Kudos to the Boston Globe for pointing out the state may lose $535 million in tax revenue beginning in 2012. Luckily, the History Channel has also pointed out that the world will end that year as well. It looks like the loss of corporate tax revenues is the least of our worries.
Sarcasm notwithstanding, it’s fascinating how the Globe paints the largest corporate tax increase in Massachusetts history as falling short of its promise. As a member of the Corporate Tax Commission, I made it very clear back then that the state’s revenue intake from so-called, closing “loopholes” was way over-exaggerated. If you need more proof, just look at how the Patrick Administration had to revise its fiscal 2009 tax revenue projections a total of five times, and still failed to get it right.
The Globe also highlights how only three corporations will benefit the most from a corporate tax deduction designed to lessen the sting of combined reporting. Those three companies are planning on claiming over $40 billion in tax deductions for the seven year period. That would equal about $281 million in tax revenue lost to the state. The Globe failed to point out the ratio of revenue lost to tax deductions claimed is only seven-tenths of a percent. Moreover, if you look at the total amount of deductions claimed by all 128 companies - $178 billion – the total estimate loss to state coffers is $535 million, or three-tenths of a percent. The Globe also failed to mention how many people are employed by these companies. It seems to me if 128 companies are big enough to ask for almost $180 billion (almost 10 times the state budget) in tax deductions, they probably provide a lot of services to the state in terms of employment, healthcare benefits, capital infrastructure, and municipal revenue. So much for investigative reporting.
The Boston Globe should just come clean and tell us the real reason for this article: laying the foundation for more taxes. Tax revenues have been falling for over a year now. Clearly, the Patrick Administration is going to need more cash to look good for next year’s campaign for re-election. What better way to pave the way to more taxes than to have the Morrissey Boulevard satellite office point out that, once again, the evil, bad corporations are not paying their fair share?
Earlier this year, Senate Minority Leader Richard Tisei and I filed legislation to repeal the $500 million corporate tax increase all together. The tax increase – believed to be the largest business tax increase ever passed in the Commonwealth – was approved by the Legislature on July 1, 2008 without the support of a single Republican legislator and signed into law by Governor Deval Patrick the following day.