The following is cross-posted at my blog.
The Coalition of Social Justice sent a very important email.
Next Tuesday (April 8), the House is expected to vote on a proposal that would close corporate tax loopholes and cut the corporate income tax rate by 25% – costing $466 million!
The Speaker of the House, of course, is billing this as a great compromise: he agreed to cut corporate tax loopholes, but his “compromise” is so generous to Big Business that their taxes will be slashed an amount no ordinary citizen would ever be so lucky to receive.
It gets even worse.
Meanwhile, 103,000 corporations pay the minimum corporate tax of $456…while the average Mass. family pays $2700 in taxes. The proportion of state and local taxes paid by corporations in Mass is way below average – 42nd in the country! This is not fair!
Amen! The economic times are so bad – and getting so desperate – that my hometown of Swampscott is about to cut all of the high school’s technical education classes. This comes one year after they shut down the best elementary school in the district, which consistently performed in the top 10 schools on the Massachusetts MCAS and was one of the state’s few Compass schools. But it’s okay to cut corporate taxes now?
It’s good to see the Speaker willing to compromise on Governor Patrick’s best ideas, and propose a few good ones of his own – from life sciences to renewable energy – but this just isn’t good enough. We, as a state, are facing a billion dollar hole next year – and none of the politicians seem willing to do the courageous thing and raise taxes, even by a tiny fraction. Something’s gotta give and so far it looks like only the middle and working class is the one sacrificing. Not good enough.
Contact your legislators. Tell them to make sure corporations in Massachusetts pay their fair share – that’s all, just their fair share. We have real problems now and cutting corporate taxes isn’t the solution. Enough is enough.
when the projected revenues collected from corporate taxes are projected to be the same going forward. Combined reporting will more accurately measure the income of multi-state corporations. If more of the corporate income base comes from multi-state corporations and the tax rate is cut to be revenue neutral then the winners will be the small MA corporate taxpayers who currently cannot shift their profits to out of state subsidiaries. Its inaccurate to describe this as being generous to “Big Business” when the actual winners will be local small and mid-sized businesses.
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p>I’m also not sure what your point is regarding the fact that 103,000 corporations pay the minimum tax of $456. Firstly, those corporations do still pay their share of sales & use tax and property taxes. Secondly, the corporate excise tax is imposed predominantly on a corporation’s income. If a corporation has no income in a given year then they pay the minimum tax. Individual families pay their taxes because they have income each year. Are you proposing a different system of imposing taxes on corporations not based on the income the corporation earns? Why is it such a problem that these corporations pay only $456 in tax when they haven’t earned any income? What’s the “fair share” of income taxes a corporation should pay when they lose money in a given year?
the loopholes are being cut. For some businesses, this will help more than most, for others it will hurt more than most. Irregardless, it was fair to cut these corporate tax loopholes. It’s not fair to cut corporate taxes, not when it’s our schools, our police, our roads, our bridges and our health care taking the hit. The proportion of corporate taxes collected in Massachusetts ranks 42nd in the nation. Meanwhile, the tech department in the town I graduated from is about to be cut – and the property taxes residents in my town pay are already among the highest in the state. Inexcusable!
The revenues collected from the MA corporate excise taxes is projected to be exactly the same. But a larger percentage of it will be collected from larger multi-state corporations than smaller local corporations. Combined Reporting does not close loopholes. Under the current separate entity system a large multi-state business that usually consists of many corporations within an ownership group only owes MA taxes on the income of the individual corporations that have nexus in MA. Its not a loophole, its simply how the separate entity reporting system was designed. Combined Reporting measures the income of the entire group that files a consolidated federal tax return and then imposes the tax on the entities with nexus based on the entire group’s income. Its an entirely different system that more accurately measures the income. Its simply not fair to say that just because a system of measuring income is inferior to another system of measuring income, that enacting the superior system is somehow “closing loopholes” in the inferior system.
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p>You still didn’t address my other point. Whats the problem with a corporation not paying any taxes if the corporation earns no income. I’m not sure why its relevant to the bill at issue, since 9.5% of 0 is exactly equal to 7% of 0, but you seemed to imply that its a problem that many businesses that have no income don’t pay any income tax.
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p>Your post used incendiary language like “slashing rates” for “Big Business.” You now seem to imply that passing a revenue neutral corporate tax bill will somehow lead to cuts in many of the public services MA residents enjoy. You also fail to mention that those high property taxes that you pay are levied at an even higher rate on those small businesses in your community regardless of whether they earn income in a year. I found several substantive problems with your post. Perhaps you could respond to the substantive points I’ve raised instead of using the same incendiary language as the original post and listing government services that you like.
