Panel backs Patrick proposal on corporate tax code
Draws fire from DiMasi
A special commission narrowly approved one of the corporate tax code changes sought by Governor Deval Patrick yesterday, prompting an angry response from House Speaker Salvatore F. DiMasi, who said the commission should set aside the recommendation and "get back to work."
"This report contradicts the goals of the bipartisan, public- and private-sector commission we created and undermines future deliberations of the task force," said DiMasi, who has opposed Patrick's tax changes. "All points of view must be reflected in the commission's work, and all aspects of the tax code should be examined in order for this process to be fair, open, and inclusive."
But aides to Patrick said that the commission did exactly what it was supposed to, by issuing an interim report on changes that could bring in revenues in fiscal year 2008, which begins July 1.
"Today, the tax commission's majority vote clearly reflected the agreement and intent agreed to by the legislative leadership and governor," said a statement issued by Patrick spokesman Joe Landolfi.
The conflict seemed to endanger what had appeared to be an initial victory for Patrick in his quest to collect more money from corporations by changing the business tax code. Earlier this year, he proposed closing seven so-called corporate tax loopholes, which he estimated would raise $295 million in the coming fiscal year and $500 million annually thereafter.
The change supported by the commission yesterday, known as "check the box," would require corporations to register as the same kind of company on both their state and federal tax forms. The tax change, if adopted by the Legislature, would raise about $100 million in fiscal year 2008, which begins July 1.
This money could potentially help Patrick pay for some of his expensive programs in education, life sciences, tax relief, and public safety.
"To me, this is the political equivalent of low-hanging fruit," Patrick said, pointing out that 45 other states have already adopted the "check the box" rule.
The 15-member commission's vote mirrored the sharp divisions among the leaders who appointed its members. Patrick's five appointees voted for the report and DiMasi's five voted against it, while two of Murray's appointees opposed it and three supported it, for an 8 to 7 vote.
Commission members who supported the change said it would replace convoluted and confusing tax classification rules with a simpler, fairer system at little cost to the state's competitiveness, since most of the rest of the country has already adopted the rule.
"We're against the tide of the whole US," said Alan LeBovidge, the outgoing state revenue commissioner and a Patrick appointee to the commission.
Opponents argued the administration was rushing through an important policy change before the commission had time to thoroughly analyze it.
They said it made more sense to issue all of its recommendations in its final report, due Jan. 1.
"I don't like the message that we're sending to industry and corporations in the Commonwealth," said Representative John Binienda, House chairman of the Joint Committee on Revenue. 