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CLT UPDATE
Thursday, September 26, 2013
"Ignorance of the law is no excuse"
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Less than two months after voting to include it
in a $500 million tax hike package, the House voted 156-1 Wednesday
to repeal the state's new computer services tax. The Senate is
expected to pass the repeal bill on Thursday.
During an acrimonious debate focused less on the
impacts of the tax and more on revisiting this year’s tax debate,
some Democrats criticized Gov. Deval Patrick for recently distancing
himself from a tax on computer services that he introduced, others
said business leaders had failed to convey their concerns about the
tax as it was being approved, and Republicans lashed out at
Democrats for failing to heed their warnings about the tax.
Rep. Christopher Fallon criticized Patrick's
recent claim that he opposed the tech tax, after he included a
version of it in the tax bill he filed in early 2013.
“I am going to accuse the Corner Office of being
a hypocrite. I am going to accuse the Corner Office of playing
politics with our speaker, Hell, with all of us,” the Malden
Democrat said....
Republicans said they knew the tax was a problem
before it passed, and scolded their colleagues for not heeding the
warnings.
“It is indeed a great day,” Assistant Minority
Leader George Peterson said. “We told you so. We told you in April.
We told you in May. We told you in June.”
Peterson said when lawmakers voted they were not
sure how it would work, or exactly what it taxed. Instead, they were
told to let the Department of Revenue figure it out, he said.
Prior to Wednesday’s debate, Rep. Ryan Fattman
(R-Sutton) said House Democrats ignored pleas not to extend the
sales tax to computer design services. Republicans this summer
called for government reforms to free up money for transportation
and to allocate expected growth in existing tax collections for
transportation.
"It's not that people didn't know, it's that they
didn't care," Fattman said.
State House News Service
Wednesday, September 25, 2013
House votes to repeal tech tax after acrimonious debate
By a 156-to-1 margin, the House voted to abolish
the measure, which applied the state’s 6.25 percent sales tax to a
range of software services such as building Web pages and computer
consulting services. The Senate is expected to take up the bill
Thursday and it could be sent to Governor Deval Patrick this week.
Patrick, who initially supported the new tax, has said he will go
along with the repeal....
Rep. Angelo Scaccia, a Democrat from Readville,
cast the single vote against repeal, arguing it is unfair to retain
a tax on cigarettes but not software.
“We’re keeping the addictive tax, because that’s
just poor people who have an addiction, but we are giving away the
tax for people who could afford it,” he said.
The Boston Globe
Wednesday, September 25, 2013
Mass. House votes to repeal ‘tech tax’
Nevermind.
That was what the House of Representatives said
yesterday about their wonderful new tax on software services.
On July 24, it was such a wonderful idea that
they passed it (by overriding a gubernatorial veto) by a vote of
133-23.
Yesterday, almost two months to the day later,
the same solons repealed said tax. The vote was 156-1, against.
So now more than 120 House Democrats can say,
truthfully, that they were for that software-services tax before
they were against it. Today it’s the Senate’s turn to fall on its
sword.
The only House hack to stand firm was state Rep.
Angelo Scaccia (D-Hyde Park).
He said, “Never, never, never give up what you
had to work for.”
Surely Angelo meant to say, never give up what
others have worked for, and you have robbed them of.
The Boston Herald
Thursday, September 26, 2013
Vote unleashes tidal wave of flip-floppers
By Howie Carr
The state Senate is poised today to follow the
lead of the House, which voted yesterday to repeal the so-called
tech tax in a finger-pointing session that left business leaders
concerned that lawmakers just don’t understand the technology
sector....
House Minority Leader Bradley Jones (R-North
Reading)
called the tech tax “a stupid thing, and told his colleagues, “Thank
you for finally seeing the light of day on this issue.”
Gov. Deval Patrick, asked if he’d veto the repeal
if it didn’t have an appropriate “plug” for the $161 million in lost
revenue, said “that’s not where I am.”
“The Legislature, the leaders and I have talked
about the hole that’s left in the budget,” Patrick said. “I can’t
deal with it without them, so I’m waiting to see what they do. And
whether they do it all today or do it over the next several months
remains to be seen.”
The Boston Herald
Thursday, September 26, 2013
Tech tax repeal moves to state Senate’s court
If the Senate goes along with the repeal today —
as it should — the $160 million tax increase will be on its way to
the trash heap of terribly misguided public policy ideas. And the
same people who voted for this tax on innovation and
entrepreneurship will try to take credit for “fixing” it.
OK, so we’ll offer a few points for the
willingness to admit a mistake. But rest assured, we’ll also be the
first ones to remind Massachusetts taxpayers that when Gov. Deval
Patrick and House and Senate leaders saw a hole in their spending
needs, they decided that taxing one of the state’s most successful
industries was the best way to fill it. And barely a handful of the
rank-and-file objected.
Meanwhile, giddy with the success of the repeal
effort a new coalition of tech-industry folks is vowing to pay close
attention to future moves like the tech tax hike that would affect
their industry. Good for them.
Curiously, the newly-formed Spark Coalition also
vows to “bypass traditional politics” to achieve their ends. We’re
all for shaking up the status quo. But it was after all “traditional
politics” that saw this tax signed into law.