… that the loopholes were ‘bad’, then shuffling things to be revenue neutral is in effect an admission that although they got away with the ‘bad’ there will be absolutely no consequences for it. If one is not willing for there to be consequences, how ‘bad’ can one really claim to think the loopholes really are?
How can you assume loopholes were or are bad? It’s just the way the law is written. Taxpayers are just doing what the Legislators wrote.
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p>’Loopholes’ are, for the most part, areas of law that some people think is unfair: churches are exempt from income tax. Loophole?
… can certainly be shown by argument to be or have been good or bad. In the case of fiscal laws, laws can be written in such a way as to provide a free lunch. Granted that, as such, you can’t blame people for playing the game with the rules as defined, one could nonetheless claim that specific rules may be or have been ‘good’ or ‘bad’ and that gains from a ‘bad’ rule may be undeserved or worse.
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p>”How can you assume loopholes were or are bad?”
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p>I ‘assumed’ no such thing (please don’t put words into my mouth). Like any law, goodness or badness should be demonstrated by argument and evidence. It seems to me that calling something a ‘loophole’ is merely a linguistic way of claiming (or at least suspecting) that argument would show it’s ‘bad’ in a sense of fairness. As you wisely point out, churches and taxes are another example of disparate tax rules and that most people don’t call that situation a ‘loophole’. This is probably owing to people generally approving of the special tax status of churches as a way of promoting a perceived good. As you have said in other threads in the past… one person’s loophole is another person’s sound policy. I agree totally… the argument is therefore on its soundness. Bringing up an example that is similar and considered sound is certainly an acceptable piece of evidence in favor of a proposition, but is also hardly a thorough examination of soundness by itself.
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p>But the fact that we aren’t raising revenue will. Earth to Power Wheels: We have 1 billion dollar deficit (did you not get the memo?). We can’t afford to slash business taxes, even if we end loopholes and require combined reporting. I know the issues here and I know the most important fact of all: we don’t have enough revenue! Core services are being slashed. Believe it or not, “slashed” isn’t an incendiary term – it’s an accurate description.
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p>I’m not out there to stick it to the small businesses – the vast majority of my postings over the past few months (casino-related) had to do with PROTECTING small businesses – so, really, get off it. Obviously, businesses should be taxed on their earnings, so stop putting words in my mouth.
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p>And, please, get a grip: if we don’t do something soon, we’re going to go bankrupt as a state. If you can’t handle that reality, maybe posting in a reality-based community isn’t exactly the perfect forum for you. I hear there are lots of people who think things are swell over at RedMassGroup.
They’re not loopholes. I’ve explained it several times. You just continue to repeat the basic talking points without demonstrating any deeper understanding of the MA corporate tax system. Half of the states in the country have had combined reporting for the past 20 years. There is nothing unintended or underhanded about what corporations have been doing for the past 20 years to reduce their MA tax burden. The MA legislature has simply lacked the will to impose a proven and more accurate system. Now they are and its a great step for better tax policy, but calling it a loophole is dismissive to the entire concept of combined reporting and is just simply incorrect.
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p>You still haven’t explained why you cited information in your original post regarding the number of corporations that pay the minimum tax. It is simply irrelevant. Reducing across the tax rate does not change how income is calculated, merely the amount of tax after income is calculated. I assure you, 9.5% of 0 is exactly equal to 7% of 0.
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p>To bill this as a tax break for “Big Business,” as you did in your original post, is incendiary and continues to demonstrate your lack of understanding of the issues at hand. The same amount of corporate excise tax will be collected, but more will be collected from multi-state corporations and less will be collected from mid-sized and smaller corporations. You feel that these smaller and more local businesses that have been carrying the water by contributing more of the corporate tax base than their larger multi-state counterparts don’t deserve a reduction in their rate. I do. You started by saying that you simply want corporations to pay their “fair share.” I think smaller local businesses have been paying more than their fair share for a long time and now they should get a break.
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p>If its necessary to raise taxes in order to close the budget shortfall then the powers that be should do it in a straightforward and honest manner instead of selling it to us as “closing loopholes.” You lower the tax policy discourse by repeating incorrect talking points and citing irrelevant information. Theres nothing reality based about that.
A ‘3’ if for no other reason, that you used the word ‘irregardless’.
