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COMMISSION RECOMMENDS CORPORATE TAX INCREASES, 'MEANINGFUL' EXCISE CUT
By Kyle Cheney
STATE HOUSE NEWS SERVICE
BOSTON, DEC. 18, 2007…A special 15-member commission studying Massachusetts's corporate tax laws voted 10-5 today to support a pair of revenue-generating proposals sponsored by Gov. Deval Patrick and decisively supported an undefined but "meaningful" reduction in the state's corporate excise tax rate.
Although the votes are non-binding, commission chair Leslie Kirwan, state Secretary of Administration and Finance, said there was "tremendous consensus" among commission members in favor of updating an antiquated tax structure while reducing the corporate tax rate. With the final report of the commission due Jan. 1, 2008, the Legislature may eventually entertain a bill encompassing the recommendations.
Today's votes favored part of Patrick's February proposal to close "loopholes" in the corporate tax structure. In particular, the commission recommended reforming "combined reporting" and "check-the-box" provisions of the tax code. The combined reporting provision would block firms from shifting profit-reporting out of state to subsidiaries, while "check-the-box" would force companies to file under the same status on both state and federal tax forms. Under the reforms, the state would gain between $400 million and $500 million, depending on estimates.
The administration staved off calls for a "revenue neutral" proposal - requiring that all corporate tax increases be offset by an excise tax cut of an equal amount - with only five commission members, including the House and Senate minority leaders, insisting on neutrality.
One key vote in favor of the governor's proposals was Rep. John Binienda (D-Worcester), top lieutenant to House Speaker Salvatore DiMasi, a vocal opponent of increasing the corporate tax burden. In an interim report last Spring, Binienda, the co-chair of the Committeee on Revenue, voted with the minority in an 8-7 vote in favor of the loophole closures.
"Neutrality, I love it, but I'm not locked into it," he said, adding that he can "go with" the governor's proposals if they came with "a substantial rate cut."
Kirwan stressed that the governor also favored cuts in the corporate excise tax but that she couldn't pinpoint what a meaningful cut would mean, nor did she have a timetable to reach that conclusion.
"The governor also feels strongly that a meaningful rate cut would send a very strong signal about the commonwealth's desire to have a competitive climate and attract businesses to locate and stay in Massachusetts," she said.
A YEAR IN OFFICE UNDER HIS BELT, PATRICK HOPES FOR DIVIDENDS IN 2008
By Catherine Williams
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, DEC. 18, 2007…Work during his first year in office has set the stage for 2008, when Gov. Deval Patrick hopes to sign energy legislation and a $1 billion life sciences industry investment bill and win an audience for a "serious debate" on his casino gambling proposal.
"We have set the table for next year," Patrick said in a year-end wrap-up interview in his office Friday.
Nearly one year after he was sworn in on the State House steps, Patrick, during a fireside Q&A in his office, covered property tax relief, campaigning for Barack Obama, frustration with a stalled life sciences bill and the hope that Donald Trump joins the fray of developers interested in building casinos in Massachusetts.
Patrick faces some challenges on his agenda in the New Year. An anti-casino movement is gaining strength and business leaders are decrying Patrick's life sciences bill because it rewards only one industry. Adding to the pressure is the less than rosy budget outlook leaving lackluster revenue growth to fund administration priorities including statewide infrastructure improvements to roads and bridges and budget increases for education.
The governor listed among his accomplishments the formation of a citizen volunteer program known as the Commonwealth Corps and the passage of new tax credits for moviemakers. He touted the "team effort" to defeat of a proposed gay marriage ban at a Constitutional Convention and the passage of the fiscal year 2008 state budget, an annual requirement under state law. Patrick said he was proud of the creation of the Commonwealth Readiness Project, a group of advisors he appointed to develop a statewide education reform strategy for the next decade.
But Patrick, who critics and observers say is still learning the give-and-take of consensus building and legislative maneuvering, expressed frustration with efforts to move his agenda and with the speed of the legislative process.
