Left In Lowell

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April 6, 2008

Action Alert! Corporate Loopholes Vote Is Next Week

by at 5:15 pm.

This came down from Progressive Dems (some bold is mine):

In a nutshell, the long-awaited loopholes bill is coming up for a vote this Tuesday (or possibly Wednesday or Thursday). We need you to call your Rep and Senator (and any others you have a relationship with) to urge their action on this bill. We are FOR the closing of the loopholes and AGAINST any reduction in the corporate tax rate.

Read the attached fact sheet prepared by the Coalition for Tax Fairness (of which PDM is a member) for more details and background.

If the two loopholes mentioned are closed, the Commonwealth will gain an ongoing revenue stream of $500 million per year. We need all of this money, and more, in a year when we are facing a deficit in excess of $1 billion. The Governor, following the recommendation of the Special Commission mentioned in the fact sheet, has proposed lowering the corporate tax rate from its current level of 9.5% to 8.3%. We OPPOSE this reduction; it would cost the state $200 million per year, giving back to business much of what would be recaptured by closing the loopholes!

Massachusetts is already among the 10 lowest-taxing states when in comes to businesses — they must pay their fair share of our needed infrastructure and workforce development costs!

To make matters worse, the Speaker has proposed lowering the business tax rate to 7.0%, which would effectively give away all the revenue gained. Obviously, we STRONGLY OPPOSE this suggestion.

Please do what you can to contact any Reps you have a good relationship with, between now and Tuesday. Many of them you may see at your caucus tomorrow. Others, you can call over the weekend if they have answering services, or better yet call on Monday and speak to them or a staff member; find out their position on this and convey that information to me.

Ask them to support the loophole closings, oppose the tax rate cut, and ask them to convey these feelings to their leadership!

Look, Sal DiMasi never met a tax cut for big business he didn’t like. He’s consistently agreed with the exceptionally conservative Greater Boston Chamber of Commerce. Some Democrat. What the hell is the point of closing a corporate tax loophole if you give away the revenues it generates to businesses? We have a low, low corporate tax rate in this state. A lower one isn’t going to attract the jobs we need, folks. But revenues to the state which help us invest in infrastructure, schools, transportation, and other areas will. One that closes our budget gap gives confidence to businesses that this state will remain fiscally sound. So, call your Rep and Senator. If you don’t know who that is, click here and get their information.

38 Responses to “Action Alert! Corporate Loopholes Vote Is Next Week”

  1. Jay Booth Says:

    This is still an improvement over the previous law, which consisted of loopholes that only big businesses could take advantage of while smaller companies paid the higher rate. At least it’s a level playing field now.

    But something’s gotta be done for revenue here. We’ve got $20 billion or so in unfunded transportation liabilities, a state budget that was 500 million out of balance last year, and funding crises, overrides and layoffs in every community. As much fun as it is to pull a Bill O’Reilly and talk about all those “tax and spend liberals”, we’ve gotta balance the books. Maybe if they could meet in the middle, make this one about half as revenue positive as it could be while still giving small businesses a break (they’re in tough times too) and finding a way to move towards a split-rate progressive income tax, how do they amend that chapter of the constitution, 2/3 vote? Referendum?

  2. Ryan Says:

    we’re obviously on the same page. I swear, readers of LiL, this wasn’t coordinated or anything. LOL

  3. Peter Says:

    With all these jerks voting against over-rides I don’t know how much good chasing businesses out of here will do. People need to understand important goods and services cost money and start poneying up themselves once in a while.

  4. waittilnextyr Says:

    I would support the Governor’s plan, no more, no less.

  5. kpem Says:

    I guess what you would need to figure out with this type of tax increase is whether it would affect the Mass. Economy. The truth of the matter is that Large Corpartions funneling everything down to Maryland, or the Carolinas will still choose to do business here. I am in sales/ marketing and It seems that we are the “desirable” area of the country to do business with right now. (Many NE companies are bailing out Southern companies) We need to stop these large corporations from gladly taking my hard earned pay and walking away with it to a realty company, equipment rental company, service corp., or whatever other front they want to create to funnel the money and keeping it here. I think that the Walmart site is interesting if you take the time to compare the number of stores w/ the volume of taxes paid: http://walmartstores.com/FactsNews/StateByState/State.aspx?id=8

  6. Josh Says:

    You mean those crazy SOBs want to let people keep more of the money they earned???

    This is an outrage!

