As .08 and MassLib have already noted, the regional president of Verizon has free advertising space courtesy of the Globe an op-ed in today’s Globe arguing that the gubmint should keep its grubby, tax-lovin’ mitts off their valuable telephone poles. Sco has done an excellent job explaining how Verizon is talking out of both sides of its mouth here, wailing about property tax being imposed on its property (imagine that!) while simultaneously withdrawing hundreds of millions of dollars of property from the tax rolls, and offshoring other assets when they can get away with it. And MassLib does a nice job contrasting Verizon’s absurd CEO pay with its small-business-like plea for tax fairness.
Note the op-ed’s threatening overtones (emphasis mine):
Yet some view the telecommunications industry and its massive investments not as critical technology infrastructure, but as a way to raise taxes. For national carriers that compete for capital investments within the respective companies, where’s the incentive to stay and grow in Massachusetts? …
Removing productive technology investment incentives will accomplish two things: Consumers will pay more and businesses will have another reason to avoid Massachusetts.
Nice.
And those of you who don’t get the dead tree edition of the Globe might have missed the full-page ad that Verizon took out on page A9, which is even more overt. I’m reprinting it in full as a public service (emphasis mine).
An Open Letter to Massachusetts Taxpayers
April 10, 2007
To Our Neighbors in Massachusetts:
There’s been talk recently about a proposal before the Massachusetts Legislature to raise certain taxes on the telecommunications industry.
The idea offers a quick fix that has long-term negative consequences for those of us who love living in Massachusetts and are planning a future here.
The tax proposal places an additional tax burden of $140 million per year on the communications industry alone — above the $492 million our industry and our customers already pay in state and local taxes.
That’s $140 million less to grow great new long-terms jobs in communications and technology sector businesses next year. $140 million less to give you the fastest broadband speeds, and the hottest new entertainment options, $140 million less to ensure that Massachusetts businesses have the best and latest technology.
Over the past several years, the Massachusetts Legislature has had a solid track record of managing the state’s tough budget challenges while promoting strong business and economic growth. Many lawmakers know that a massive tax hike on one business sector has no long-term benefits to working families and employers who envision a future here. We don’t want to see our state lose jobs.
Fiscal policy that promotes technology innovation and job, business and economic growth will keep tax revenues flowing into the Commonwealth and young Bay Staters from heading South or West in search of new opportunities. Verizon alone spent $600 million in new capital upgrades in Massachusetts last year and we’d like to do more. But there’s a cloud hanging over the state. We ask the Legislature to continue to stand up for tax policy that promotes our state’s long-term prosperity and reject any quick and burdensome tax fixes that stifle innovation and economic growth.
In return, we pledge to work together to continue to bring you the newest and best technology our industry has to offer to help Massachusetts grow.
Our customers, our residents, our union members and all our employees deserve nothing less.
Donna Cupelo
Region President
Verizon MA and RI
Myles Calvey
Business Manager
IBEW Local 2222
Wow, what garbage. Read that, then read sco’s and MassLib’s posts again, and then marvel at the chutzpah apparently possessed by Ms. Cupelo, whose moniker appears on both the ad and the other ad op-ed.
Memo to Theresatore DiMurray: Don’t submit to this kind of thing. Do what’s right for the state. You know what that is.
Let me just, for additional emphasis, repeat a point that I made on my blog.
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Verizon’s Boston Property Tax bill 2003: $3,000,000+
Verizon’s Boston Property Tax bill 2005: $9,307
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Telecoms in Massachusetts have been exploiting the hell out of this provision in the tax code over the past few years. This is a new phenomenon. They were creating jobs, providing phone service, expanding their operations all before they started agressively taking advantage of the loophole.
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The exemption is a privilege. They abused it. They should lose it.
This is Verizon Wireless’s Tax bill, which is a subsidiary of Verizon, or at least was in 2005.
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My point still stands, though.
Them’s a lot of words. Let me shorten it for you.
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Maybe they will raise rates just out of spite, but it seems to me that there is so much competition in telecom these days — long distance carriers, cells, VoIP, etc — that raising rates is a risky proposition for any one company.
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And not for nothing, but they didn’t seem to be too keen on lowering rates while they were taking $1.4 billion off of the property tax rolls between 2002 and 2005. What so different now in 2007 that they can’t pay those taxes at a 2002 or 2003 level?
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I cannot find any evidence of increasing rates in any of the states that have repealed this or other telecom exemptions, and even Verizon is not threatening rate increases, they’re threatening jobs and growth.
Corporation bear no spite. They’re not people. They win or lose the tax increase battle and adjust their pricing accordingly.
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This doesn’t just affect Verizon in Massachusetts. It affects all the telecoms in Massachusetts.
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So, let’s see. I’m the CEO of Verizon. Costs go up. Where do I turn.
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a) decrease the CEO’s salary?
b) decrease the shareholders’ dividend?
c) decrease the salaries or hiring of employees?
d) increase rates?
e) trundle down the money tree growing in the basement to fetch some cash?
f) your suggestion?