Memo to the Sparkies: Sometimes you have to
actually scale the steps of the State House (or horrors, pay someone
to do it for you) to have an actual impact on the outcome.
A Boston Herald editorial
Thursday, September 26, 2013
Tech tax clock ticking
Emerging from a battle over new taxes that will
likely result in $340 million, far less than the $1.9 billion he
proposed in January, Gov. Deval Patrick says he is disinclined to
propose more taxes in 2014, the final year of his second term.
“I gotta file a budget in January, but it’s not
what I anticipate doing,” Patrick said Wednesday, a few hours before
the House repealed the $161 million computer services tax that
lawmakers paired with gas and tobacco taxes in July’s $500 million
tax law.
Patrick said a recent meeting with House Speaker
Robert DeLeo, Senate President Therese Murray, and tech industry
executives convinced him that the Legislature would not be open to
additional tax increases....
The absence of new taxes in Patrick’s final state
budget proposal would remove a divisive issue from the table on
Beacon Hill in 2014, an election year when all members of the House
and Senate are up for re-election and the governorship and five
other constitutional offices will be up for grabs as well....
“I think that we will have an ongoing tax
discussion, and at the moment one of the focal points for that
discussion is this new Commission on Tax Fairness,” House Chairman
of the Revenue Committee Jay Kaufman, a Lexington Democrat, told the
News Service Thursday. “If the question is, ‘Are we going to be
raising questions about taxes?’ the answer is yes. If the question
is, ‘Are we likely to resolve anything about taxes and make some
decisions to raise taxes?’ the answer is probably no.”
State House News Service
Thursday, September 26, 2013
Patrick doesn't anticipate a final push for new taxes
While repealing a tax on computer and
software design services, Senate leaders on Thursday had to beat
back attempts by some lawmakers to both raise the gas tax and
eliminate the 3-cent gas tax increase that was part of the same
transportation financing package that included the tech-tax.
The three Republicans in the Senate who tried
to add the gas tax increase to the list of taxes on track for
repeal were also unsuccessful in their attempts to unchain the
gas tax from future increases tied to inflation.
Sen. Cynthia Creem, in her attempt to raise
the gas tax further, argued that with the tech tax gone there
will not be enough money to invest in transportation. Creem
wanted to raise the current gas tax from 24 cents to 29
cents....
Senate Ways and Means Chairman Stephen Brewer
said the state will bet on larger than expected revenues to plug
the budget hole left by retroactively repealing the new sales
tax on computer services, which had been counted on for $161
million in the fiscal 2014 budget.
The bill to repeal the tax (H 3662) passed
unanimously in the Senate, 38 to 0....
Minority Leader Bruce Tarr (R-Gloucester),
Hedlund and Sen. Richard Ross (R-Wrentham) filed amendments to
eliminate the 3-cent gas tax increase and the mechanism in the
transportation funding package that automatically ties future
gas increases to inflation.
“At what point do we stop digging into the
wallets of taxpayers?” Hedlund asked.
Hedlund called the Legislature’s move to
automatically raise the gas tax based on the Consumer Price
Index “repugnant” because future lawmakers will not be held
accountable for the increases. Hedlund predicted CPI was on the
verge of an increase because the Federal Reserve has kept it
artificially low.
“That will have a direct impact on what we
have done with this automatic increase. I think people will find
it somewhat onerous,” Hedlund said. “Citizens of Massachusetts
are not going to like this when they realize what’s hit them.”
Opponents of indexing the gas tax to
inflation are also pushing a initiative petition to repeal the
inflation adjusted gas tax at the ballot in 2014.
State House News Service
Wednesday, September 26, 2013
Reversal complete as Senate sends tech tax repeal to Patrick
It is now up to Governor Deval Patrick to
decide whether to put his signature on a bill to kill a tax that
was a major part of his initiative to fund statewide
transportation projects. A decision by Patrick could come this
week.
In a reversal of his original position, the
governor has supported the repeal effort, but stopped short this
week of saying outright that he would sign the repeal bill. “I’m
waiting to see what they do,” Patrick told reporters Wednesday.
While he has said the $160 million the state
expected to collect from the tax should be replaced, he isn’t
expecting the Legislature to find a new source of money
immediately. “We’re going to have to come back to this,” he
said.
The Boston Globe
Wednesday, September 26, 2013
Senate votes to abolish tech tax
Though legislators voted Wednesday to repeal
the technology sales tax, Department of Transportation officials
said at a board of directors meeting that they were unconcerned
with the repeal, for now....
“For the next three years, it’s probably not
going to matter,” [Secretary of Transportation Richard A. Davey]
said. “But it could be an issue in four to five years.” ...
“We didn’t get everything we wanted, but
[legislators] did fund us to a pretty significant degree,” [Dana
Levenson, MassDOT’s chief financial officer] said. “Frankly, our
biggest challenge is not so much that we got this money, but now
that we have the money, how do we put it to work?”
The Boston Globe
Wednesday, September 26, 2013
State transit officials begin task of allocating added funding
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Chip Ford's CLT
Commentary
To quote Clinton presidential aide Paul Begala in
1998, "Stroke of the pen, law of the land." With Governor Patrick's
expected signature on the tech tax repeal bill, that short-lived tax
will be like it never happened. But it will add one more dark stain
of Massachusetts legislative ineptitude to a storied history.
