The #TechTax: Confusing, Narrow, Arbitrary. So What's A Progressive Alternative?

tech.gifThe troubles with the “tech tax” have been highlighted by many inside and outside the business community, and it looks to us like the right call to repeal and replace it.

But now that we’re talking taxes again... let’s remember that the only reason the Legislature has had to try to scrape together new revenue from niche sources (like the tech industry) in the first place is because they have consistently refused to address the obvious problems --address our real revenue needs AND our regressive tax structure -- or consider the viable progressive solutions. The silver lining of the tech tax debate is that the Legislature now has the opportunity to take action and do it right this time.

Innovation Requires Investment

Massachusetts cannot be an innovation and jobs leader if we continue to undermine our education and infrastructure through neglect and ever more drastic cuts. And we cannot continue to rely only on increases in those taxes that disproportionately burden those who can least afford it (as with the gas tax and sales tax).

We advocate reversing this damaging austerity trend, and a renewing investment in Massachusetts’s economic future.

We advocate an increased income tax, structured in such a way to protect middle-class and lower income families and seniors from burdensome increases, such as in "An Act to Invest in Our Communities."

Unlike the tech tax, which targeted one sector of the economy in a complicated and unfair fashion, an income tax/personal exemption increase would be:

  1. Fair -- People making less pay less; when you do better, you pay a little more, which reduces the overall regressivity of our Massachusetts tax system (the poor pay disproportionately MORE of their income than the wealthy, who pay the LEAST]).
  2. Simple -- it applies to everybody.
  3. Predictable -- Businesses need to be able to rely on a stable, predictable tax structure to know how plan ahead to grow their business and create jobs.

Now that the topic of funding our Commonwealth is on the table again, Legislators should be reminded that there are good alternatives, such as “An Act to Invest in Our Community", already on the table (and which could have helped avoid the whole tech tax mess in the first place).

We have four questions for our Legislators:

  1. Now that the Tech Tax is about to be repealed, what are you doing to make sure we adequately and responsibly invest in our Massachusetts communities and future economic strength?
  2. It was unfair to target the tech industry; it’s also unfair that the poor pay more than the rich in MA! What are you doing to change our regressive taxes?
  3. Will you support a modestly increased Income Tax, designed to protect the poor, middle-class and vulnerable (as in “An Act to Invest in Our Communities”)?
  4. The legislature rejected the Governor’s proposal in the spring, with many legislators complaining of its complexity. “An Act to Invest in Our Communities” is much simpler. Will you push to bring it to a vote?

After the disappointing votes on this in the spring, we have no illusions that this legislature is going to increase the income tax, even if what’s right is also smart and fair. But they ought to be reminded of the road they’re not taking.

For your convenience, here’s a list of Legislators’ contact info, including a growing list of Legislators' twitter and facebook accounts:

Budget Cuts Undermine Our Commonwealth

A decade of budget cuts has been undermining our communities and future economic strength:

We've Been Cutting

The Poor Pay the Most in Mass. Taxes

Our tax burdens are unfairly distributed -- the poor pay the most, the wealthiest, the least:

The Poor Pay The Most

Additional Reading/Resources:
  • Mass Budget and Policy - After Tech Tax Repeal: Remembering the Big Picture (PDF) -
    • "It now appears likely that one major element of that tax package – the "tech tax" – will be repealed without being replaced by a new permanent revenue source. This will reduce by roughly $160 million the new tax revenue annually available to address long term transportation and education needs. The revenue remaining is well below the amount needed to fund core investments in transportation and education. While addressing those needs is now likely to be more of a long term than an immediate 
      debate, it is important to remember the big picture: the ability to maintain our transportation infrastructure and make needed investments in education and other areas is critical to the future or our economy and our quality of life. 

      With the repeal of the tech tax the major remaining elements of the tax plan are tobacco and gas taxes.  These taxes are good for public health and for the environment, but they are also taxes that generally require lower income people to pay a larger share of their income than higher income people. In thinking about new revenue sources, it is important to consider how overall costs are balanced between 
      lower income people, higher income people, and businesses.

  • Joe Curtatone - An Investment In Public Transportation Is An Investment In The Future | Cognoscenti -
    • "The tech tax was passed as one part of a larger revenue package. And the objective of this revenue was to improve our transportation capacity and, one of the chief beneficiaries of transportation investments is the tech sector itself."
  • Joan Vennochi - Patrick’s tech tax wakes up a sleeping giant - Opinion - The Boston Globe -
    • Is [a] no-tax line in the sand where the new tech generation wants to be? 
      The tech crowd is used to being gushed over. Many political promises — from better schools to improved infrastructure, from happy hours to longer-running public transit — are aimed at pleasing this constituency. Massachusetts doesn’t want to lose it. But delivering on those promises takes money. 
      Who foots the bill for better roads and T service? Taxpayers, of course. During the last budget debate, Beacon Hill concluded more tax revenue was necessary. Indeed, Patrick wanted more than he got; he vetoed the tax bill — which included the computer sales tax — because he said it didn’t raise enough revenue.

      That’s the debate the new tech universe ducked.

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