Have you looked at a Verizon bill. Here’s mine:
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Services: $19.53
Federal Subscriber Line charge: $6.50
911/Disability access fee: .99 (what’s that?)
Federal excise tax: .78
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Is it so hard to imagine a new line call Mass property tax?
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Corporations are passthroughs. Nothing more. Tax hikes hit customers and employees.
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Or, I’m wrong. If so, then where does the tax hike money come from?
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While every single other business (except those incorporated in Delaware, of course) has to pay property taxes?
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I don’t think anyone’s arguing that without taxes, everything in life would be cheaper. But why does Verizon get special treatment?
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And I also missed the drop in rates when the loophole was first introduced.
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That’s because you weren’t born. 1915.
But telecoms did not take advantage of it with a vengence until much more recently, as I have tried to point out repeatedly.
You forgot an option:
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It seems as though, once upon a time, businesses actually tried to innovate to make money — they didn’t depend on shirking tax responsibilities. Instead of hiring high-priced lawyers who can figure out how to eliminate a few hundred million in expenses in one fell swoop, they’ll have to do it the old way — by making sure that their products are desirable, moving forward; by making sure that their employees are well-trained and efficient.
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This kind of crap is killing our country. Instead of working hard and figuring out how to operate a call center better, or inventing something that makes call centers less necessary, these companies are moving the work overseas — virtually assuring that no one from the USA will be able to invent something to improve them, because inventions are usually bottom-up, need-based, rather than top-down, idea-based.
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Bottom line: Verizon was handed a big basket of money a couple of years ago. And they celebrated by jacking up their corporate pay immensely. The party is over, they had their fun, now its time to work harder to make that money.
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Why do conservatives demand different rules for corporations than they do for individuals? Conditions should never be soft for individuals, lest they become lazy and dependent. Well, then the same goes for our corporations — making it harder for them only makes them better and stronger. Coddling companies that can’t compete is not in anyone’s best interest. If Verizon pulls out, that opens the door to someone more agile, with better ideas.
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Excellent question! Really. We (I) demand different rules for Corporation contrasted against Individuals because Corporation AREN’T individuals.
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Corporations get their cash from and give their cash to individuals. Corporations are just a conduit.
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This tax abatement went to shareholders and employees and customers and that’s where Verizon will get the cash to pay for the tax hike.
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Corporations are much, much more than just a conduit.
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Even using your description, corporations are a conduit directing money from regular people to wealthy people. They exist to maximize their profits, not their employee salaries. To a corporation, an employee is simply an expense.
While I disagree with you often, you’re rarely clearly wrong. But you are here.
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Corporations have personhood. Maybe they should or shouldn’t, but in tUSA they do.
I don’t care what wikipedia says.
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Various courts have extended certain Constitutional rights to Corporations, but that doesn’t make them people.
check out this timeline.
But until I see a Corporation walking down the street, a Corporation isn’t a person, and needn’t be similarly treated.
but legally, they is.
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In any case, it’s a tangent, so no worries anywho.
When the SJC majority rules that Corporations can marry, then I’ll agree that Corporations are legally people. Until then, they’re not.
voila
Use the market.
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Telecom is pretty dang competitive, and growing more so as multiple technologies to transmit voice bits grow stronger.
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His stock options — where he makes lots of money — will be worth a whole lot less if Verizon loses customers. So, this off-handed argument that they’ll simply raise prices to make up for the entire tax bill is crazy-talk. It doesn’t pass the common sense test nor the MicroEconomics 101 test.
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Ultimately, I’d expect some amounts of a, b and d, mostly b. The market is too competitive for much of d or much (any) of c. a is untouchable if we’re talking base salary, but reducing dividends is a big cut in his own salary.
You tax increasers have one good argument. It’s this. The transfer of cash to the towns/cities will be spread out so that it’s a small affect on a lot of people.
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Spread the pain, and call it a “loophole” to pretend it’s not a tax increase.
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But, it’s still a transfer of cash from me and you to the towns, and that’s what a tax increase does.
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And, to your “the market is too competitive for much of a tax increase”. That’s not true. These are Mass companies, doing business in Mass, selling to Mass residence. The tax increase will be on all telecoms similarly doing business in Mass; all telecoms can pass the tax on with no loss of customers. And they will.
I’m serious. Sprint doesn’t own poles here, does it?
But even not, if the cost of the Verizon pole goes up, the rent to any company would also increase, so Sprint would pay more to rent the pole.
if it was a situation where the municpalities “own” them but the the utilities are granted right-of-way on them in return for maintenance.
If so, then why would the utilities pay property tax on property they don’t own?
I’m serious too. If the telecom tax loophole is closed, will that act as an incentive for Verizon to get rid of the poles and put its cables underground? Maybe potentially there could be some excellent secondary effects. Or will they then have to pay a tax on the underground easement? It would be so nice to get rid of the poles…
Hmmm…sounds like a porn website name. Putting cable underground is big money, speaking as someone who just buried 425′ of cable.
