GOP leaders to file legislation to repeal controversial $500M corporate tax increase

Casey Ross takes a look at the implementation of the state’s controversial corporate tax increase in today’s Boston Globe. The story includes comments from Senate Minority Leader Richard R. Tisei and House Minority Leader Bradley H. Jones, Jr., who today announced plans to file legislation to repeal the increase.

The following is the text of the GOP leaders’ announcement:

Senate Minority Leader Richard R. Tisei and House Minority Leader Bradley H. Jones, Jr. announced today that Republican legislators will be filing legislation on January 14 to repeal the $500 million corporate tax increase that took effect on January 1.

The tax increase – believed to be the largest business tax increase ever passed in the Commonwealth – was approved by the Legislature on July 1, 2008 without the support of a single Republican legislator and signed into law by Governor Deval Patrick the following day. The tax changes impact businesses that employ nearly 40 percent of the state’s workforce, including many multi-state companies that are based outside of Massachusetts.

“The combination of a bad economy plus a substantial increase in the cost of doing business brought on by these tax increases could cripple our state’s economy,” said Senator Tisei. “The real damage will be over the long-term, as many of these businesses will not replace the jobs that are lost here and will instead opt to move the jobs to more tax-friendly states.”

“We are in the midst of what is expected to be a very deep recession,” said Representative Jones. “Imposing new taxes on struggling corporations could have a disastrous effect on our state's economy and I am confident that these tax increases will lead to more layoffs in the short term and more companies fleeing the state in the long run.”

Both Tisei and Jones served on the special commission that reviewed the state’s corporate tax laws, but did not support the commission’s final recommendations and voted against the resulting legislation.

Because the tax increases were introduced halfway through the current fiscal year, they are expected to generate $290 million in new revenues for the state in Fiscal Year 2009, which ends on June 30. Once they are fully implemented, however, the state expects to bring in as much as $500 million in additional corporate tax revenues a year.

In calling for the repeal, Tisei and Jones cited recent unemployment figures which show the state’s jobless rate is creeping upwards. According to the Department of Labor and Workforce Development, the state’s unemployment rate now stands at 5.9 percent, the highest it’s been since August of 2003. Between August and November of 2008, Massachusetts lost 19,100 jobs, and economic forecasters are predicting the state could lose anywhere from 26,000 to 100,000 jobs by the time Patrick’s first term ends in 2010.

“These tax increases were passed at a time when the state was experiencing a very different economic climate,” said Tisei and Jones. “Given the unprecedented fiscal crisis the state is now facing, we think the best thing we can do to minimize the impact of the current recession is to eliminate these tax increases before they do any further harm to our workforce and our economy.”