The business community has a right to be worried about Governor Patrick’s so-called loophole closings. Proposed under an umbrella reform bill by a special commission dominated by Patrick appointees, the closings would throw a monkey wrench into the decision making processes made by businesses. Corporations, like individuals, respond to incentives and avoid disincentives. An ideal state corporate tax should be broad with a competitively low rate. It should be predictable Patrick’s plan shaved but a point off the already high effective rate.
Return To Taxachusetts?
Michael Lanava, business resource manager for the Worcester Regional Chamber of Commerce, said he sees many businesses checking with their accountants on what the changes would mean to them.
“They’re just trying to figure out, if this is the case, what will the impact be on the bottom line,” he said.
That flurry of activity at accounting offices could indicate another problem with the proposed tax code change, according to Eileen McAnneny, senior vice president of the Associated Industries of Massachusetts, which opposes the changes.
The governor suggests the tax code changes would bring in $297 million in new revenue. But McAnneny says that combined reporting, in particular, is a complicated proposition that may still offer companies ways to minimize their tax burdens. Besides that, she says, the rule could push multi-state companies to shift resources to states with lower taxes.
Ellis argues that the tax code changes could also hurt the state’s prospects for attracting new companies. Over the past 15 years, he said, state officials have done a good job of shedding the “Taxachusetts” image.
“Then all the sudden we want to change that course? I would suggest that’s a bad tack,” he said.
Can the state GOP capitalize on this issue? Will the public be able to comprehend this critical issue? Is corporate tax policy one reason why job growth has been sluggish over the years?
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