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Anywazz, if memory serves, I think that even the underground Telecom equipment is exempt.
The tax will only be on telephone companies.
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If I want to switch my telephony to VoIP through Comcast, for example, I am unaffected by this increase.
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So you’ve eliminated the likelihood of them raising rates.
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We’re now down to 5 choices. Where will the tax hike cash come from?
Gary, the exemption is the money tree in the basement, and they’ve been fetching cash from it for the past five years.
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They can do whatever they did before they decided they were too good to pay property taxes in 2002.
But come on. Throw me a bone. I’m right on this. There’s no money tree. And I’ll guess that CEO isn’t going to cut his/her own salary.
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The tax hike will be covered by a combination of shareholder, employees, and telecom customers. It’s very small per capita, but it’s a tax hike and, if passed, amounts to the Legislature saying, we’re going to take cash from shareholder, employees, and telecom customers and give it to the Towns. You may think that’s fair, and I may think it’s unfair, regardless, it’s a tax hike, and it’s not Verizon that feels the pain, ’cause corps don’t feel pain.
Most of which, I point out, don’t live in Massachusetts. So, we’ve got a transfer of wealth from outside the state to inside the state.
and we’ve had this discussion multiple times.
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VOIP and coax-based telephony allow phone calls now, and in Massachusetts. The companies offering these services are currently paying their share of property tax, unlike Verizon.
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So, when the loophole gets closed, their (VOIP, coax) costs won’t increase, and this competition is precisely what will keep Verizon from yanking up its fares.
I am a consumer. My telecom costs go up. Where do I turn?
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a) Switch my long distance carrier.
b) Drop my landline completely and switch to cell service.
c) Drop my landline completely and switch to VoIP.
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Consumers have choices now they didn’t before. But if I’m a telecom and everyone else is raising rates, I’ll eat the taxes in the short term to get the consumers looking for rate relief.
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Right now the median property tax in Boston is $3,093 for a single family. So, that means that you and the neighbors on either side of you pay the same amount of property taxes to the City of Boston as does Verizon, a company that took in $75.11 billion in FY05.
whether or not in actuality they would raise rates, isn’t the standard strategy to threaten increases? that letter looked like corporate clip art to me. classic. i liked this bit: “burdensome tax fixes that stifle innovation and economic growth”. yeah, growth of the CEO’s billfold. when you can’t make the mortgage payment on your summer home in Provence, it is burdensome indeed. (corporate clip art deserves populist clip art in response 😉
This corporate crap is drowning us. And it’s not a pretty way to go. Fight back!!!!
Any survey on general practices?
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Forgive me if I suggest telephone poles are not the way to grow our state’s high tech industry. It’s a legacy business. The tax will be passed on, to the extent Verizon can wing it, to consumers, but I think most consumers would be OK with that as compared with a local Prop 2.5 override.
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This would simply be a way to put telephone poles on the local tax base, right? No way the state could ever grab the bucks, except in the time honored tradition of unfunded mandates and regulations?
Most every other state has a telecom excise tax at the local level. In 2004, Virgina’s was the highest at 26.99%, though I believe they have since reorganized their tax code. Fifty-state data here.
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If you lived in North Carolina, where they tell us all the jobs are going, your local share of the telecom excise tax would have been 12.36% in 2004. In Massachusetts, 0%.
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That of course, is different than what we’re talking about here, but it’s good information to have about the relative costs of telecom here and in other states.
There was a post here not too long ago about residents in Western MA needing better telcomm infrastructure.
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I’d say use this as a bargaining chip. Property tax exemption on the poles in exchange for ensuring the entire state has the infrastructure needed for today’s communictions. If it isn’t done already, require that the poles need to be multi-vendor — cable, phone, electric — and stipulate that the pole owner cannot monopolize their use.
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I claim no expertise in this area, but it seems to me that if we are going to increase our revenue stream over the long term, we need to put some investment into generating revenue through growth vs. just collecting taxes. The deal with Verizon can be considered an investment as much as incentives to renewable energy or biotech would be.
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The question is not of “lost” revenue, but whether we are getting a return on our investment.
quality, reality-based arguing. love it. learned a lot.
If our taxes are so flippin high, then leave. Oh, you can’t? You have too much invested here? You’re thinking that we’d need to raise taxes a lot more for it not to be worthwhile to supply telephony and other services to a highly-educated, densely packed, high bandwidth-use population?
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Heck, Verizon can leave, and someone else will come in. No skin off my nose.
I have had difficulties with their residential AND commercial services. They are a terrible, crappy service. Some of the local companies they hire are good, but can do nothing when it’s Verizon who f-‘s up. Luckily, for DSL and phone there have been other options. Verizon lost our business on several fronts over the years.
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I also hate Comcast, but that’s another story.
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And I reiterate others’ comments, when Verizon took advantage of the loophole in large amounts in the last couple years, saving them millions, where the flippin’ hell was MY rate reduction? I think we can safely say, screw Verizon.