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Critics Say Speaker's Tax Loophole Plan Leaves Holes in State Budget

February 18, 2008

Boston, MA - House Speaker Sal Dimasi has pitched a plan to compromise with Governor Patrick on closing corporate tax loopholes. Some say Dimasi's plan falls short of the ultimate goal, however, which is raising revenue to make important investments and pay off a budget deficit. Dimasi's plan would close two loopholes, one that allows businesses to shift profits out-of-state to pay fewer taxes in Massachusetts. It also would lower the business tax rate from 9.4 percent to 7 percent.

Carl Nilsson with Neighbor to Neighbor, a Massachusetts-based grassroots organization that works on economic justice issues, says the tax rate cut makes the plan a short-term fix.

"We're happy that Speaker Dimasi realizes that corporations shifting their profits out of the state is a problem, but this huge cut in the tax rate is totally unaffordable."

Nilsson believes making investments in education and infrastructure, rather than cutting the tax rate, would make Massachusetts a more attractive business climate.

"If you look at the factors businesses' decisions are actually based upon, the state corporate tax rate is probably the last thing on the list. They're much more concerned about whether there are qualified workers in the state, and if it's an affordable place to live."

The Governor has proposed a slower and smaller reduction in the business tax rate. Critics of Patrick's plan argue closing tax loopholes is essentially raising taxes, and businesses should be compensated for that. Nilsson says he expects a decision to be reached within a month.

Kevin Clay, Public News Service - MA