"We just have to pick up the pace. There is too much that the people are expecting of all of us," said Patrick, whose own fortunes are tied to his ability to force the Legislature to act on important issues.
Patrick said he's still learning. Based on his experience this year, the governor said he would draw more on the "substantive experience" of legislators but that he is not "here to do things the same old way." He is looking to legislators to meet him half way.
Patrick predicted that the life sciences bill and energy bill will pass by July - legislative leaders have already indicated both bills are priorities, with the energy bill, sponsored by House Speaker Salvatore DiMasi, having cleared the House already. Patrick stopped short of predicting the casino bill would pass by July but said the proposal should have "a serious debate" by the session's end next summer. He said he is working with the legislative leadership on a calendar for the "bigger proposals" for next year.
The life sciences bill is more important to Patrick than the casino bill, he said. Patrick said there are plans in place to have life sciences bill through the committee process and on the floor to be voted on by end of January or the beginning of February. Rep. Daniel Bosley (D-N. Adams) said at a life sciences industry meeting in Cambridge recently the bill should emerge from the committee process by Feb. 15.
Looking to next year, Patrick said he plans to put his efforts toward the 2009 budget, anti-crime legislation and his municipal partnership proposal designed to allow more local tax options. Hoping to make big steps forward in education policy, Patrick said he still hopes to propose education governance changes and said he's been discussing those changes with legislative leaders.
Most of the questions directed to the governor during the 37-minute interview with reporters from regional newspapers circled around Patrick's casino proposal, which has been idling in the Legislature where it awaits a public hearing and faces long odds in the House.
When asked if he was worried if casino gambling would lead to a resurgence of organized crime, Patrick said he was "not concerned" about opening the door to organized crime. Patrick said his proposal features oversight systems in place in states including New Jersey and Nevada. Patrick said modern gaming, unlike organized crime-backed gaming portrayed in the movies, has "all kinds of checks and balances."
Despite requests from the Mashpee Wampanoag Tribe, Patrick said he doesn't plan to meet about the casino bill with members of the tribe. Patrick also said he hasn't met with Trump and he doesn't plan to meet with developers either. Asked if he hoped the real estate mogul would come to the Bay State, Patrick said, "The more the merrier."
Patrick said he has expressed his frustration about the delay in getting a public hearing on his expanded gaming proposal and about the pace at which his agenda is moving through the legislature.
"There is one thing legislators will sometimes say in terms of what they want to do, and another thing what they will do, depending on what they are told," said Patrick.
Patrick defended the number of people from western Massachusetts he has appointed to administration posts in addition to Rick Sullivan, who serves as the commissioner of the Department of Conservation and Recreation. Patrick said representatives from western Massachusetts sit on the Board of Higher Education, the Massachusetts Turnpike Authority and Massachusetts Water Resources Authority. A wide range of people the governor asked to take state posts turned them down because they weren't interested in making regular treks to Boston, he said.
Patrick said he was "not able to deliver" on his promise of property tax relief during his first year in office and had to abandon plans to close tax loopholes to get a negotiated version of the 2008 budget passed.
Over the holidays Patrick said he plans to go to Iowa to campaign for presidential candidate Barack Obama. Patrick said he also plans to campaign for Obama in New Hampshire and South Carolina. Patrick was pressed by reporters about potentially taking a post with Obama, should Obama win the presidency.
"I am not going to Washington," said Patrick, who wore a blue and white, Barack Obama 2008 rubber bracelet.
When asked about his reaction to a report that emerged recently during a Revenue Committee hearing predicting that it would take Massachusetts until 2012 to regain the jobs lost since 2001, Patrick said economic development is his No. 1 priority. Patrick said he plans to focus on growing Massachusetts industries including clean energy, life sciences and information technology. He also said he would be open to investment from overseas.
"I'm not overconfident and I am not afraid," said Patrick. "We have to continue on this path because I think we are making some progress and adjust as we go."
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