The tide may be turning on the state’s newest money grab, known as the “tech tax.”
On Tuesday, Gov. Deval Patrick dropped his support for the much-reviled duty on software design services, telling the State House News Service it was a “serious blot” on the state’s reputation as an innovation. Since it was the governor who proposed the tax in the first place, his change of heart is good news.
Of course, saying you don’t like a tax and striking it from the books are two different things. As in many things we’ve witnessed on Beacon Hill, there can be a long gap between words and deeds.
Technology companies, including those on the North Shore, call the 6.25 percent tax so vague and poorly written it could apply to any number of businesses and services. Lawmakers say the measure was meant to raise $161 million; IT executives, however, say the tax rules are so soft and spongy they could end up paying closer to $500 million. Talk about stifling innovation.
Indeed, the evidence falls more squarely on the side of the IT executives. Legislators who passed the tax admitted that the scope of it was not clearly known, and the state’s Department of Revenue had a difficult time sorting out exactly whom it applied to, and for what. What a poor excuse for tax policy.
Speaking at yesterday’s North Shore Chamber breakfast, Salem attorney and Chamber member Bill Tinti called the tax “the largest tax on technology of all the states in this country. All of us in this room, including the cities and towns, will be the victims of this tax.”
The chamber, along with the Massachusetts Taxpayers Foundation, was one of the first groups to rise in opposition to the tax, and others have followed. House and Senate Republicans this week said they will file legislation to repeal the measure (as Democratic state Sen. Karen Spilka has already done), and there is a tech industry-backed initiative petition headed for the 2014 ballot if lawmakers don’t take action. Locally, state Sen. Bruce Tarr, R-Gloucester, has been an outspoken opponent of the tech tax.
Even with those positive developments, it is important to keep the pressure on the Statehouse. House Speaker Robert DeLeo and Senate President Therese Murray have been somewhat noncommittal about repealing the tax, and Patrick is already talking about finding other revenue (likely reaching into taxpayers’ pockets in a different way) to make up the difference.
As Tinti noted yesterday, those opposed to the tax shouldn’t ease up on their efforts until it is “rightly and justifiably buried.”