If "ignorance of the law is no excuse" for
breaking it, is ignorance of a proposed law an excuse for voting to
pass it?
And honestly, how deep did this alleged ignorance
flow? CLT warned all legislators of the pitfalls in its
memo of April 24. Republicans in the Legislature warned of its
consequences — intended and unintended
— repeatedly during the debates, even
offered amendments to strip it out of the overall tax package. The
amendments were of course defeated.
That's not ignorance. That's the Democrats'
usual blind march in lockstep to their House and Senate leaders'
whims and commands.
Rep. Ryan Fattman (R-Sutton) nailed it perfectly:
"It's not that people didn't know, it's that they didn't care."
One tax down, another to fell ahead.
Minority Leader Bruce Tarr (R-Gloucester), Sen.
Bob Hedlund (R-Weymouth), and Sen. Richard Ross (R-Wrentham) offered
amendments to eliminate the 3-cent gas tax increase and the
perpetual automatic future hikes. Of course they were defeated by
the Democrat majority, as usual.
This will take the voters to repeal
— if enough signatures are collected in
the ongoing signature drive and the question makes it onto the 2014
ballot. If the perpetual automatic gas tax hike question makes it
onto the ballot, it'll give candidates challenging the insatiable
tax-and-spenders a great issue. I can't imagine how any incumbent
who voted for it can effectively defend this blatant dereliction of
responsibility.
If you want to sign a petition, circulate a
petition, or help getting signatures at malls around the state, you
can download a copy and find more information below:
Help us
Tank The
Automatic Gas Tax Hikes
Though at the moment the Legislature's leadership doesn't look
anxious to catch another case of tax hike fever, the governor is
still looking to "plug" the loss of the tech tax.
We must remain vigilant, as always. On Monday the left-wing "think
tank," Massachusetts Budget and Policy Center (which replaced our
old adversary, TEAM
—
"Tax Everything And More"), released its latest "study": After
the Tech Tax: Remembering The Big Picture. In part it reads:
Our new factsheet, "After the Tech
Tax Repeal: Remembering the Big Picture," describes a
variety of ways to generate additional revenue to
support our long-term needs. We consider three basic
approaches:
• Reforming or eliminating special business tax
breaks
• Reducing opportunities for tax avoidance
• Reexamining other major tax cuts of the past two
decades, including changes to the income tax that
cost the state nearly $3 billion per year.
Rather than an exhaustive list, "After
the Tech Tax Repeal: Remembering the Big Picture"
summarizes some of the revenue options we could consider
as we think about the best, fairest way to improve our
schools, roads, bridges, and public transit systems.
As we at
CLT often observe, More Is Never Enough (MINE) and never will be for
them.
We'll be
paying attention.
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Chip Ford |
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State House News Service
Wednesday, September 25, 2013
House votes to repeal tech tax after acrimonious debate
By Colleen Quinn and Michael Norton
Less than two months after voting to include it in a $500 million
tax hike package, the House voted 156-1 Wednesday to repeal the
state's new computer services tax. The Senate is expected to pass
the repeal bill on Thursday.
During an acrimonious debate focused less on the impacts of the tax
and more on revisiting this year’s tax debate, some Democrats
criticized Gov. Deval Patrick for recently distancing himself from a
tax on computer services that he introduced, others said business
leaders had failed to convey their concerns about the tax as it was
being approved, and Republicans lashed out at Democrats for failing
to heed their warnings about the tax.
Rep. Christopher Fallon criticized Patrick's recent claim that he
opposed the tech tax, after he included a version of it in the tax
bill he filed in early 2013.
“I am going to accuse the Corner Office of being a hypocrite. I am
going to accuse the Corner Office of playing politics with our
speaker, Hell, with all of us,” the Malden Democrat said. He said,
“He vetoed it because he wanted more money from us, and we had the
stamina, we had the backbone, to tell him, ‘We are taking a leap of
faith. We know we’ve got to fund some of the line items, but we are
not going to put the people of Massachusetts in that type of
economic bind.’ We said no to him.”
Rep. Angelo Scaccia, a Democrat from Readville, voted against the
repeal. Scaccia said House Speaker Robert DeLeo would regret backing
away from the tax, suggesting it might cost him future political
capital.
“Mr. Speaker I’m not a revisionist, but I do revisit every once in a
while because I’ve had some history here. You are going to rue the
day when you have gotten something and then have given it back for
nothing,” Scaccia said on the House floor. “If in fact we run into
problems down the road, I don’t know if you can ask your membership
to vote green on a tax package again.”
Scaccia called the nearly $2 billion tax package the governor
originally pushed unreasonable, and said the package DeLeo and
Senate President Therese Murray agreed to made sense. Removing the
computer services tax does not leave enough money to invest in
transportation, Scaccia said. He criticized legislative leaders for
keeping the gas tax and $1 cigarette tax, while dropping the
computer services tax.
“Those people who are making tons of money do better than those poor
people who smoke. We are going after addictions, but as soon as
those rich folks out there decided to put their money together, we
fold. We folded, and we are now not going to tax them $162 million,”
Scaccia said. “So what do we have left? Three cents on gas and a $1
on cigarettes.”