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p>Say here’s one of the 103,000: friends of mine own a cleaning business. They (husband and wife) clean offices at night.
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p>They do business with their wholly owned corporation. (She’s the President, of course). They use a corporation because somewhere along the way they decided they needed to protect themselves from liability if anyone decided to sue them.
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p>They pay themselves a salary, and of course pay tax on that salary. After all expenses, including their salaries, they have to file that corporate return and pay that $456.
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p>I say, we smoke ’em. $456 isn’t enough. Storm the walls! Viva la revolucion!
the fee was probably higher $456.
I didn’t set it up. Corps. So old school.
Is your friends’ corporation representative of that 103,000? Do you know, yea or nay?
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p>I could imagine that any number of corps are like your friends. But you get silly when you pretend that’s the typical case. You don’t know. Or if you do, demonstrate it and teach us all a real lesson.
in that each one has earned less than $4,800 of income in the given tax year. Thats why the corporation owes the minimum amount of tax, because it didn’t earn enough income to be subject to a higher amount of tax.
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p>Regardless, the post’s point about the 103,000 was irrelevant to the topic of the post, since 9.5% of 0 is exactly equal to 7% of 0.
Burden of proof is on the guy making the argument. Look! 103,000 corps making minimum payments! That’s evil. Change it.
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p>Make the case. I’m happy to rebut.
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p>But I’ll start the analysis for you. DOR statistic are delayed for a couple or reasons. But, the most recent release is 2004. The stats show ‘minimum excise’ corporation as 36,339. A tiny bit off from the 103,000 of minimum excise payers claim in the posting
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p>Ok, so I’ve first carved the 103,000 by 2/3.
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p>I won’t bother to count the S-Corporations, because although they pay the minimum $456, 100% of their income flows to the individuals who pay the tax.
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p>So what do we know of the 36,339. Well, from the same link, fully 50% of them are from the Services Sector. What do we know of the Services Sector:
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p>First, they are the high growth, and high M&A companies. Typically high growth means high investment which means higher amortizable cost which means lower income.
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p>Second, how many mom and pops are in the service sector? Certainly my example of the cleaning business was. I also know of a painting company that uses the same technique of zeroing out the income by paying fully taxable wages to its shareholders. How many total throughout the state? Who knows. But I’m just a poor tax guy out here in the middle of nowhere. I’m guessing my examples aren’t the only 2.
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p>So, are there companies out there that allocate income away? You betcha. 103,000? No f’in way.
Doesn’t shifting income to out-of-state shareholders result in a net loss for this state? Does anyone have any sense of whether the state wins or loses when it comes to capital gains taxes of money earned elsewhere versus lost corporate taxes of money shifted elsewhere?
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p>This sounds like the same problem we face with urban areas. Money is earned in one location, taxes paid (property) in another. Then people in those other areas complain that their taxes are too high, too much leaving their own community.
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p>We might benefit on this one, though, if our residents are more often shareholders than other places.
Unless there aren’t any Mass residents who own stock in non-Mass corporations.
First, I quoted that piece of information. If Charley is right – and the Coalition of Social Justice is wrong, feel free to refute it with numbers. I won’t refute that there are some, maybe even a whole freaking lot, in that 103,000 who shouldn’t be paying any corporate taxes that are higher than the 456. But I’d be willing to bet that there are more than enough who are getting away with what the Commonwealth should consider grand theft. I’m not pretending to be in expert on corporate law in Massachusetts, but I do know slashing the corporate tax makes no sense whatsoever.
You know that you are omitting just a few key pieces of information in your example here, don’t you? How much of that salary is exempt under current tax laws? How many ways are there exactly to hide income legally when running a business? You know the games, and I’m sure you know how they are played as well.
There are two plans (Gov Patrick’s and Speaker Dimasi’s) out there to solve the 1.3 billion dollar deficit.
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p>Here is a link to my comment in another post on the plans. Both plans call for a structural deficit (one time revenue sources – like the withdrawal of money from the rainy day fund). Both plans call for a corporate excise tax cut with Speaker Dimasi’s amounting to 93 million (this year) more in cuts then the Governor’s plan. I have taken my numbers from articles published in the Globe.
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p>I favor Governor Patrick’s plan with regard to closing loopholes and the cutting of in the corporate excise tax. This represents, for a lot of corporations, a tax cut for smaller businesses and raise in taxes for the larger corporations that are using the loopholes. This is why the Governor supports it (according to David Sullivan) and why in my opinion it makes sense.
