Deval Patrick's New Corporate Taxes!

Patrick pitches budget to business leaders

By Jay Fitzgerald
Boston Herald General Economics Reporter
Wednesday, February 28, 2007 - Updated: 02:03 PM EST

Business leaders remained cool to Gov. Deval Patrick's plan to raise $295 million in new corporate taxes, despite Patrick's insistence the move won't harm the state's economy.

"It will increase the cost of doing business," said Paul Guzzi, executive director of the Greater Boston Chamber of Commerce, which sponsored a breakfast event this morning in which Patrick defended his newly unveiled $26.7 billion state budget.
Patrick, facing a $1.3 billion deficit and hoping to carry through on many of his campaign promises, received a standing ovation from business leaders before his speech at the Boston Park Plaza Hotel this morning.
And Patrick didn't shy away from his attempt to close "tax loopholes," as he called them, in an effort to close the budget gap and fund programs.
"Look, I know that taxes are about the investors' money and I want companies, just like each of you personally, to keep as much of your money as you can," said Patrick. "It's your money. But it's also your broken roads.It's your over-crowded schools and unsafe streets. It's your broken neighborhoods and your broken neighbors."
He said everyone, including businesses, have to chip in to meet the state's needs. He also noted studies showing Massachusetts' corporate taxes are among the lowest in the nation.
"What we want to address, and what we ought to address, are gaps in the tax laws, discovered and exploited by clever tax accountants to extract advantages the Legislature never intended to confer."
But Guzzi, while saying business leaders intend to work with Patrick and lawmakers on the budget, said the chamber opposes the tax moves.
After the speech, Massachusetts Taxpayers Foundation President Michael Widmer said Patrick's corporate tax plan is more than a closing of loopholes.
"It's a major change in the tax code," he said, but cautioned that if businesses are scared away from Massachusetts by the new tax policy, the losses in jobs will offset the gains in revenue.
"This will discourage job creation and exacerbate our long-term problems," Widmer said.
The proposals by Patrick would, among other things, prohibit multi-state firms from funneling money to out-of-state subsidiaries to avoid taxes here; crack down on firms that rent property to themselves and deducting those expenses on tax forms; and force corporations to identify their corporate structure the same way on both federal and state tax returns.

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