“Now if you think we can provide the services we have now in
transportation and education with that little money you are kidding
yourself,” he added.
Without the computer services tax, there is $340 million left in the
tax package the Legislature approved in late July to pay for
investments in transportation and other budget accounts.
House budget chief Brian Dempsey said the business community
initially supported the tax, but later changed their minds. Dempsey
said when lawmakers passed the tech tax -- expected to generate $160
million -- they vowed to revisit its impact. He said the “outcry”
against the tax from businesses did not come until mid-May.
“We made it very clear months ago we would continue to monitor and
watch this tax,” Dempsey said while laying out the reasoning for its
repeal.
DeLeo said he was proud of the vote to repeal, adding he had
promised to listen to business leaders about the tax’s impact when
it initially passed.
“Our vote sends a strong message to the world that Massachusetts is
the place for innovators to succeed and thrive.” DeLeo said in a
statement.
Republicans said they knew the tax was a problem before it passed,
and scolded their colleagues for not heeding the warnings.
“It is indeed a great day,” Assistant Minority Leader George
Peterson said. “We told you so. We told you in April. We told you in
May. We told you in June.”
Peterson said when lawmakers voted they were not sure how it would
work, or exactly what it taxed. Instead, they were told to let the
Department of Revenue figure it out, he said.
Prior to Wednesday’s debate, Rep. Ryan Fattman (R-Sutton) said House
Democrats ignored pleas not to extend the sales tax to computer
design services. Republicans this summer called for government
reforms to free up money for transportation and to allocate expected
growth in existing tax collections for transportation.
"It's not that people didn't know, it's that they didn't care,"
Fattman said.
Rep. Joseph Wagner (D-Chicopee) called Republicans the “party of no”
new revenues for transportation. Wagner said Democrats got behind
the tax because business leaders initially supported it. He was
disappointed when they retreated.
“If the business community had an epiphany late in the game, even
though people were talking about it, I can tell you as the chair of
the Economic Development and Emerging Technologies Committee, I
didn’t hear from them in April, and June and July,” he said.
Rep. Shaunna O’Connell, a Taunton Republican, later countered that
Republicans are “the party of yes” to stopping illegal immigration
and assuring the business community it won’t be over-regulated.
Fallon said that in a previous private caucus, DeLeo notified
members that the House might revisit the tax.
“If we’re going overboard, if we’re being excessive, we’ll revisit
this after summer break,” Fallon said, paraphrasing DeLeo’s caucus
comments.
After the session, Speaker Pro Tem Patricia Haddad, of Somerset,
demurred when asked whether she agreed with Fallon’s comments about
the governor.
“I don’t like to call names. I will just say that when we make a
decision we make it with the best information possible,” Haddad
said.
Andy Metzger contributed reporting
The Boston Globe
Wednesday, September 25, 2013
Mass. House votes to repeal ‘tech tax’
By Michael B. Farrell
The Massachusetts House of Representatives on Wednesday
overwhelmingly voted to repeal the controversial tax on software
services, just two months after it was adopted as part of a
transportation finance bill and before any money was collected.
By a 156-to-1 margin, the House voted to abolish the measure, which
applied the state’s 6.25 percent sales tax to a range of software
services such as building Web pages and computer consulting
services. The Senate is expected to take up the bill Thursday and it
could be sent to Governor Deval Patrick this week. Patrick, who
initially supported the new tax, has said he will go along with the
repeal.
Massachusetts business leaders praised the House decision.
“Leadership isn’t always easy, and we recognize and appreciate the
leadership demonstrated in the legislature by agreeing to repeal the
tech tax before it inflicted further harm on our state’s innovators
and small business owners,” said Chris Anderson, head of the
Massachusetts High Technology Council.
Debate in the House grew heated at times as some lawmakers lashed
out at Patrick for pushing Beacon Hill to pass a transportation
finance package that raised taxes on gas, cigarettes, and computer
services, but then called for repeal of the software tax once the
business community applied pressure.
Rep. Angelo Scaccia, a Democrat from Readville, cast the single vote
against repeal, arguing it is unfair to retain a tax on cigarettes
but not software.
“We’re keeping the addictive tax, because that’s just poor people
who have an addiction, but we are giving away the tax for people who
could afford it,” he said.
The Boston Herald
Thursday, September 26, 2013
Vote unleashes tidal wave of flip-floppers
By Howie Carr
Nevermind.
That was what the House of Representatives said yesterday about
their wonderful new tax on software services.
On July 24, it was such a wonderful idea that they passed it (by
overriding a gubernatorial veto) by a vote of 133-23.
Yesterday, almost two months to the day later, the same solons
repealed said tax. The vote was 156-1, against.
So now more than 120 House Democrats can say, truthfully, that they
were for that software-services tax before they were against it.
Today it’s the Senate’s turn to fall on its sword.
The only House hack to stand firm was state Rep. Angelo Scaccia
(D-Hyde Park).
He said, “Never, never, never give up what you had to work for.”
Surely Angelo meant to say, never give up what others have worked
for, and you have robbed them of.
This was what you’d call a rout. How bad was it? Last week, when
asked about the pending repeal of the tax he’d been salivating over
all summer, Gov. Deval Patrick said, basically, “Who, me?”
