From the Massachusetts Budget and Policy Center:
Facts At a Glance: New Corporate Tax Breaks
Proposed in Economic Development Legislation
July 6, 2010Economic development legislation under consideration in the House contains proposals for new corporate tax breaks.
A new MassBudget Facts At a Glance describes these proposals and provides information about potential costs.
The paper cites a lack of formal analysis about whether these new tax breaks are a more effective way to use resources — ultimately over $100 million a year — than other investments that could improve the productivity of the state economy.
Please share widely!
I don’t have the time or energy to chase it down (the MassButdet Facts at a Glance) but would read it if given a link. Remember the rule “if you want someone to do something, make it as easy as possible.”
…is in the body of the post – “Massachusetts Budget and Policy Center”.
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p>Here is a link to a pdf file of the report in its entirety.
…and the one thing that struck me as odd was that no one is doing fiscal analysis.
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p>i live in washington state, and we require “fiscal notes” for all legislation; this information is publicly available, and the office of financial management is required to ensure it’s accurate and complete.
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p>i would encourage mass to consider such a law–and it’s too bad the initiative process is not available, as this would be something that you could probably pass fairly easily.
In my experience, most pols here would rather be eviscerated by rabid gerbils than provide public access or objective analysis of policy matters – I mean any analysis, not just fiscal notes.
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p>Thus private institutions do the wonk work by default, and public attention is directly proportional to those institutions’ media outreach.
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p>We have a fairly robust initiative process here, but it’s most successfully employed by the Libertarian Right.
…exactly how things work in mass my ignorance often shines through; this is a good example.
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p>that said, i looked up the process, and it almost seems to be designed to keep you from passing your own laws: obviously three registrars might not be willing to sign the voter registration certificates and the secretary of state could be “late” with the ballot summary…but all that is hypothetical.
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p>on the other hand, do i understand that the general court can amend an initiative you’ve already passed, or ignore it altogether, forcing a second election on the same question?
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p>combined with the “6 year rule”, it appears to be a lot tougher than it ought to be for citizens to manage their own affairs.
The MBPC is referring to two new ‘corporate’ tax breaks:
1) Extend the NOL carryforward period to 20 years. The federal government has a 20 year NOL carryforward rule, and many states have adopted the federal standard. A 20 year NOL carryforward costs nothing in the short term, and only costs in the long term if corporations have huge NOLs for a few years in a row, and then those companies recover slowly from the recession (circumstances which many companies might find themselves in in a few years). However, a 20 year NOL carryforward could potentially reduce compliance and complicates audits. It’s fair in theory to allow for a longer NOL carryforward period, but it’s slightly more difficult in practice to comply and administer a longer NOL carryforward period. I guess I’m indifferent to this change.
2) A reduction from 5.3% to 3% of the tax rate on investments in new small MA businesses that are held for at least 3 years. This is not actually a corporate tax break, since 5.3% is the personal income tax rate. This is probably unconstitutional under the Peterson case. Compliance would be very difficult (Who certifies that the MA business is “new” and “small”? Is a newly created subsidiary of an existing business “new”? is a business with $30 million in assets at the time of creation but $1 billion in assets at the time of sale of the stock still “small”? What about a business that’s in MA at the time of it’s creation but moves before three years, or before the stock is sold? What about non-residents who own shares of an LLC with business in MA?). I think this is an idea that sounds good in a press release (“A break for MA small businesses”) but is probably unconstitutional, very difficult to enforce, very difficult to comply with, and subject to gamesmanship.
MA passes legislation with no required cost analysis. Unfunded mandates are the norm; new crimes are created and then the cost of police work, incarceration, and indigent defense go up and rather than blame the unfunded mandate and the lack of a “Legislative Budgetary Office” the police, prisons, and indigent defense get criticised for costing more money. THIS is a crazy situation, and the opposite of transparency. Congress has the non-partisan Congressional Budget Office which is why Congress Critters like Barney Frank, or John Kerry or for that matter, Scott Brown can state the projected costs for legislation.
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p>It is the same tribal attitude that led to Beacon Hill exempting itself from Open Meeting Laws and the Freedom of Information Act – they are NOT accountable as a matter of the culture of the place and THAT must change.
The state should just take a percentage based on the federal returns. Administration is simple and so is compliance.
Stein made a strong case on Emily Rooney last night that explodes these myths that we need to be cutting critical programs and bending over backwards to give taxpayer money to companies that are outsourcing jobs anyhow:
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p>And Jason Pramas over at Open Media Boston chalks it all up to
neo-liberal ideology. Can’t say I disagree!