  7. Michael in Pawtucketville Says:

    > We have a low, low corporate tax rate in this state. A lower one isn’t going to
    > attract the jobs we need, folks.

    It is hard to take you seriously when you post something like this.

    Your fact sheet puts it this way: “Massachusetts ranks 42nd among the states in terms of the business share of total taxes, meaning only 8 out of 50 states have lower tax burden for businesses.”

    A google search for “corporate tax rate nh” returns many page but in the first page we see that there are about 40 states with lower rates (there are ranges and I did a quick eyeball count) at http://www.taxadmin.org/fta/rate/corp_inc.html and in another page, it said that MA has higher corporate tax rates than 45 other states at http://www.taxfoundation.org/taxdata/show/22661.html

  8. kpem Says:

    These loopholes cause unfair competition to the companies that do business here that are not trying to come up with everyway they can to avoid paying taxes.

  9. joe Says:

    Michael in Pawtucketville,

    Your links are about corporate tax rates. Lynne’s is about total tax burden. Hers takes into account other taxes, and looks at the total tax burden on businesses, while yours just report the rate of one tax.

  10. kpem Says:

    Joe,
    Where can we find this info?

  11. Michael in Pawtucketville Says:

    re: Joe

    > Your links are about corporate tax rates. Lynne’s is about
    > total tax burden. Hers takes into account other taxes, and
    > looks at the total tax burden on businesses, while yours
    > just report the rate of one tax.

    Her original post was:

    “We have a low, low corporate tax rate in this state.”

    When someone says corporate tax rate, most people think of the corporate tax rate. Not total tax burden. If she meant total tax burden, she should have said total tax burden and then explained what she means by the term.

    If you want to look at the total state business tax burden, the second link puts Massachusetts at 36 meaning that there are 35 states with lower total state business tax burdens. This include corporate taxes, unemployment and individual taxes (income, sales, property).

    I’m all for closing loopholes. But it seems to me that DeMasi and Patrick have
    done their homework in determining that the high corporate tax rate hurts Massachusetts in attracting companies looking to expand.

  12. kpem Says:

    Why are we always looking at how we can increase taxes instead of how we can decrease spending? The purchasing systems of the state, cities and towns, National forests, Mass Parks, National defense, and the Federal Government etc. are just completely flawed. We have more surplus and overpriced equipment and properties sitting around unused then I can even tell you about from first hand knowledge. Why don’t we push to have a central purchasing system, that actually has rules these officials need to follow and push for more mass buying power. I will give you examples:

    1) The town or city says you need to post a notice in the Newspaper to buy equipment over $5000. They do not tell them when to post it or which paper to post it in. Friend #1 already has the deal and waits for the ad date (monday in the bottom corner of the community ads of the most obscure paper as a single line item) to pass by and becomes the lone respondant.

    2) State job requires age of materials to be a certain use limit and they are used once and then no good after that. Instead of perfectly good product being used elsewhere(same items needed were out to bid) they get loaded into officials car to be used at home.

    3) The government says any purchase over $5000 needs to go to bid. You have a friend that offers this product and may not win the bid. That is ok you can just send out 10 recs at $4999 dollars each instead so that they do not meet the bid requisite.

    Why can’t the city and state just say that every bid goes out to the public. The days of backroom dealings should be over. One website, all bids.

  13. Mr. Lynne Says:

    You want to be careful about selling surplus property. It often comes to pass that years later, during a population growths spurt, municipalities find out after the fact that it would have been cheaper to hang on to surplus land for the resultant increased footprint of schools and municipal buildings necessary as a result of population growth.

  14. Jay Booth Says:

    Kpem there are a lot of issues with the RFP system and I could come up with a list of another several gripes about the way government works, but the thing is, all of these things add up to a very small part of the problem, if you fixed them all by fiat and your solutions were actually better then the status quo, then you get what, a small one-time cash infusion that doesn’t grow year after year? The funding problem remains — state budget is a billion out of balance right now, we’re posed to wipe out the rainy day fund in next year’s budget cycle, 20 billion in unfunded transportation liabilities just to keep the system running, and pretty much every municipal budget stretched to breaking. Our communities are just not getting the money they need to keep things running, and the state’s not in any better shape.

    We’ve gotta pay for this stuff, somehow.

  15. Lynne Says:

    OK, fine, the total corporate tax burden is low. From here:

    Massachusetts’ 2008 Business Tax Climate Ranks 34th
    Massachusetts ranks 34th in the Tax Foundation’s State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Rhode Island (50th), Connecticut (38th), New York (48th), New Hampshire (7th) and Vermont (44th).