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p>PS: Any other candidates have a position on this? I’d love to see the other candidates running for the legislature use BMG as a means to express their positions rather than as a press release mechanism. I believe Dan Bosley is a terrific model for other legislators to follow in terms of his willingness to “mix it up”.
I ask this question with all due respect because I’m honestly interested in your answer. Do you support Gov. Patrick’s plan because you feel that out of all the potential revenue sources, the corporate excise tax should provide a larger percentage of the revenues raised by the MA government? Or do you support it because its the most politically expedient tax to increase at present because the increase can be sold as “closing loopholes” to those without a serious understanding of the MA corporate excise tax? Or can you actually argue that the substance of the plan actually consists of closing corporate loopholes? Or do you support it for another reason? I am very interested to read your response.
Speaker Dimasi’s plan (204M in additional revenue from the change) is still a net raise in the corporate excise tax this year as well, just not as much as the Governor’s (297M). Are you suggesting a third plan that nets out the change in tax code? As far as I know there is no plan calling for that type of change.
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p>To answer your question I do believe that some of the changes put forth are to close “loopholes” and some are not. Ideally we could net out the change but I don’t believe we can afford it now, nor would it pass.
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p>Either way I do believe corporations have a responsibility to their shareholders to take advantage of any legal means to reduce their taxes. To do otherwise would put them at a disadvantage to their competition.
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p>Under the Governor’s plan (quoting his budget brief) 2,000 to 3,000 businesses would pay more while 15,000 to 20,000 would pay less.
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for that response. I am not aware of any proposals that are projected to bring in a net even amount of revenue. However, Speaker DiMasi’s is closer to net even than Gov. Patrick’s. Projections regarding the increase in revenue collected after the institution of combined reporting have been wrong in the past, notably in Minnesota where the projections severely overestimated the additional revenue that would be collected. Given some unpredictable projections, I would be comfortable with a plan that institutes combined reporting along with a reduction in the rate that projects a modest amount of additional revenue but does not use that as a major revenue raiser in order to balance the budget.
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p>My comments have focused more on his combined reporting proposal which I strongly believe is a better system than separate entity reporting but is certainly not a loophole closer. Which of Gov. Patrick’s proposals do you consider to be “closing loopholes?”
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p>I appreciate your honesty regarding idealistically imposing combined reporting in a revenue neutral manner but recognizing the political and economic hurdles. However, I would urge you to take a serious look at which revenue sources you actually believe should be increased instead of which revenues are politically expedient to increase. I think a serious evaluation of all the taxes imposed in MA should be considered and if taxes have to be raised, it should be the most favorable from an economic and tax policy perspective.
Why even tax corporations? Why not make MA the US mecca for corporations, the #1 destination for American business and industry?
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p>Why increase corp excise taxes? (memo: silly progressive mantra to “close the loopholes” and make sure they “pay their fair share” is code for “raise the evil corporations’ taxes.”) It’s a disincentive for companies to stay or relocate or expand in MA.
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p>It’s hard enough to entice firms to MA what with the extra high cost of living the progressive geniuses’ policies have created in imposing their vision of utopia. Why make it any harder for corporate HQ’s to remain in MA? For God’s sake, make it easier!
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p>Why is Fidelity planning for 1,000,000 square feet of back office in RI? Because RI accommodated them, both on the corp excise side and on the key-employee, high-wage side (legislation passed to protect some key employee income.) A million square feet can house 4,000 employees. That’s a lot of income tax on some solid wages. One company expansion like that in MA could generate — what? — $1.5 billion in income tax?
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p>Not to mention 4,000 extra houses, and their property taxes, 4,000 extra car buyers, 4,000 extra restaurant-going, grocery-buying, convenience-shopping households.
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p>Instead of whining about corporations “paying their fair share,” how about spending some mental energy thinking about getting corporations back into the state? Corporations like Fidelity.
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p>Don’t progressives give a s**t about IMPROVING the permanent state economy instead constantly devising ways of making it worse, however incrementally?
happens locally, with small businesses.
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p>Furthermore, what really brings businesses to an area is strong universities, excellent transportation infrastructure and a well-educated population. All of those things cost money, money businesses are willing to pay taxes for if they have to. No one here is saying we need to tax businesses out of existence in Massachusetts – just their fair share. Heck, I’m not even arguing for the tax rate to go up on businesses, just the loopholes to be cut. That’s all. It won’t make a dent in corporate profits and, really, I’m tired of the fact that Walmart’s employees cost this state more in health care expenses than Walmart the corp pays in state taxes – because of a loophole.
what a “loophole” is to you. I’ve made my case above for why a change from a separate entity corporate taxation system to a combined reporting corporate taxation system isn’t merely closing a loophole. Instead it is an entirely different way to calculate a multi-state corporation’s MA taxable income. Combined reporting is a more accurate system that better reflects the way current multi-state corporations do business.
