One of the big reasons politicians in Massachusetts get away with raising taxes and piling on regulations is the fact that they make legislation so complex that people like you and I can’t understand it without the help of an expert.
The legislature’s recent move to close “tax loopholes” is just another instance of this.
Luckily, we have friends like the Beacon Hill Institute who can translate for us. In today’s Globe, Prof. Angelini and Prof. Tuerck give us the bottom line:
The new law closes some loopholes by instituting combined reporting, which makes it harder to shift income to other states, and a check-the-box provision, which requires Massachusetts firms to choose the same tax status for state law and federal law. But it does nothing to improve compliance by nonresident shareholders or partners who don’t pay taxes on flow-through income from Massachusetts S-Corporations or partnerships. Nor does it stop corporations from taking advantage of tax dodges such as paying salaries rather than dividends to shareholders or leasing property from shareholders.
As a sop to business, the House will cut the corporate tax rate first to 8.75 percent and eventually to 7.5 percent. But, at the end of the day, Massachusetts corporations will find themselves paying more in taxes and, as a result, looking for ways to move plant and payrolls out of the state.
They go on to recommend a bold and controversial solution here in Massachusetts…
Simplify the darn thing:
If state leaders had really wanted to reform business taxes, they could have done so. In a recent report, the Beacon Hill Institute showed how the state could simplify the business tax code, restore equity, and make Massachusetts an attractive destination for investment, with almost no loss in revenue. It could cut the tax rate on corporate income all the way to 5.3 percent (the same as the individual rate). It could eliminate double taxation, the tax on tangible property, and the minimum corporate tax, and offer single-sales factor apportionment to all entities. This it could do by taxing business only at the entity level, adopting combined unitary reporting, and ending all tax incentives. The economic return would consist of thousands of new private-sector jobs and millions of dollars in new investment.
Whole thing here: http://www.boston.com/bostongl…
So next time the Democrats talk about the need to raise taxes, ask them if they’ve actually read any of the research on the subject. When they answer “no” (which they know they will) take a minute educate them. As John Adams said “Facts are stubborn things.”
Don’t let them forget the facts!