The business community is hard pressed to get a break. The Legislature is like a cook and the business community is a lobster in a pot of warm water. Slowly, the water gets hotter and the lobster keeps saying, “It’s not so bad,” but suddenly, the lobster is cooked.
For months, the Legislature was debating how much to raise taxes. In the end, legislators passed several new and higher taxes including a perpetual increase to the gas tax and a new 6.25 percent sales tax applied to computer software services without a single public hearing. Only 33 representatives and three state senators, approximately 18 percent of the Legislature, voted against the tax hikes.
But a small group of business owners and entrepreneurs didn’t let the hot water cook them; instead they learned how to turn on their own heat. Joe Baz lives and works in Cambridge, and since 2004, he’s been a business owner.
Baz first heard about the tax on Aug. 2 and quickly realized his company had no authoritative guidance on how to comply. His options were limited; if he were to try to comply, he could be sued by his clients for overcharging them on a tax that isn’t supposed to be collected or he could face stiff penalties or even up to five years in prison for not complying. Baz is right to think the tech tax is egregiously unfair to businesses in the respect that it was vague, obfuscated from the public during its creation and debate and put businesses at a permanent disadvantage with those in neighboring states, which he competes with.
When I asked Baz to describe his interaction with lawmakers, it was mixed. On the one hand, he had conversations with state Sen. Karen Spilka, D-Ashland, and state Rep. Ryan Fattman, R-Sutton, who were both extremely helpful and empathetic to his situation. On the other hand, the legislators who represent his hometown, state Rep. Marjorie Decker, D-Cambridge, and state Sen. Patricia Jehlen, D-Somerville, never returned his calls.
Andrew J.M. Faria lives and owns a business in South Dartmouth. He has seven employees, two of whom occupy new positions. Faria was never involved with politics before the tech tax passed; he got involved the day it passed and had seven days to comply.
Scott Foster is a business and entrepreneurial lawyer from Longmeadow. Foster immediately saw an opportunity to help the tech community by putting together a lawsuit and seeking an injunction to stop the tech tax before it caused further harm.
Baz, Faria and Foster have been behind the scenes and sometimes out in front of the tech tax repeal effort. They are not political activists; they have been focused on their business.
When legislators passed and the governor signed the tech tax into law, they essentially stuck their hand into a bees’ nest thinking they were going to get honey. Instead, they woke up an industry that was willing to push back. Baz, Faria and Foster and others started an organization called the SPARK Coalition to protect the interests of small business technology providers through mass mobilization. They used the SPARK Coalition as an organized effort to push for a repeal of the tech tax.
Baz, Faria and Foster and many others focused on legislative leaders and, one by one, some lawmakers began to support repeal. The Republican caucus was united in opposing the tech tax, holding town halls, press conferences and even posting an online video. Some of the big lobbying organizations started to put in place a plan to repeal the tech tax through a ballot initiative.
This week, the Legislature voted to repeal the tax; the governor signed off on repeal Friday.
Baz, Faria and Foster have committed to a long-term plan to ensure the tech community has a voice. The good news is that lawmakers from time to time listen to the voters. The bad news is that despite the tech community’s success, the broken process that led to the passage of the tax is still in place. Success cannot be measured by just repealing the tech tax.
Politicians are like children. If they are not corrected early, they will not learn. Taxpayers, and the tech and business community need to work on fixing the broken legislative process that allowed a small group of lawmakers to pass sweeping tax hikes without a single public hearing and without transparency and access to committee votes. What has really changed to prevent this from happening again?
Paul D. Craney of North Andover is executive director of Massachusetts Fiscal Alliance. Follow him on Twitter at @PaulDiegoCraney.