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p>I’ve always thought of a loophole as an unintended and unforeseen consequence of a system of taxation. Walmart transferred its real property to real estate investment trusts in exchange for the ownership of the trust and then excluded the REIT’s income from its MA taxable in accordance with the federal internal revenue code. They took advantage of some glaring holes in the MA separate entity taxation system that were well known and easily manipulated by dozens of other corporations using several similar types of tax planning tools. To say that the corporate structure created by Walmart that enabled it to avoid a substantial portion of MA taxation was somehow unforeseen is naive at best and dishonest at worst. Anyone familiar with corporate tax policy would have foreseen exactly the type of planning Walmart undertook. Anyone familiar with corporate tax policy would also be very familiar with the combined reporting system in place in almost half the states that prevents those type of tax planning tools.
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p>The MA policy makers know exactly what the problem was and exactly how to prevent it. At what point do they share some of the blame for allowing the problem to continue? I would simply ask you to acknowledge that the tax planning tools that were made available to multi-state corporations through the inaction or political cowardice of the MA legislature for the past 25 years are not some type of newly discovered loophole to be closed. It was the foreseen and expected way that things were done under the separate entity system. Now, finally, a new and better way to measure income seems likely to pass. Let’s recognize that for what it is so we can raise the level of tax policy debate in MA.
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p>I agree! I don’t get why you’re so hung up on the fact that I call it a loophole. To me, a loophole is any way that corporations can take advantage of a tax system. I get that it’s different in many ways from traditional loopholes, but a loophole is a loophole is a loophole. Many businesses get out of paying millions because of combined reporting and that’s just unacceptable (and unfair for Mass-based companies). We both agree that it should be closed, changed – or whatever you’d like to rhetorically call it.
just displays a lack of real understanding as to what combined reporting is. When you file your federal tax return do you consider yourself to be taking advantage of “loopholes” when you deduct mortgage interest, student loan interest, moving expenses, etc? Or are you simply figuring out the proper amount of tax that you owe under the federal income tax system? Its like Mike Huckabee arguing that he wants to “close loopholes” in the personal income tax system by implementing his Fair Tax system. Its a policy choice as to what system that he feels is better. Hes not (to my knowledge) dumbing down the political debate by arguing that he just wants to “close loopholes.” And if he has done that then I would strongly disagree with him, just as I’ve disagreed with you in this post.
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p>I believe that referring to combined reporting as “closing loopholes” has been a way for Gov. Patrick and others to raise the revenues collected by the corporate excise tax in a politically expedient manner. Instead we should be taking an honest look at which revenues should be increased based on sound economic and tax policy principles.
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p>I’ll start that discourse. Instead of raising tax rates we should keep tax rates as low as possible while expanding and simplifying tax bases. Thats exactly what instituting combined reporting along with reducing the corporate tax rate does. Thats good tax policy. Now lets do the same thing to the Sales Tax. Chapter 64H, sec. 6 includes the exemptions from sales & use tax. They are lettered (a) through (tt). They include sales of: rare coins worth more than $1,000 (ll), boxes to hold film (gg), all clothing without any maximum dollar amount (v), and magazines (m) just to name a few. Lets have a comprehensive review of all the sales tax exemptions and the $ amounts associated with them. Perhaps if we get rid of enough exemptions we could raise revenue while at the same time reducing the sales tax rate and making the MA sales tax system fairer and simpler for all. Then we could even move on to the MA personal income tax…
You want to cut exemptions – loopholes – whatever the hell you want to call them, while reducing the income tax to make things simpler.
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p>If we moved to a progressive income tax and taxed based on income levels, I’d be right there with you, but because we don’t – we can’t afford to both cut exemptions and the tax rate, since we need more freaking revenue.
You’ve given me several definitions of loophole now. You’ve said “any way a corporation can take advantage of a tax system,” “exemptions” and you’ve particularly enlightened me with “a loophole is a loophole is a loophole.” I have a problem with your incorrect rhetoric and I’ve explained why several times. I was hoping you actually might understand after my analogy to Mike Huckabee’s Fair Tax proposal. Apparently not. Once again, I believe that a loophole is an unintended and unforeseen tax advantage. Thats simply not whats happening in our current separate entity system.
