Bank robbers stick up banks because that’s where all the money is. States feel the pull of service taxes for the same reason.
Today, Governing magazine looks at the way states repeatedly turn to service taxes when they need money. The magazine builds its look around the new Massachusetts software design tax, but argues that the current Bay State tempest is just the latest in a series of skirmishes over states’ shifting tax bases.
The Massachusetts tech tax passed as part of this summer’s transportation revenue package. It attracted little notice as the larger transportation tax bill worked its way through Beacon Hill, even though the bill that contained the tax was the subject of one of the most bruising political fights of Gov. Deval Patrick’s tenure. The governor and legislative leadership battled over income taxes and sales taxes and the gas tax, but nobody said a word about taxing tech services until after the levy kicked in on July 31.
Now, though, the tax is the worst thing to hit Boston since Bucky Dent. Gubernatorial candidates from both parties are lining up against the tax, and it’s the subject of multiple legislative and ballot repeal efforts. That’s partly because of the anti-tax reflex that has long lurked in Massachusetts politics, but it’s also partly because, as Governing reports, nobody can say for certain how far the tax actually reaches.
“It’s administrative chaos,” the Massachusetts Taxpayers Foundation’s Andrew Bagley tells Governing. “It affects just about every industrial sector from restaurants, insurance, retail, to farms and manufacturing. All are major purchasers of software … and all are subject to taxation.” A report MTF released yesterday makes the case that the Massachusetts tax is the most burdensome in the country.
Governing argues that Massachusetts isn’t taxing a key economic sector out of some impulse toward economic suicide; instead, the state is following a long tradition of trying to combat flat sales tax bases by taxing the service end of the economy, which is where most economic growth is happening. Florida, for instance, tried taxing legal work, construction services and advertising more than two decades ago. It backed off that effort after a massive business community uproar. Maryland enacted a 6 percent tech services tax in 2007, but repealed it the following year. Massachusetts has been through this dance before, having enacted a sweeping business service sales tax in the last days of the Dukakis administration, only to back off in the face of activism by business interests and incoming Gov. William Weld.
Beacon Hill lawmakers in 1990 didn’t learn from Florida’s prior disastrous business tax, just as the backlash that Maryland’s tech tax produced didn’t give pause to Patrick and Bob DeLeo and Therese Murray this time around. And a couple years from now, when the Massachusetts tech tax is some forgotten footnote, somebody in a state house in California or Wisconsin or Illinois will look at a vast amount of internet commerce happening inside their borders and ask, Hey, why don’t we try taxing that?
–PAUL MCMORROW
BEACON HILL
A handful of House Republicans have gone rogue and are gumming up the works on Beacon Hill over the objections of their own party leaders.
MUNICIPAL MATTERS
An incumbent member of the Fairhaven Board of Health romped to victory in a redo of a controversial tied election in April that became a referendum on the town’s two wind turbines.
Gloucester beach parking revenue this summer totaled $1.61 million, $40,000 less than last summer but $100,000 ahead of 2011, the Gloucester Times reports.
NATIONAL POLITICS/WASHINGTON
The Senate Judiciary Committee holds a hearing Tuesday on legalizing marijuana.
A Brockton faith group is joining forces with national activists in protesting deportations of illegal immigrants, saying the actions are tearing families apart in the city.
The AFL-CIO agrees to forge deeper political ties to outside groups like the NAACP and the Sierra Club.
ELECTIONS
The 12 Boston mayoral candidates engage in lots of shouting, egged on by one moderator more interested in heat than light, with lucid moments of substance nonetheless occasionally breaking through. The Republican serves up “six takeaways” from the Boston Herald/ NECN debate. Check out the NECN video here and here. WBUR follows the candidates to the arts debate.
The Globe profiles Charlotte Golar Richie.
Four of the six men running for mayor of Lawrence said they will stand united against incumbent William Lantigua if he makes it into the final election against one of them, the Eagle-Tribune reports. Lantigua declined to appear at the debate, which was sponsored by CommonWealth and the Eagle-Tribune, but he did authorize the repair of the rundown front steps of the city’s police station.
Peter Lucas, writing in the Lowell Sun, analyzes the political transformation of Charles Baker, but saves his best line for Baker’s opponents, calling them something out of Lost and Found at the old Filene’s Basement.
New York’s wild Democratic mayoral primary ends today. Dante de Blasio may have turned around his dad’s mayoral hopes by starring in the most effective ad of the campaign, but most of the kids in his Brooklyn high school still don’t know who he is. A New York Times editorial hits Mayor Michael Bloomberg for tone-deafness, saying the outgoing mayor appears to worry more about Dante de Blasio’s Afro than the politics of stop and frisk.
CASINOS
A legislative committee votes Tuesday on the Mashpee Wampanoag compact. Meanwhile, Plainville votes Tuesday on a slots proposal and West Springfield on the Hard Rock casino bid. Milford selectmen voted 2-1 in favor of a host agreement with Foxwoods for a $1 billion resort casino, the Telegram & Gazette reports.
BUSINESS/ECONOMY
The new iPhone is here! The new iPhone is here! Probably.
Foreclosures in Massachusetts continue to drop.
Boston is poised to approve construction of 900 new housing units this week.
Jim Koch, who founded Boston Beer Co., which brews Sam Adams, is officially a billionaire, NPR reports (via WBUR).
EDUCATION
U.S. News & World Report unveils its annual college rankings, showing Princeton as the number one ranked university and Harvard second. MIT was the only other Massachusetts school making the top 10, while Williams College and Amherst College ranked first and second respectively on the list of liberal arts schools with Wellesley College at number 7. Wheelock College in Boston tops the list of schools whose graduates have the highest amount of student debt, nearly $50,000 on average as they head into the workforce.
Chelmsford high school students are under investigation for some type of hazing incident at a football summer camp in New Hampshire, NECN reports.
HEALTH CARE
Weston-based Biogen Idec and an Ireland-based Elan Pharmaceuticals are facing a lawsuit in connection with a rare brain infection that is a side-effect of the drug they market to treat multiple sclerosis.
TRANSPORTATION
Fall River officials announced the launch of a fast ferry service between that city and Block Island beginning next summer, a ride that will be about an hour and allow travelers to forego driving to Newport to catch a boat.
CommonWealth’s Paul McMorrow, in his weekly Globe column, writes that we’re squandering an opportunity to add housing along the Fairmount commuter rail line.
ENERGY/ENVIRONMENT
About 40 commercial oyster beds in Duxbury, Plymouth, and Kingston will remain closed at least another three weeks under state orders because of a bacterial outbreak that has sickened at least three consumers.
CRIMINAL JUSTICE
A New Bedford elementary school was locked down after police responded to two unrelated shootings in the neighborhood near the end of the school day.
Boston Police Commissioner Ed Davis speaks out in defense of his department’s record on hiring and promoting minority officers.
The Globe’s Maria Cramer questions whether a major Boston police sweep in Roxbury earlier this year has had any impact on crime and violence in the neighborhood.
California Gov. Jerry Brown and lawmakers agree to ask the courts for more time to deal with prison overcrowding. But if that doesn’t work they’ve agreed to spend hundreds of millions of dollars to relocate prisoners to private prisons, county jails, and other facilities, the Los Angeles Times reports.
MEDIA
Carey Goldberg and Rachel Zimmerman, the duo behind WBUR’s CommonHealth blog, launch a podcast on health issues with Slate. The Nieman Journalism Lab has a story on the collaboration.