State lawmakers have finally done the right thing with the so-called “Tech Tax.”
By an overwhelming margin, they have tossed it in the hopper of bad ideas. After only a few short weeks on the books, the delete button has been pushed.
It was a major retreat for Democrats, who just a few weeks ago had their arms twisted by their leadership to pass it. Yesterday, they stampeded away from it.
For Democrats, it was an embarrassment that never had to happen.
Democratic leadership failed to heed all the warning signs that clearly indicated this was a bad tax, a job-killing, economy-stalling burden that our tech-heavy state didn’t need. It applied the state’s 6.25 percent sales tax to a large segment of our economy — software and technical services.
The tech tax was a poorly vetted policy, so broadly and vaguely written that even the state Department of Revenue was unclear about its scope. Democrats had only a vague idea of what they were voting on. But, as usual, they followed where their noses were led by their leaders.
House Speaker Robert DeLeo, one those leading his “people” by the nose, hailed the reversal of course at a Merrimack Valley Chamber of Commerce luncheon yesterday in Haverhill.
DeLeo said this year’s tax revenue windfall made it unncessary to raise other taxes to recoup the “lost” revenue.
“I’m not interested in new taxes to replace the tax we cut yesterday,” DeLeo said.
Michael Widmer, who was in Newburyport yesterday to address the Greater Newburyport Chamber of Commerce, had a more honest assessment of the debacle.
Widmer heads the Massachusetts Tax Foundation, a non-profit group that studies state finances and policy.
“The passing of the tax reflected a lack of due diligence on the part of lawmakers,” said Widmer, whose group lobbied against it. “The business community finally raised its voice, and Chamber members like those here today have always got to reach out to state representatives when bad initiatives are being considered.”
The tax was a solution in search of a problem. Billed as a way to pay for state infrastructure repairs, it came at a time when the state is hauling in tax revenues hand over fist. The state’s treasure trove of taxes has been steadily increasing, despite a still sluggish economy that has seen employment numbers remain stagnant.
August’s revenue numbers are a good example. According to the state Department of Revenue, preliminary revenue collections for August totaled $1.543 billion, $121 million or 8.5 percent more than the state took in last August. That’s $64 million above the monthly benchmark that the state was aiming at.
Massachusetts government is having a very profitable year. There was no need to pick the pockets of one of the brightest spots in our economy. Let’s hope that the next time lawmakers take a run at the goose laying the golden eggs, they don’t cook it.
Even taxaholic Gov. Deval Patrick admitted the tax was a step too far. At an event in Worcester, he called the tax a “serious blot” on the state’s reputation.
The vote to kill the new tax was a rare bipartisan rebuke of the latest effort to pick the pockets of businesses and, indirectly, the taxpayers whom they are elected to serve.
“Today is corrections day,” Senate Minority Leader Bruce Tarr of Gloucester said as the Senate debate began, according to the Statehouse News Service. “We can correct this mistake of trying to impose a tax on the innovation economy.”
It’s good to see an egregious error corrected and the tech tax repealed, just as the Dukakis era sales tax on “services” was repealed when Republican William Weld was elected to replace the Democratic spendthrift.
But voters should remember whose side the newest generation of taxaholics was on when the tech tax was first proposed.
They were for it before they were against it.