    And from this report (PDF) pg 36:

    Overall, business taxes in Massachusetts are significantly lower than the national average. Massachusetts, however, receives an unusually large share of our business taxes in the form of corporate income taxes, while businesses in Massachusetts pay substantially less in sales taxes and excise and gross receipts taxes than the national average.

    In other words, we are not a heavily tax burdened state for corporations to do business in.

    And why close a tax loophole and then cut the revenues that brings in? The only issue you fix at that point is tax fairness, which is a good thing, but meanwhile, our budget deficit grows, we continue to cut into the bone, our infrastructure is falling way behind, public transit is in trouble, as are our schools, universities, and the business climate continues to fail. Not because of overly burdening taxes, but because of all the other degradations in quality of life (and because of cost of living here, which was a result largely, so far as I can see, of a great booming economy that we used to have). Businesses KNOW they have to invest in themselves in order to grow. Why is it so hard to see that this is needed by government as well?

  16. joe Says:

    If you want to look at the total state business tax burden, the second link puts Massachusetts at 36 meaning that there are 35 states with lower total state business tax burdens.

    Even that is misleading, as it considers taxes in absolute terms. Property taxes, for example - companies are paying higher tax bills in Massachusetts because they own more valuable, more expensive property. As a share of their assets, however, property taxes are not so high in Massachusetts. Similarly, their income taxes in absolute dollars overstate the burden, compared to looking at them as a % of income, because we have higher incomes in Massachusetts.

  17. Lynne Says:

    RE bids going out under $5000: the amount the state would pay in administering a bid system for every little hammer bought would be wasteful. Maybe you make the ceiling lower ($3000? $4000?) but as someone who has worked in and ran different orgs (nonprofits), you can’t tie the hands of decision makers for every little damned thing.

    For instance, we had rules in different orgs I have been in about how much could be spent of the group’s money without a quorum. We set a reasonable amount, not too high, but enough so we could get copies done for an upcoming event if needed, even if we didn’t quite have enough people at the meeting to get a full quorum.

    Trust me, $4999 bids are almost not worth it to most cronies. Whenever you see the system abused, it’s much larger amounts that DID go to bid. The best way to combat that is sunlight, sunlight, sunlight.

  18. joe Says:

    Although it would probably be better to change “we’ve got a low corporate tax RATE in this state” to “we’ve got low corporate TAXES in this state.”

  19. Michael in Pawtucketville Says:

    It appears to me that one has to look at convoluted measures to find a low tax burden from the report cited at page 36. Why would a state that has such a high Corporate Tax Rate have a very low tax burden, however it is defined? The report cited a low sales tax. Perhaps. Perhaps corporations are using loopholes to pay much less than the stated corporate tax rate.

    I will have to spend about twenty or thirty hours doing my taxes over the next week or two and I could use a healthy dose of tax simplification. I’d guess that corporations could use the same. Outside of the ones benefiting from the loopholes. Perhaps getting rid of the loopholes and lowering corporate tax rates will result in overall higher taxes collected.

    I’m not an expert in MA taxes other than owning a business in the State back in the 80s. It was a real pain in the neck with all of the paperwork and I went back into industry when someone made me an excellent offer. If you want to make MA attractive to industry, provide breaks or lower the Corporate tax rate. It’s the most visible thing out there. Otherwise you have to pay for reports from accounting firms to show that you’re not heavily taxed in a convoluted way when anyone with a web browser can see your corporate tax rate. That’s what the elected officials are doing and hopefully it brings in more businesses.

  20. Peter Says:

    Give me a break Josh,
    I am so sick and tired of you people thinking you “earn” your money on your own in a vacuum. There’s a whole society of laws and services set up which allow people to do business and “earn” money in a civilized manner. Without these laws/government etc. how long do you REALLY thing you’d be able to hold on to ANY of the money and things you have “earned” before someone stronger and smarter just came into your home and took it all from you?
    I love it, everyone of these guys does everything “ALL BY THEMSELVES WITHOUT HELP FROM ANYONE” and not a single one of them can appreciate the society and government’s role in making all that “EARNING” and “KEEPING” possible.
    I’d love to see these guys thrown into a REAL no-taxes/small-government caveman scenario and see how well they “Earn” then.

