Some Democratic lawmakers in the Commonwealth of Massachusetts want to raise the corporate tax rate. Several spoke on behalf of a pair of bills that would do just that on Wednesday.
The Joint Committee on Revenue of the Massachusetts Legislature held a hearing Wednesday, December 22 on bills that would increase taxes on corporations.
State Representative Mary Keefe (D-Worcester) proposed a bill (H.2969) that would raise the state corporate tax rate from 8 percent to 9.5 percent, noting that it used to be 9.5 percent.
Keefe testified that raising the rate could bring in $375 million to $500 million annually, money that she said could help combat the ongoing coronavirus pandemic, boost funding to public schools, lessen food insecurity, and reduce the costs of childcare.
“In order to respond to the COVID-19 pandemic, and to correct the cracks in our system that the crisis has exasperated, we need to generate more progressive revenue,” Keefe said. “We also need to center equity and justice in our plans for restoring our economy.”
She also took issue with white men making money during the pandemic.
“During the pandemic, 17 out of America’s top 25 corporations have made extraordinary profit and distributed 99 percent of their profits to their wealthy shareholders, who are overwhelmingly white, male, and among the wealthiest 10 percent of Americans,” Keefe said.
Keefe’s bill has 50 co-sponsors between the two chambers of the Massachusetts Legislature.
In 2008, then-governor Deval Patrick, a Democrat, signed a bill that gradually lowered the state’s corporate tax rate from 9.5 percent to 8 percent.
“With these measures we can secure our competitive advantage and also make targeted investments in our future,” Patrick said in 2008, according toBoston Business Journal.
State Representative Mike Connolly (D-Cambridge) offered another idea yesterday: raise the minimum corporate income tax on companies that do more than $1 million in sales per year (H.2853). The current minimum corporate income tax in the Commonwealth is $456 per year — something that hasn’t changed since 1989. Connolly wants to set nine different rates — depending on how much the company does in sales. The proposed tax scheme would top out at a minimum corporate income tax of $150,000 on companies that do more than $1 billion in sales per year.
“When we say those words ‘progressive revenue,’ what we’re really saying is tax fairness,” Connolly said. “As we know, corporations avoid paying taxes by employing a variety of accounting techniques and taking advantage of certain provisions in the law, and as we’ve already heard, the largest corporations already saw an incredible windfall as a result of the tax cuts that were introduced at the federal level back in 2017.”
“The legislation before the committee today would seek to introduce just a degree of tax fairness for the residents of the Commonwealth,” he later added.
During his testimony, Connolly said that there have been times in recent years when 2,200 companies in Massachusetts with more than $50 million in annual sales paid just $456 in corporate taxes.
Connolly’s bill has four co-sponsors in the Massachusetts House of Representatives.
No one spoke against the bills during the hearing Wednesday.
Massachusetts Fiscal Alliance spokesman Paul Craney told NewBostonPost that raising corporate tax rates could result in businesses leaving the Commonwealth.
“Lawmakers have such short memories,” Craney wrote Thursday by email. “It was only a few years ago when General Electric moved out of Connecticut to Massachusetts because of Connecticut’s high taxes. Now our state lawmakers are trying to replicate Connecticut and drive out more businesses in an attempt to squeeze every last penny from businesses and taxpayers.”
The legislative committee has not taken action on either of the two bills.
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