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p>The problem that I have with the “loophole” rhetoric is that its an attempt to raise the revenues from the MA corporate excise tax without undergoing a serious economic and policy analysis of the entire MA tax system. I think that if the Governor truly believes that he has to raise taxes, he should do it honestly and make his case to the public based on accurate and informed logic. He is trying to raise taxes in a politically expedient manner by claiming he is merely “closing loopholes,” and you are helping him by repeating his inaccurate talking point.
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p>To address the remainder of your comment, combined reporting does not cut any exemptions so it doesn’t even meet your latest definition of a loophole. Maybe now you’ll stop repeating that talking point. And I’m not sure why you’re now bringing up the idea of a progressive income tax now. (I am going to go out on a limb and assume that you mean a progressive personal income tax). Perhaps that was your attempt in having a real policy discussion. The only thing missing is the realness and the policy discussing.
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p>Some advice – if you want to be taken seriously then don’t start that discussion with a post claiming that you want to eliminate the “loophole” where people making more than $X still only pay tax at the 5.3% rate.
You either aren’t concerned about the deficit, or think there’s plenty services left to cut, or think that we should raise taxes on people but not businesses. All of them are the wrong priorities.
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p>Also, learn how to rate.
I thought your last few comments were worthless so I rated them as such. You have in most cases failed to address the criticism I have leveled against you and even when you have, you continue to display a lack of understanding of the subject matter in a post that you started.
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p>I think its fair to give a tax break to the small businesses have been contributing a large share of the corporate tax revenue because the legislature has lacked the guts to fix the system over the past 25 years. Speaker DiMasi’s plan that you have railed against here still projects a modest increase in the total revenues collected from combined reporting along with those tax breaks. I think thats appropriate. I proposed above that we take a similar approach with the Sales and Use tax by broadening the base and lowering the rates. The exemptions from the Sales and Use tax are lettered (a) through (t)(t). I would like to see an economic projection on what would happen if we eliminated all the exemptions. Could we have a modest decrease in the tax rate and still project increased revenues? I would also like to see as economic analysis if the Sales and Use tax were expanded to services combined with a more significant cut in the rate. What if we taxed rounds of golf, health club memberships, concert tickets, home decorating services, etc. at 3% along with computers, furniture, and meals. Would that raise more money and be fairer? I would be interested in that discussion.
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p>I never said I am unconcerned about the projected deficits for the next fiscal year, or that I think enough costs can be cut to cover it. You are putting words in my mouth and you have, once again, failed to respond to substantive criticism. For those reasons I will again rate your comment as a 0.
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p>Feel free to discuss your ideas on how we get to a balanced budget as a state without closing the loopholes and limiting the slash of the corporate tax to as small amount as possible – going closer to Patrick’s plan than DiMasi’s.
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p>The few, recent ideas you’ve presented (kudos, I guess), would almost certainly not get us close to a balanced budget.
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p>Furthermore,
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p>Actually, no. A sales tax is the least fair way of taxing a population – and there already exists a 5% sales tax in the Commonwealth. To take one of your examples – computers – everyone in this day and age needs them. There’s a deep technology divide in this state and country. Not only the middle and well off people of this country deserve to be connected into today’s technology: kids, working class and unemployed families need computers just as much (and maybe even more). Computers provide access to information, education, society – and is becoming the #1 way of finding a job. There are consequences when the under and unemployed don’t have access to computers, for starters. There are consequences when people aren’t properly learning how to use them – and thus becoming obsolete with the old technology of this country.
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p>The same can be said of furniture and food and whatever else you planned on throwing in there. Working class and the working poor in this country have almost no discretionary spending – thankfully, we have elected leaders who aren’t going to support such douche-baggary – making your plan not only a bad one, but also unrealistic. The kind of corporate loopholes I’m talking about are so petty, that for many large businesses they represent the tiniest fraction of a fraction of their overall profits (ie taxing telephone polls).
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p>Finally, in terms of rating 0s, they’re limited to personal attacks and off topic/trolling/thread derailment. If you absolutely, positively see no merit or attempt to back up my opinions through logic, quotes, links, etc. – then the appropriate rating is a 3. You talked about having credibility on this board… take it from someone who’s been here longer, dropping 0s on comments isn’t a good way to go about getting it.