He told reporters, why are you asking me about this? I vetoed this.
Yeah, he did. It was part of a $500 million package of tax hikes. He
wanted $1.9 billion in new taxes. That’s why he vetoed it — it
didn’t tax working people back to the Stone Age fast enough.
State Rep. Brian Dempsey (D-Haverhill), the Ways and Means chairman,
was one of the very few Democrats who spoke up at all yesterday
before the humiliating vote. His excuse was that the business
community had initially supported it.
Well, no, not really.
Last summer, Dempsey kept talking about the 35 states who’d passed
similar taxes, as if that made it OK. But just before the 123-33
vote two months ago, state Rep. Marc Lombardo
(R-Billerica) pointed
out that the leadership’s claims were lame.
“It was sold to this Legislature that the industry was OK with the
tax increases.” Not quite. Lombardo had gotten a letter from a
computer company CEO saying “a major client he works with that does
$20 million in buys in Massachusetts put a halt to all of it. He
noted this tax will not only drive his company but his fellow
companies to seek refuge in New Hampshire.”
Did the sheeple and the moonbats and the EBT-fraud enablers care in
the least? They did not.
State Rep. Carl Sciortino
(D-Medford) was one of the few to speak
up for the entire $1.9 billion tax package in July. He thanked the
governor for “giving us an opportunity to make a generational
investment.”
They’re not making generations like they used to, I guess, because
yesterday Sciortino voted to repeal the software-services piece of
the “generational investment.”
He’s running for Congress by the way. Another profile in courage,
like the guy he wants to succeed, Ed Markey. He’d fit right in down
in D.C., flip-flopping, spinning wildly in the wind like a weather
vane.
As state Rep. Ryan Fattman (R-Sutton) said yesterday: “It’s not that
people didn’t know, it’s that they didn’t care.”
The Boston Herald
Thursday, September 26, 2013
Tech tax repeal moves to state Senate’s court
By Jordan Graham
and Matt Stout
The state Senate is poised today to follow the lead of the House,
which voted yesterday to repeal the so-called tech tax in a
finger-pointing session that left business leaders concerned that
lawmakers just don’t understand the technology sector.
“There were some surprising words out there that continue to
indicate that (legislators) don’t fully understand our industry or
even understand it at all, so we need to talk to them,” said Andrew
Mazzarella of the SPARK Coalition, a group of tech businesses that
organized to push for repeal of the tech tax.
The 6.25 percent tax on software services was part of the $500
million transportation financing bill passed in July and it caused
an almost immediate outcry from the state’s tech industry, which
said it would drive away business. Gov. Deval Patrick and House and
Senate leaders reversed course earlier this month, agreeing to
pursue a repeal of the tax many lawmakers had voted for.
“We got what we needed,” said Joe Baz, president of the SPARK
Coalition, adding the group will make sure lawmakers have a better
sense of what matters to the tech industry. “We’re going to be
trying to build some more relations with some of the folks that are
suggesting there needs to be reform in the process and see how we
can continue to protect the interests of small business.”
Lawmakers yesterday traded barbs on the House floor, with Democrats
calling Republicans “revisionist” and Assistant Minority Leader
George Peterson (R-Grafton) telling Democrats, “We told you so.”
Boston mayoral candidate and Dorchester state Rep. Martin J. Walsh
backed the repeal of the tech tax he initially voted for, dismissing
any suggestion the flip-flop would be an issue in the race.
“When the tech tax was originally voted on, the intent of the tax
wasn’t what it turned out to be. There was a flaw in the legislation
in the way it was written,” Walsh said.
House Minority Leader Bradley Jones (R-North Reading) called the tech tax
“a stupid thing, and told his colleagues, “Thank you for finally
seeing the light of day on this issue.”
Gov. Deval Patrick, asked if he’d veto the repeal if it didn’t have
an appropriate “plug” for the $161 million in lost revenue, said
“that’s not where I am.”
“The Legislature, the leaders and I have talked about the hole
that’s left in the budget,” Patrick said. “I can’t deal with it
without them, so I’m waiting to see what they do. And whether they
do it all today or do it over the next several months remains to be
seen.”
The Boston Herald
Thursday, September 26, 2013
A Boston Herald editorial
Tech tax clock ticking
The Massachusetts House yesterday used the occasion of a swearing-in
ceremony for three newly-elected state representatives to vote on
repealing the now-widely-repudiated “tech tax.” We sure hope those
three newbie reps — all Democrats — remember this moment the very
first time they’re asked to follow blindly along as their party
leaders try to solve a budget problem with higher taxes.
If the Senate goes along with the repeal today — as it should — the
$160 million tax increase will be on its way to the trash heap of
terribly misguided public policy ideas. And the same people who
voted for this tax on innovation and entrepreneurship will try to
take credit for “fixing” it.
OK, so we’ll offer a few points for the willingness to admit a
mistake. But rest assured, we’ll also be the first ones to remind
Massachusetts taxpayers that when Gov. Deval Patrick and House and
Senate leaders saw a hole in their spending needs, they decided that
taxing one of the state’s most successful industries was the best
way to fill it. And barely a handful of the rank-and-file objected.
