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Business

August 4, 2013

Mass tech tax stirs unease over impact, application

(Continued)

In May 2012, House Speaker Robert DeLeo attempted to woo Facebook founder Mark Zuckerberg back to Massachusetts, touting a new economic development bill, which later passed into law. DeLeo spokesman Seth Gitell said the new computer service tax would not dissuade technology companies.

“The Legislature passed a carefully balanced transportation plan that limits the financial burden on businesses and families while making responsible and proactive investments in education and transportation,” Gitell said. “With our strong foundation in emerging industries, highly-trained workforce, public infrastructure investments, and additional economic and cultural attributes, Massachusetts is still poised to capture and retain innovation companies.”

The new tax has drawn sharp criticism from Charlie Baker, the one-time and potentially future Republican candidate for governor, who is now the entrepreneur in residence at the venture capital firm General Catalyst Partners.

“I cannot believe MA is going to implement the most expansive tax on software services in the country - at exactly the same time as this industry is poised to boom. I guess it will just boom elsewhere. Talk about stepping over a dollar to collect a dime,” Baker wrote on Facebook.

The Massachusetts High Technology Council has heard an outpouring of concern from its members, according to MHTC President Chris Anderson.

“We’ve got to believe that this is a temporary policy,” Anderson told the News Service. He said, “This cannot become a permanent feature of the Massachusetts tax landscape.”

Anderson said the Bay State taxing computer workers is like Florida taxing oranges, and said, “Since we are now the only state with such a broad tax, Massachusetts employers of all sizes will have a much harder time competing for and winning business.”

Anderson said the new sales tax would be applied even when the taxed services are not purchased as part of a package with the sales of a software or network product.

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