Once again, you have completely missed the point. I named some services that are sold but are not currently subject to sales tax (rounds of golf, health club memberships, etc.) and then some tangible objects that are sold and ARE subject to sales tax (computers, furniture, meals) as a way of indicating some discrepancies I see in the MA sales tax system. I think some revenue can be raised by changing the policy to tax sales of services along with lowering the rate in the MA sales tax. Again, computers and furniture and meals ARE currently subject to tax. Its almost as if you have no knowledge at all of any of the taxes currently levied in MA, but you also think that your intuition regarding the MA tax system should be blindly accepted as good policy.
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p>I’m not sure when I ever said that I was looking for credibility. I’m just trying to educate you on the current MA system of taxation. I guess I’m just too much of a douche bag to do it properly. Does that constitute a sufficient personal attack to rate your comment a 0. I’m going to say yes.
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p>Perhaps if someone like you has that kind of high credibility here, then trying to have an informed tax policy discussion might just not be possible.
I wasn’t referring to you, I was referring to taxing the working poor through unfair sales taxes.
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p>Second off, fine. Do whatever the hell you want. I’m done with you. If you want to give my comments 0s, I suggest you put a zero for each and every one I’ve ever written on the board. There’s a handy little way to look up comments by going on other users’ profiles. Please do so. Have fun.
Corporations get to take advantage of the fact that the tax rate isn’t higher than it is. Let’s close this loophole!
Besides excellent transportation — and I challenge that — what do strong universities and a well-educated population have to do with the corporate income tax? We already fund one of the best education systems in the US. We need more money? It’s already on of the top ten most expensive school systems in the country. We need more money? Tell Newton to fund their own $200 million high school. School spending is out-of-control insane.
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p>NH has some of the highest test scores which towns and cities achieve without state aid. And at much lower cost per pupil. We need more money for schools?
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p>And until the MBTA and the MTA stop their fiscal hemorrhaging, thanks to billions of unfunded pension and retiree health benefits they’ll be paying in the future, our “excellent transportation” is a canard. They now need $19 billion just for repairs and maintenance? Where’s the rest of the money going?
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p>And you claim “Walmart’s employees cost this state more in health care expenses than Walmart the corp pays in state taxes.” I think this is fake talking point progressives love to trot out. Do you have a valid, statistical citation for this claim? Do you tax into account the sales taxes generated by Walmart? They’re HQ’d in Arkansas. Leave them alone.
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p>Any why am I paying for are Walmart employees’ health care. Maybe we shouldn’t be paying for them.
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p>Cut the tax rate to ZERO and start getting companies to relocate the HQ’s to MA.
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p>But I didn’t say they did, either. I said that strong universities and a well-educated populace are both more likely to attract businesses to Massachusetts than a low tax rate with low services. Furthermore, a good transportation system and well educated populace are more likely to incubate small start ups that have, in the past, driven Massachusetts’s economy (and in some ways still do). After all, it’s kind of tough to have a start up without a well educated populace that includes the kind of citizens who have the brains and drive to create a new bio-tech or tech company, and it takes a knowledgeable, qualified populace for them to find employers.
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p>Err… try again. While the UMASS system is fairly decent compared to other state systems, it’s state funding bottoms out in the lowest 2-3 in the country per capita.
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p>Also, I had to fix this quote for you:
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p>Also, for your linking pleasure: Walmart DOES cost us more in health care expenses than we receive from them in state taxes. I don’t bring out “liberal talking points” on bmg posts, thank you very much.
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p>Finally, this is quite possibly the funniest quote I’ve EVER heard.
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p>Thanks for the laughs.
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p>Just imagine, if Walmart weren’t in the state at all, think what the cost of those unemployed folks would be. Plus, I’d really miss my low, low prices!
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If Wal*mart was not in the state, think of the opportunity for other businesses, perhaps many of them locally owned. Sure, the prices would be a little higher, but there would be more middle-class local owners, more competition, and probably more people working since multiple businesses wouldn’t be as efficient as a large multinational corporation.
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p>I would rather pay higher prices for goods than higher taxes to support those who can no longer find jobs due to efficiencies being wrung out of the system.
Significant price inflation for groceries and sundries!
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p>Just think of the sales tax revenue when Mom & Pop stores can mark up small appliances by a few hundred percent again!
I’m not anti-corporation. I just don’t think we should provide loopholes that allow for them to cost us more as a state than the taxes they pay us. We’re one of the few states with such a loophole that allows them to get away with this.