Meanwhile, giddy with the success of the repeal effort a new
coalition of tech-industry folks is vowing to pay close attention to
future moves like the tech tax hike that would affect their
industry. Good for them.
Curiously, the newly-formed Spark Coalition also vows to “bypass
traditional politics” to achieve their ends. We’re all for shaking
up the status quo. But it was after all “traditional politics” that
saw this tax signed into law.
Memo to the Sparkies: Sometimes you have to actually scale the steps
of the State House (or horrors, pay someone to do it for you) to
have an actual impact on the outcome.
State House News Service
Thursday, September 26, 2013
Patrick doesn't anticipate a final push for new taxes
By Andy Metzger
Emerging from a battle over new taxes that will likely result in
$340 million, far less than the $1.9 billion he proposed in January,
Gov. Deval Patrick says he is disinclined to propose more taxes in
2014, the final year of his second term.
“I gotta file a budget in January, but it’s not what I anticipate
doing,” Patrick said Wednesday, a few hours before the House
repealed the $161 million computer services tax that lawmakers
paired with gas and tobacco taxes in July’s $500 million tax law.
Patrick said a recent meeting with House Speaker Robert DeLeo,
Senate President Therese Murray, and tech industry executives
convinced him that the Legislature would not be open to additional
tax increases.
“The leadership, various people were suggesting different things and
they kept taking things off the table,” Patrick said. “So I don’t
want to propose anything that is a waste of time from the outset.
And you know, the Legislature is rightly hesitant to raise taxes.
You want a Legislature to be hesitant to raise taxes, to think about
it and take their time, and that was part of my objection to what
they ultimately did, because they proposed it one day and they
enacted it 10 days later with no hearing.”
House Speaker Robert DeLeo and Senate President Therese Murray on
April 2 jointly proposed their tax package. The House approved the
proposal April 8 and the Senate okayed it during a rare Saturday
session on April 13.
The absence of new taxes in Patrick’s final state budget proposal
would remove a divisive issue from the table on Beacon Hill in 2014,
an election year when all members of the House and Senate are up for
re-election and the governorship and five other constitutional
offices will be up for grabs as well.
Legislative leaders have advanced few major initiatives over the
first nine months of 2013 other than the tax package and the fiscal
2014 budget. Still awaiting action are bills identified as
priorities by legislative leaders that would address welfare reform,
the minimum wage, water system funding needs, gun violence,
compounding pharmacy regulation, and public retiree benefits.
This year’s tax debate was launched by Patrick’s call for
transportation and education investments, his subsequent pleading
for legislators to show “political courage” in boosting state
revenues, and finally his veto – which was easily overridden in both
branches – of a tax bill he found inadequate.
Though Patrick has said the Legislature should replace the foregone
revenue lost with the repeal of the unpopular tech tax, his comments
during a regular hour-long appearance on WGBH indicated that the
final budget of his governorship will likely not spark a repeat of
this year’s tax battle.
“I think that we will have an ongoing tax discussion, and at the
moment one of the focal points for that discussion is this new
Commission on Tax Fairness,” House Chairman of the Revenue Committee
Jay Kaufman, a Lexington Democrat, told the News Service Thursday.
“If the question is, ‘Are we going to be raising questions about
taxes?’ the answer is yes. If the question is, ‘Are we likely to
resolve anything about taxes and make some decisions to raise
taxes?’ the answer is probably no.”
Patrick’s January budget was replete with new revenue boosters.
Beyond the income tax increase and sales tax decrease, the budget
zeroed out 44 personal income tax exemptions, including more
expansive taxation on computer services and additional corporate
taxes.
Speaking with co-hosts Jim Braude and Margery Eagan Wednesday,
Patrick portrayed that original budget as a starting point that
lawmakers could “whittle” down into something more palatable.
“I put a lot of things on the table so they could take things off
the table and be the ones whittling it down,” Patrick said.
The response from DeLeo was to call Patrick’s tax package a “fantasy
land” in a caucus with Democrats, before joining Murray to introduce
their plan for gas, business, and tobacco tax hikes and the new tech
tax adding up to $500 million.
Patrick said his late summer meeting with DeLeo, Murray and tech
leaders convinced him that the $161 million technology services tax
was making a bad name for Massachusetts and that legislative
leadership was not amenable to new taxes to replace it.
“Leaving aside whether it could have been – you know whether it
actually is so complicated as to be harmful to the industry, and I
think that’s a debatable question – but the impact on our reputation
as a tech hub was to me very worrisome, and that’s one of the
reasons why I came around,” Patrick said.
As the News Service reported at the time, the Massachusetts
Taxpayers Foundation warned in mid-March, ahead of DeLeo and
Murray’s scaled-down tax proposal, that Patrick’s more expansive
tech tax would create a "Pandora's box" of problems for nearly every
business in the state.
Patrick, who has spoken nationwide about his belief that Democrats
need to have a “backbone” and stand up for what they believe,
ruminated Wednesday on his party’s makeup within the Massachusetts
Legislature.
“The dynamic as I experience it on Beacon Hill is not
Republican/Democrat. It’s insider/outsider. We have Democrats, God
love them, in our Legislature who in other states would be
Republicans. We have a whole range of philosophies, and I think
probably like a lot of legislative bodies, relationships have a
whole lot to do with things moving. It’s not all about the merits;
it’s also about the merits, but it’s other stuff, too,” Patrick
said.
