patrick and legislative leaders agreed to meet with several
technology executives and other business leaders to hear their
complaints about the tax. Before the meeting, Patrick said he would
be in listening mode; afterward, he did not comment at all. Until
Tuesday.
At an event in Worcester, Patrick said in separate remarks to
reporters that “we had a really good meeting last week,” and that
after concluding the tax has become too onerous, “the hard part now
is to figure out what to replace it with,” according to a transcript
provided by his office.
Additionally he told the Globe that the meeting with tech executives
provided him with a better understanding of the “complexities and
some unforeseen consequences” associated with the tax.
Patrick’s economic development chief, Greg Bialecki, said the
governor is not calling for a new broad-based tax to replace the
computer software levy, but will work with the Legislature to
identify other means to pay for transportation projects.
Seth Gitell, a DeLeo spokesman, declined to comment on Patrick’s
shift on the tax and referred instead to a joint statement the
speaker and Senate President Therese Murray released after Patrick
met with business leaders last week.
“We engaged in a very thoughtful and informative discussion with a
number of business leaders in today’s meeting with Governor
Patrick,” the statement said. “We look forward to continuing these
conversations.”
A Murray spokeswoman could not be reached last night.
“We’re delighted the governor wants to repeal it. This is where we
want to be,” said Andrew Bagley, director of research at the
Massachusetts Taxpayers Foundation, a business group that is
organizing the ballot initiative.
The tech tax was but one financing mechanism in Patrick’s
transportation bill. The governor went so far as to veto the
original bill passed by lawmakers because it did not include large
enough increases in other taxes he is counting on to pay for
improvements. Lawmakers subsequently overrode his veto, putting the
measure into place.
So removing that tax leaves a major hole in Patrick’s transportation
plan, which is among the priorities of his second term.
“The question is, what do we replace it with?” Patrick repeated.
“The solution is not just to repeal, but to repeal and replace, and
that’s the part we’re all working on together.”
The tax had become so unpopular so quickly that Patrick is
abandoning it before the state Revenue Department had settled on
final rules for its collection.
The governor also appeared to try to distance himself from ownership
of the tax. When asked at the Worcester event to clarify his
position Tuesday, Patrick said, “Do I still support? I’ve vetoed
this, remember. So, no.”
Material from State House News Service was used in this report.
The Boston Herald
Wednesday, September 11, 2013
Gov. Patrick denies he flip-flopped on tech tax
By Matt Stout
Gov. Deval Patrick said today he never flip-flopped in his support
of the controversial tech tax he once floated but now wants
vanquished, arguing he’s “evolved” in his thinking since the
business community lashed out against the new measure.
“First of all, let’s be clear. What was ultimately passed was
something I opposed,” Patrick told reporters at the State House
today, referencing his veto of the $500 million transportation
financing bill that included the 6.25 percent tax on software
services.
“You know that, everyone knows that. And some of the people who have
been advocating we reconsider this were advocating then that it be
passed and that is passed over my veto,” he continued. “I think a
lot of us have evolved. We’ve done that by listening.”
Patrick, in discussing his backing of a repeal of the tax, also had
to fend off criticisms about his version of history.
Patrick was the first to propose the tax as part of his $1.9 billion
plan in January, and even as he and the Legislature haggled over the
bill late into July, he never publicly voiced concerns about it —
instead debating its size and what he argued was lawmakers’ lack of
consideration for disappearing tolls on the Mass Pike in 2017.
But after the tax plan was passed, it caused an almost immediate
uproar from the state’s tech industry, who bashed the measure as too
broad and a potential jobs killer. Activists have sought a ballot
question to repeal it, and both Democrats and Republicans have filed
legislation aimed at reversing the measure.
Patrick’s decision on Tuesday to publicly back a repeal of the
controversial measure represented a major shift he said today was
“trending” in the legislature, too.
“I think there is a consensus that it ought to be replaced, I mean
in the leadership,” Patrick said. “But how it will be replaced, I
don’t know. I have some ideas.”
The Milton Democrat repeatedly refused to offer alternatives, only
saying he has heard a Republican argument that the state’s
over-performing tax revenues — at $139 million above benchmark
through two months — can replace the $161 million the tax was
counted on to generate for the budget.
“I hope I don’t have to do that,” Patrick said, though he said
finding a replacement ultimately rests with legislators. “At this
point, it’s really on them.”
Asked whether there is appetite to simply replace one tax with
another, Patrick said he didn’t view it that way.
“It’s not just another tax,” he said of a possible “plug”.
“I think folks are going to be looking for a solution that doesn’t
require asking for more from the public,” Patrick added. “And as
long as the public understands that that also means they’re not
going to get all of the things that they want (in transportation
financing), then we’ll get it done.”
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