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Commission Recommends Corporate Tax Increases, 'Meaningful' Excise Cut
By Kyle Cheney
STATE HOUSE NEWS SERVICE
BOSTON, DEC. 18, 2007…..A special 15-member commission studying Massachusetts's corporate tax laws voted 10-5 today to support a pair of revenue-generating proposals sponsored by Gov. Deval Patrick and decisively supported an undefined but “meaningful” reduction in the state's corporate excise tax rate.
Although the votes are non-binding, commission chair Leslie Kirwan, state Secretary of Administration and Finance, said there was “tremendous consensus” among commission members in favor of updating an antiquated tax structure while reducing the corporate tax rate. With the final report of the commission due Jan. 1, 2008, the Legislature may eventually entertain a bill encompassing the recommendations.
Today's votes favored part of Patrick's February proposal to close “loopholes” in the corporate tax structure. In particular, the commission recommended reforming “combined reporting” and “check-the-box” provisions of the tax code. The combined reporting provision would block firms from shifting profit-reporting out of state to subsidiaries, while “check-the-box” would force companies to file under the same status on both state and federal tax forms. Under the reforms, the state would gain between $400 million and $500 million, depending on estimates.
The administration staved off calls for a “revenue neutral” proposal – requiring that all corporate tax increases be offset by an excise tax cut of an equal amount – with only five commission members, including the House and Senate minority leaders, insisting on neutrality.
One key vote in favor of the governor's proposals was Rep. John Binienda (D-Worcester), top lieutenant to House Speaker Salvatore DiMasi, a vocal opponent of increasing the corporate tax burden. In an interim report last Spring, Binienda, the co-chair of the Committeee on Revenue, voted with the minority in an 8-7 vote in favor of the loophole closures.
“Neutrality, I love it, but I'm not locked into it,” he said, adding that he can “go with” the governor's proposals if they came with “a substantial rate cut.”
Kirwan stressed that the governor also favored cuts in the corporate excise tax but that she couldn't pinpoint what a meaningful cut would mean, nor did she have a timetable to reach that conclusion.
“The governor also feels strongly that a meaningful rate cut would send a very strong signal about the commonwealth's desire to have a competitive climate and attract businesses to locate and stay in Massachusetts,” she said.
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