Later Wednesday afternoon, Malden Democrat Rep. Christopher Fallon
lambasted Patrick on the House floor, saying the Legislature showed
it had “backbone” by overriding Patrick’s veto of the tax bill.
Rep. Dan Winslow, a Norfolk Republican who is resigning his House
seat for a higher paying job as general counsel at Rimini Street, a
Las-Vegas-based tech company, also made a crack at Massachusetts
party politics during his farewell address Wednesday.
“I’ve often felt a special affection for you, Mr. Speaker. I wasn’t
sure whether it was because I’m half Italian or you’re half
Republican,” Winslow said to laughter from the chamber.
State House News Service
Wednesday, September 26, 2013
Reversal complete as Senate sends tech tax repeal to Patrick
By Colleen Quinn
While repealing a tax on computer and software design services,
Senate leaders on Thursday had to beat back attempts by some
lawmakers to both raise the gas tax and eliminate the 3-cent gas tax
increase that was part of the same transportation financing package
that included the tech-tax.
The three Republicans in the Senate who tried to add the gas tax
increase to the list of taxes on track for repeal were also
unsuccessful in their attempts to unchain the gas tax from future
increases tied to inflation.
Sen. Cynthia Creem, in her attempt to raise the gas tax further,
argued that with the tech tax gone there will not be enough money to
invest in transportation. Creem wanted to raise the current gas tax
from 24 cents to 29 cents.
The tech tax was counted on to raise $160 million and was part of
the $500 million tax package approved this summer, which included a
3-cent per gallon increase in the gas tax and $1 tax increase on
tobacco products. Future gas tax increases are tied to inflation.
The repeal bill now sits on Gov. Deval Patrick’s desk awaiting his
signature.
Senate Ways and Means Chairman Stephen Brewer said the state will
bet on larger than expected revenues to plug the budget hole left by
retroactively repealing the new sales tax on computer services,
which had been counted on for $161 million in the fiscal 2014
budget.
The bill to repeal the tax (H 3662) passed unanimously in the
Senate, 38 to 0.
Like her House counterparts, Senate President Therese Murray said
legislative leaders made a promise to revisit the tech-tax to see if
the impact was broader than anticipated. Business leaders decried
the sales tax as an innovation-killer for the state.
“Today, we kept that promise,” Murray said in a statement after the
vote. “Through ongoing conversations with industry experts, it
became clear that this sales tax was having an unanticipated
negative effect on our technology industry and I am proud of the
Senate for taking action.”
Before the repeal passed, the Senate debated 10 amendments.
Creem, a Newton Democrat, said her constituents ride the T, travel
the roads, and care about social services. Last spring when the
Legislature was debating transportation financing, they came to her
to ask, “What are you doing to support the governor?” she said. Her
constituents favored raising taxes to generate $1 billion a year for
transportation.
Creem said she has voted for gas tax increases before because “I
feel there is a nexus between the gas tax and transportation.”
She then admitted she did not expect the amendment to pass, or for a
roll call vote to be taken. A few minutes later, Sen. Robert Hedlund,
a Weymouth Republican, asked for a roll call vote on Creem’s
amendment. It was defeated 11 to 26.
Minority Leader Bruce Tarr (R-Gloucester), Hedlund and Sen. Richard
Ross (R-Wrentham) filed amendments to eliminate the 3-cent gas tax
increase and the mechanism in the transportation funding package
that automatically ties future gas increases to inflation.
“At what point do we stop digging into the wallets of taxpayers?”
Hedlund asked.
Hedlund called the Legislature’s move to automatically raise the gas
tax based on the Consumer Price Index “repugnant” because future
lawmakers will not be held accountable for the increases. Hedlund
predicted CPI was on the verge of an increase because the Federal
Reserve has kept it artificially low.
“That will have a direct impact on what we have done with this
automatic increase. I think people will find it somewhat onerous,”
Hedlund said. “Citizens of Massachusetts are not going to like this
when they realize what’s hit them.”
Opponents of indexing the gas tax to inflation are also pushing a
initiative petition to repeal the inflation adjusted gas tax at the
ballot in 2014.
Sen. Patricia Jehlen, a Somerville Democrat, argued against
eliminating the gas tax hike saying the state could not afford to
continue to “ratchet down our revenues.” There are many programs
that have not recovered from cuts in funding resulting from the
recession, including early education, she said.
Tarr countered that state spending has outpaced personal spending by
state residents, and taxpayers cannot afford any more taxes that eat
into their budgets.
“If you want to accelerate the problems, continue to increase the
gas tax,” he said.
The Senate also rejected a Republican amendment to audit the savings
that were projected from the 2009 transportation reform act. Tarr
said the Department of Transportation never realized the savings
they were supposed to attain, and the Legislature continues to “pour
more money into the system” without holding MassDOT accountable.
The Boston Globe
Wednesday, September 26, 2013
Senate votes to abolish tech tax
By Michael B. Farrell
The Massachusetts Senate voted unanimously Thursday to abolish a
sales tax on software services that generated a firestorm of
criticism from business leaders, following Wednesday’s action in the
House of Representatives to repeal the fledgling levy.