  21. waittilnextyr Says:

    Closing the loopholes seem to be an accepted position, primarily from a “fairness” point-of-view. It also increases revenue to the State, which most people agree is needed. Offsetting some of that increase through marginally lower corporate tax rates is a good idea politically, and I believe economically. DiMasi’s plan is supposedly revenue neutral, whereas Patrick’s plan likely will result in a net revenue increase. With some uncertainty on how much “loophole-closure” revenue will result, I believe DiMasi’s plan has the risk of actually reducing revenue. The more moderate reduction advocated by Patrick is pretty certain to increase revenue, while at the same time spurring growth in those businesses that have been harmed by the current uneven playing field on which they must compete with inter-state corporations. This growth should be better for jobs thereby helping the workers of the State, and in turn for the State with increased personal income tax revenue from these jobs.

  22. Josh Says:

    Peter, you’re damn right I earn my money. Obviously, I don’t do it on my own. When society helps me, I pay them. It’s called the market. Government and society are to separate things.

    If government’s only role was to stop people from taking my things then I would gladly pay those taxes. But people like you believe that I should worship the government because it does oh-so-much for me. Tell me Peter, how much do I owe the government for the overburdensome housing regulations that drive up the cost of housing? How much do I owe the government for those handouts to the biotechnology industry? How much do I owe the government for failing public schools that leave chidren uneducated? How much do I owe the government for a war on drugs that has decimated the inner city? How much do I owe the government for the 4,000 soldiers that have been killed in Iraq?

    Throw out a figure and I’ll write a check to the IRS. Otherwise, get real about the reality of government.

  23. Peter Says:

    Josh, if you do not understand what I am saying, then I can not help you.

    And P.S. DO NOT PUT THIS WAR ON US BUDDY, THIS WAS ALL YOU GUYS!!!!!!

  24. Mr. Lynne Says:

    “Government and society are to separate things.”

    So much for ‘…of the people, by the people, for the people’.

  25. Jay Booth Says:

    Hey Josh, how about taking some responsibility towards your country and community for a change, eh? Who educated you from K-12? Did you pay tuition while you were there? Did they “owe” it to you? How about the people who are there now, they don’t deserve it as much as you did? How about the highways and transit system with 20 billion in liabilities over the next decade, let’em fall apart? Because you “earned” your money and shouldn’t have to pay for things?

    And what do you owe to the rest of us? Nothing, strictly, if you want to be a jerk about it. But let’s be honest about who’s the jerk here, don’t act like you’re some dynamic free marketeer with a better system while the teachers, cops, highway workers, administrators and other public servants who keep things running get crapped on by your favored policies. You get to sit there and talk about how great your ideas are because these people are dedicated enough to continue working for us in the face of layoffs and lousy raises, and let alone the possibility of paying for what we’re getting, you want to insult them on top of cutting their funding.

  26. Peter Says:

    Anyone watching Star Wars on spike lately? It’s amazing how much the Sith remind me of these GOPers. How anyone can warp their entire world-view so heineously and be willing to sacrifice their humanity and the good of society just to keep a few extra bucks in their wallet is so beyond me.

    Yes, yes, Josh, we know, “it’s not to save a few extra bucks….” yawn. It’s getting so old. Like I’ve said, if they can’t see it even now, they’re truly lost.

  27. Josh Says:

    Who says I don’t take responsibility? That’s how warped your sense of responsibility is - you see paying taxes as your contribution to the community. On the other hand, us small government folks believe there is an individual responsibility to the community. How do I contribute? I donate my time and money to causes I deem worthy (and make sure they’re not wasted on some hack twiddling his thumbs).

    People like you guys shrug off that responsibility by saying “Oh look, I voted to use someone else’s money to pay for something I think is good.” What a real sacrifice that is there! I’m not insulting the people who are actually working hard at their jobs. I don’t have much respect for those who pat themselves on the back for dropping a ballot in the box without actually doing anything else.

  28. Mr. Lynne Says:

    BTW… love this tactic:
    “…people like you believe that … [insert disparraging words to create easily knocked over straw man]”. This goes along with “..you have absolutely no understanding of economics whatsoever.”

    Its really ok though. It’s a common libertarian mistake to assume that the Government and the People are distinct and separate. It’s a lot like Marx’s mistake in not understanding that the worker class and the investor class could greatly overlap in a free market.

  29. Jay Booth Says:

    Thanks Mr. Lynne. I’m sure Josh is contributing far more to his community than the teachers whom he proposes to starve in favor of cultivating “individual responsibility”. Josh doesn’t even take a public paycheck and those jerks expect healthcare coverage and a cost of living raise. And we all know he’ll be voting against Reaganites who want to continue spending 2/3 of our federal income tax dollars on things like F-22s and amphibious landing vehicles rather than spend it on fundamentals we actually need. Because he’s against big government, and for responsibility to his community.

