, Newburyport, MA

September 27, 2013

Our view: Tech tax an example of herd politics

Newburyport Daily News

---- — State lawmakers have finally done the right thing with the so-called “Tech Tax.” By an overwhelming margin, they have tossed it in the hopper of bad ideas. After only a few short weeks on the books, the delete button has been pushed.

It was a major retreat for Democrats, who just a few weeks ago had their arms twisted by their leadership to pass it. Yesterday, they stampeded away from it.

For Democrats, it was an embarrassment that never had to happen. Democratic leadership failed to heed all of the warning signs that clearly indicated this was a bad tax, a job-killing, economy-stalling burden that our tech-heavy state didn’t need. It applied the state’s 6.25 percent sales tax to a large segment of our economy -- software and technical services.

The tech tax was a poorly vetted policy, so broadly and vaguely written that even the state Department of Revenue was unclear of its scope. Democrats didn’t have a clear idea of what exactly they were voting on. Instead, they followed where their noses were led.

We agree with Michael Widmer, who was in Newburyport yesterday addressing the Greater Newburyport Chamber of Commerce. Widmer heads the Massachusetts Tax Foundation, a non-profit group that studies state finances and policy.

“The passing of the tax reflected a lack of due diligence on the part of lawmakers,” said Widmer, whose group lobbied against it. “The business community finally raised its voice, and Chamber members like those here today have always got to reach out to state representatives when bad initiatives are being considered.”

The tax was a solution in search of a problem. Billed as a way to pay for state infrastructure repairs, it came at a time when the state is hauling in tax revenues hand over fist. The state’s haul of taxes has been steadily increasing, despite a still sluggish economy that has seen unemployment numbers remain stagnant.

August’s revenue numbers are a good example. According to the state Department of Revenue, preliminary revenue collections for August totaled $1.543 billion, $121 million or 8.5 percent more than the state took in last August. That’s $64 million above the monthly benchmark that the state was hoping to collect.

Massachusetts government is having a very profitable year. There was no need to pick the pockets of one of the brightest spots in our economy. Let’s hope that the next time lawmakers take a run at the goose laying the golden eggs, they don’t cook it.