The Associated Press

Mass. GOP Calls For Repeal Of Software Tax

BOSTON — Republican lawmakers and business groups ramped up pressure Monday on the Legislature to abolish a new sales tax on computer and software services.

Rep. Brad Jones, minority leader of the Massachusetts House, and Sen. Bruce Tarr, the minority leader in the Senate, filed a bill to eliminate the 6.25 percent tax that took effect July 31 as part of a massive transportation financing law.

The tax has drawn sharp criticism from technology companies that contend it will hurt a critical sector of the state’s economy.

Meanwhile, the Massachusetts Taxpayers Foundation, which also opposes the tax, released a new analysis Monday that the business-backed organization said supports its assertion that Massachusetts now imposes the highest tax in the nation on software services.

According to the study, only four other states — Connecticut, Hawaii, New Mexico and South Dakota — tax computer system design and all do so at a lower rate than Massachusetts.

“Repealing the tax would return Massachusetts to the mainstream of the 50 states,” said Michael Widmer, president of the foundation. “With Massachusetts losing 3,000 jobs since January, placing the highest tax burden in the country on innovation and technology — the state’s greatest economic strength — is simply bad policy.”

Democratic legislative leaders and Gov. Deval Patrick, who met with business leaders last week to discuss the tax, have not ruled out the possibility of changing or repealing it. But they also have insisted that if the tax were to be altered or eliminated, it would need to be replaced by another tax or measure that delivers an equivalent source of revenue for transportation and other budgetary needs.

State officials estimate the tax will generate $161 million in the current fiscal year.

The Republican bill mirrors the language of a petition filed by business groups that would ask voters to repeal the tax on the November 2014 ballot if lawmakers do not act in the interim. It does not specify an alternative revenue source and GOP lawmakers have previously maintained that the state’s transportation woes can be solved through greater efficiencies rather than new taxes.

Jones, R-North Reading, and Tarr, R-Gloucester, announced the legislation at Genuine Interactive, a Boston-based digital media firm with about 100 employees. John Grayson, the company’s chief executive, said out-of-state vendors were using the tax as a means for luring businesses away from Massachusetts.

Tarr called the tax a penalty on innovation and job creation.

Democratic Sen. Karen Spilka of Ashland, a candidate for the U.S. House seat formerly held by Sen. Edward Markey, filed legislation earlier to repeal the tax. Spilka’s bill would ask a special commission to recommend possible replacement revenue.

The state Revenue Department proposed new guidelines last month that officials said were aimed at narrowing the scope of the levy to lessen the impact on software developers and clear up some confusion over what services are taxed under the new law.

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  • X-Ray

    MA lawmakers never have seen a tax they didn’t like.

    • dust truck

      …all except the income tax. I guess they’re afraid of the backlash if they raise the income tax so instead they’re picking on the one industry that is bringing business to MA.

      • X-Ray

        Remember, the income tax is a rate. As such, as inflation, pay rasies, and all things which improve our lives increaseand then produce higher taxes and minimize the effect to deductions and thresholds.

        • dust truck

          dangit X-Ray, stop making sense! You’re hurting my brain. ;-)

  • alexMass

    The hi-tech industry is something you want to attract, not scare off with taxes. MA’s legislators need to play more SimCity 4.

    • fun bobby

      but we will have all these great casinos sucking revenue from poor people. what a great trade off

      • alexMass

        Casinos are bad in SimCity 4 as well. More crime.

        • fun bobby

          i played the original sim city. it was pretty fun. maybe people should have to prove competence before they can be elected. I like it. deval is like a wrecking ball for our economy and liberty

  • fun bobby

    why does deval seem hell bent on turning us from silicon valley to reno?

    • jefe68

      Except that Governor Patrick is now also calling for it’s repeal.
      It was a dumb idea, period.

      • fun bobby

        way to flip flop?

  • fun bobby

    in other news devil Patrick is on beacon hill today calling for more infringements on our basic civil rights. does he know that we are currently being overrun by bears, among other things, due to a lack of hunters?

    • jefe68

      You know, if you dislike the gun laws in this state as much as do, you cold move to one that has the kind of laws would like, say Arizona or Texas.

      • fun bobby

        far too restrictive, I would prefer to move to VT if firearms were my only concern and I was a selfish person. I would be remiss to run away and be complicit in the injustices that occur here. moreover I would not like to leave my homeland in the clutches of deadly, out of control bears. while I think we could improve our laws what I find very concerning is that the police do not follow the laws that we have here

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