It is now up to Governor Deval Patrick to decide whether to put his
signature on a bill to kill a tax that was a major part of his
initiative to fund statewide transportation projects. A decision by
Patrick could come this week.
In a reversal of his original position, the governor has supported
the repeal effort, but stopped short this week of saying outright
that he would sign the repeal bill. “I’m waiting to see what they
do,” Patrick told reporters Wednesday.
While he has said the $160 million the state expected to collect
from the tax should be replaced, he isn’t expecting the Legislature
to find a new source of money immediately. “We’re going to have to
come back to this,” he said.
Stephen Brewer, chairman of the Senate Committee on Ways and Means,
said it takes a “mature, grown up, and thoughtful” Legislature to
reverse course so quickly on such a major piece of legislation. “We
listened, we learned, and we acted,” he said.
Looking back, said Brewer, the tax “may not have been the wisest
move taken at the time.”
The software levy went unnoticed by many in technology industry
until it was passed in late July as part of a transportation funding
package, and went into effect seven days later. No money was
actually collected from tech companies.
The transportation legislation raised taxes on cigarettes and gas,
but also added the state’s 6.25 percent sales tax to many computing
services such as software consulting and even some Web development
work.
In a statement, the Massachusetts Taxpayers Association lauded the
Senate vote. “The Legislature’s recognition of the impact of this
tax and the importance of a speedy repeal will help to ensure the
long-term competitiveness of the Massachusetts economy,” the group
said.
During Thursday’s debate on the repeal bill, Republican lawmakers
did not miss an opportunity to remind their Democratic colleagues
that Republicans opposed the software tax from the start.
“This is corrections day,” said Senate Minority Leader Bruce Tarr.
“We said it was a bad idea then, and say that it’s a bad idea
today.”
The Boston Globe
Wednesday, September 26, 2013
State transit officials begin task of allocating added funding
By Martine Powers
HYANNIS — Though legislators voted Wednesday to repeal the
technology sales tax, Department of Transportation officials said at
a board of directors meeting that they were unconcerned with the
repeal, for now.
That’s because money from the controversial tax on computer software
services would probably not have contributed to MassDOT’s coffers
until at least 2017.
“It does affect the package, to the tune of $26 million,” said Dana
Levenson, MassDOT’s chief financial officer. “We’re hopeful there’s
going to be a replacement.”
That lost revenue makes up just more than 3 percent of the yearly
$805 million promised to the Transportation Department by 2018.
After the meeting, which was held at Barnstable Municipal Airport,
Secretary of Transportation Richard A. Davey expanded on the reasons
for the department’s apparent lack of immediate concern. As written
by legislators, the revenue from the tech tax was meant to be added
to the state’s pot of sales tax money. Each year, MassDOT either
receives 1 percent of that total, or a sum of about $780 million,
whichever amount is higher. For years, the lump sum has been larger
than the 1 percent, and that probably will not change in the near
future, Davey said.
“For the next three years, it’s probably not going to matter,” Davey
said. “But it could be an issue in four to five years.”
The tax drew the ire of the state’s technology community, which
stoked fears that the levy would threaten potential growth of the
state’s innovative businesses. After state representatives voted
Wednesday to repeal the tax, minority leader Bradley H. Jones said
in a statement that the tax would have been “devastating.”
“A tax on one of the Commonwealth’s most vital and vibrant sectors
should have never seen the light of day,” Jones said. “Beacon Hill
Democrats should be ashamed that they green-lighted such a crippling
revenue measure.”
The tech tax was part of a larger transportation finance package
passed in July to infuse the state’s financially beleaguered
Transportation Department with cash to make necessary repairs and
invest in some big-budget projects for the future. That package
included a 3-cent increase in the gas tax, and a $1 increase to the
tax on tobacco products.
Additionally, legislation mandated that MassDOT seek to reopen tolls
in the westernmost part of the state, which had been eliminated in
1996. On Wednesday, the board voted to approve that move: Starting
Oct. 15, it will cost $2 to travel from exit 1 to exit 6 along the
Massachusetts Turnpike, the same price as when the tolls were closed
17 years ago.
The board also approved $393 million for the first stage of the
long-brewing Green Line extension project, a project that broke
ground last December, even though the money to finance the project
was not firmly in place. Now, that money that will probably come, at
least in part, from the transportation finance package.
On Wednesday, Davey and Levenson painted a clearer picture of the
process to decide how those funds will be spent.
“We didn’t get everything we wanted, but [legislators] did fund us
to a pretty significant degree,” Levenson said. “Frankly, our
biggest challenge is not so much that we got this money, but now
that we have the money, how do we put it to work?”
Davey will offer a capital project spending plan at the October
board meeting and hold several public meetings in the ensuing month,
he said, with hope that the board will vote to approve the plan in
November. He declined to reveal details about what he intends to
include in his spending proposal, but said that much of the money
will be spent on “the state of good repair”: MBTA and highway
infrastructure that must be replaced, and projects like the Green
Line extension that MassDOT is legally required to complete.
Additionally, as mandated by the July legislation, MassDOT will have
to create an advisory council by the end of 2013, which will help
MassDOT prioritize which construction projects to pursue and which
to leave on the table for later.
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