  30. Lynne Says:

    As Mr. Lynne says all the time, relying on people to “do the right thing” themselves instead of having us ALL pay into a system for the common good means punishing the good people who DO decide to donate time and money to helping others, and rewarding selfish behavior (those that do NOT donate time and money). Exactly the sort of society I want to live in, yup.

    If we relied on charity for the welfare of our state, we would wind up with the split between haves and have-nots increasing exponentially. Especially if we turned our education, job training, and public university system into such. It doesn’t work. It never did. It’s a lovely theory, which in practice falls apart like so much crumb cake.

  31. Peter Says:

    mmmmmmm crumb cake.

  32. Michael in Pawtucketville Says:

    Is this $20b liability in MA or the whole US? If MA, it sounds like the Big Dig did suck the air out of the rest of the state.

  33. waittilnextyr Says:

    I believe the $20B is the figure for MA to repair and upgrade its roads and bridges. Yeah, the Big Dig sucked a lot of money out of other projects, but whereas it took 15 yrs to spend that $15B, the Federal Government has blown that every 6 weeks for the past 5 years in Iraq, with no end in sight.

  34. Shawn Says:

    blah blah blah “war”.. blah blah “starving teachers”.. blah blah “selfish GOPers”…

    Every thread ends up the same way. Extremism is glorified and your arguments lose their validity cuz people stop listening.

    Its a real world. Its a tough economy. At this point, the people are telling their governments “prove to me that you’ve cut everything you can and beyond, then I’ll consider choosing to give you more.”

    You may not like it, and think you know better, but we’re seeing 3:2 votes on these issues almost every time.

    Chelmsford embarrassed themselves last week when the Charter School issue blew up in their face. They won’t get an override for years now.

    And all along, their manager is trying to grow their government by adding more firefighters to do a job that was privatized years ago and functions excellently.

    The towns need to start looking at savings. If you have excess capacity, that doesn’t means spread the kids further and further because someone believes “lower class size is always better,” it means close a building down and reduce administration and maintenance costs.

    Purchasing of large equipment should be regionalized among many towns, small purchasing within a town should be done by one office (not the town doing its own and the schools doing their own).

    Fuel costs.. I’ve seen examples of taking the school bus contracts and separating out the fuel costs.. and have the town purchase the fuel because it can get a reduced rate (lower state taxes)… but no, we never have the schools work WITH the town.. its always “us vs them”.

    Well, the taxpayers are sick of it, and are speaking up. And don’t blame it on prop 2-1/2, cuz the same is true throughout NH as well.

    Stop the new programs, the perks, and the “bells and whistles.”

    Then I’ll consider how much more to give.

  35. Shawn Says:

    Oh, and our pal, Deval, seems to know the solution to all the problems.
    He’s going to bond out everything, dump a lot of debt on our grandchildren, and then jump ship to some federal position based on his “Miracle in Massachusetts.”

  36. Mr. Lynne Says:

    “Extremism is glorified and your arguments lose their validity cuz people stop listening.”

    Why create your own straw man when you can just vaguely label anyone else’s positions as extremist and make that a straw man?

    Seriously Shawn… you’re better than this.

  37. Michael in Pawtucketville Says:

    I saw an article stating that the cost to fix MA’s bridges with structural problems as $350 million. Hard to imagine how you get to $20 billion from there.

    I recall that the NH Sec of Transporation was looking for somewhere between 600 million and maybe double that amount. We’ve raised tolls to increase revenues to address roads and bridges but I think that we’ll need more than that. It’s very hard to raise fuel taxes in NH because of the powerful trucking lobby.

  38. kpem Says:

    What about the amount that citys and towns pay in benefits to city workers? These perks are not ones offered in the private sector and we pay for them. Health insurance before age 65, sick time buyback, over $14,000,000 for Lowell Early Retirement and pensions,over $1,000,000 in overtime, vacation buyback, longevity pay etc. Can you imagine having so many sick and vacation days that they can not even use them all and you get them bought back. Two departments alone in the city of Lowell will get close to a half million in unused sick time buy backs. I am sure there must be some defense why these people get what the people that pay for their salary do not. When AK talks about hiring people from Lowell I get excited that maybe some people from Lowell will reap some of these benefits.

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