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p>Finally, there are plenty of large retail chains out there with “low, low prices” that a) are willing to pay their fair share of taxes and b) treat their employees well – paying a liveable wage and health insurance. Such examples include Costco and Ikea, but I’m sure don’t end there. I’d shop at Walmart if it joined that list, and costumers wouldn’t even notice the differences in prices.
under the impression that Walmart is one of the few corporations that have paid less corporate excise tax in MA under a separate entity reporting system than they would have under a combined reporting system? If you are than you would be very mistaken. If you want to criticize Walmart for not providing health coverage than fine, but I can’t see any logic to your connection between Walmart’s employee health care coverage and Walmart’s MA corporate excise tax returns.
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p>I would also point out that approximately 1/2 of the states are separate entity reporting states. Corporations use the same structures to reduce their taxes in NC, PA, CT, IN, FL, MD, and a host of other states.
The “loophole” you’re complaining about is called the loophole of “captive REITS”. It’s very common throughout 15 to 20 states. Massachusetts, Maryland, Texas, Kentucky are seeking legislation to limit its use as a tax savings device.
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p>I don’t know if Costco or Ikea use it, but I’m certain that Walmart isn’t alone in its use. I’m very certain as I’ve seen the technique used before.
I’m not an expert on the Texas Franchise Tax, but I was under the impression that it was some sort of gross receipts tax that was calculated on a unitary basis. Why would captive REIT legislation be necessary in that case? Unless its not a true gross receipts tax and the rent paid to the REIT is deductible.
You’re right. Texas is unitary after 1/1/08. Breaking news!
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p>I guess the move to unitary was an answer, in part, to the Captive REIT and other combined v. non-combined state income tax issues, just like Mass.
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p>I guess if I were WalMart, or AutoZone, I’d think about spinning off (355) the Captive REIT to the shareholders but eventurally sell enough of it to an unrelated party to break the unitary group. Then, it’s no longer captive or unitary. The shareholders wouldn’t pay tax because there is no Texas individual income tax.
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p>Texas is taking a far less agressive measures toward its corporations: low rate on gross margin only; single apportionment (sales) so that a high capital company isn’t punished with its large investment in the state. Mass should pay attention!
if we instituted a gross margin tax with a low rate then we wouldn’t be able to pick the film production and life sciences industries as the big winners in our tax lottery. Whats the point in having a corporate tax system thats simple and fair when you can make it more complicated and unfair.
But, at the end of the day, the only fair state corporate tax is probably something like:
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p>i) A Corporation’s Federal taxable income ii) calculated on a consolidated basis iii) apportioned based on sales, then iv) multiplied by a single low rate.
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p>THERE’S a progressive idea whose time has come.
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p>Presto. We’ve just cut the audit staff of Mass DOR and cut the overhead at every large corporation in the U.S.
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p>Suppose Walmart, or any company, does business in the State, and hires the poorest of the poor–the minimum wage worker, the MassHealth and Connector Care recipient.
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p>Is your point that because the company pays less in tax than the health care expenses of the employee it just hired it’s an undesireable company?
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p>By inference, you’re saying that an employer in your state must pay health care for all its employees. Is that your argument?
I’d prefer a single payer system, so we could take it out of the hands of employers (and save billions as a country, whilst providing better aggregate health care)… but, under the current situation, then at the very least we should expect Walmart to pay more in state taxes than Massachusetts pays for Walmart employee health care (or lack thereof).
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p>Why stop at Walmart?
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p>Walmart isn’t even one of the state’s larger employers.
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p>Take on the big guys, you know, Bay State Medical, Beth Israel Deaconess, Boston University, Brigham and Women’s Hospital, MIT, President and Fellows of Harvard College, UMASS Memorial.
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p>Each one of those hires more Mass employees than Walmart, and I bet, each one, pays less in taxes than Massachusetts pays for employee health care.
But you’re wrong, anyway.
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p>Each one of those hospitals has employee-health care plans and benefits that far exceed Walmart, or other major retail chains. I was only using Walmart as an example because I knew for a fact that this state pays more toward their employees’ health care costs than Walmart pays in taxes. I wouldn’t be shocked to see companies like Target, Payless (shoes), Old Navy or a hundred other retail chains in the same company, but I didn’t name them because I don’t have the facts in those cases.
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p>Furthermore, you’d never see me suggest that non-profit entities, from hospitals to universities, should be taxed the same as a business. Now, if the hospital is a for-profit, then maybe my opinion would change slightly, but not at risk of the hospital’s solvency.