House Votes To Repeal Tech Tax After Heated Debate
Less than two months after voting to include it in a $500 million tax hike package, the Massachusetts House of Representatives voted 156-1 Wednesday to repeal the state's new computer services tax. The Senate is expected to pass the repeal bill on Thursday.
During an acrimonious debate focused less on the impacts of the tax and more on revisiting this year's tax debate, some Democrats criticized Gov. Deval Patrick for recently distancing himself from a tax on computer services that he introduced. Others said business leaders had failed to convey their concerns about the tax as it was being approved, and Republicans lashed out at Democrats for failing to heed their warnings about the tax.
Rep. Christopher Fallon, D-Malden, criticized Patrick's recent claim that he opposed the tech tax, after he included a version of it in the tax bill he filed in early 2013.
"I am going to accuse the Corner Office of being a hypocrite. I am going to accuse the Corner Office of playing politics with our speaker, Hell, with all of us," Fallon said. "He vetoed it because he wanted more money from us, and we had the stamina, we had the backbone, to tell him, 'We are taking a leap of faith. We know we've got to fund some of the line items, but we are not going to put the people of Massachusetts in that type of economic bind.' We said no to him."
Rep. Angelo Scaccia, a Democrat from Readville, voted against the repeal. Scaccia said House Speaker Robert DeLeo would regret backing away from the tax, suggesting it might cost him future political capital.
"Mr. Speaker I'm not a revisionist, but I do revisit every once in a while because I've had some history here. You are going to rue the day when you have gotten something and then have given it back for nothing," Scaccia said on the House floor. "If in fact we run into problems down the road, I don't know if you can ask your membership to vote green on a tax package again."
Scaccia called the nearly $2 billion tax package the governor originally pushed unreasonable, and said the package DeLeo and Senate President Therese Murray agreed to made sense. Removing the computer services tax does not leave enough money to invest in transportation, Scaccia said. He criticized legislative leaders for keeping the gas tax and $1 cigarette tax, while dropping the computer services tax.
"Those people who are making tons of money do better than those poor people who smoke. We are going after addictions, but as soon as those rich folks out there decided to put their money together, we fold. We folded, and we are now not going to tax them $162 million," Scaccia said. "So what do we have left? Three cents on gas and a $1 on cigarettes."
"Now if you think we can provide the services we have now in transportation and education with that little money you are kidding yourself," he added.
Without the computer services tax, there is $340 million left in the tax package the Legislature approved in late July to pay for investments in transportation and other budget accounts.
House budget chief Brian Dempsey said the business community initially supported the tax, but later changed their minds. Dempsey said when lawmakers passed the tech tax - expected to generate $160 million - they vowed to revisit its impact. He said the "outcry" against the tax from businesses did not come until mid-May.
"We made it very clear months ago we would continue to monitor and watch this tax," Dempsey said while laying out the reasoning for its repeal.
DeLeo said he was proud of the vote to repeal, adding he had promised to listen to business leaders about the tax's impact when it initially passed.
"Our vote sends a strong message to the world that Massachusetts is the place for innovators to succeed and thrive." DeLeo said in a statement.
Republicans said they knew the tax was a problem before it passed, and scolded their colleagues for not heeding the warnings.
"It is indeed a great day," Assistant Minority Leader George Peterson said. "We told you so. We told you in April. We told you in May. We told you in June."
Peterson said when lawmakers voted they were not sure how it would work, or exactly what it taxed. Instead, they were told to let the Department of Revenue figure it out, he said.
Prior to Wednesday's debate, Rep. Ryan Fattman (R-Sutton) said House Democrats ignored pleas not to extend the sales tax to computer design services. Republicans this summer called for government reforms to free up money for transportation and to allocate expected growth in existing tax collections for transportation.
"It's not that people didn't know, it's that they didn't care," Fattman said.
Rep. Joseph Wagner, D-Chicopee, called Republicans the "party of no" new revenues for transportation. Wagner said Democrats got behind the tax because business leaders initially supported it. He was disappointed when they retreated.
"If the business community had an epiphany late in the game, even though people were talking about it, I can tell you as the chair of the Economic Development and Emerging Technologies Committee, I didn't hear from them in April, and June and July," he said.
Rep. Shaunna O'Connell, a Taunton Republican, later countered that Republicans are "the party of yes" to stopping illegal immigration and assuring the business community it won't be over-regulated.
Fallon said that in a previous private caucus, DeLeo notified members that the House might revisit the tax.
"If we're going overboard, if we're being excessive, we'll revisit this after summer break," Fallon said, paraphrasing DeLeo's caucus comments.
After the session, Speaker Pro Tem Patricia Haddad, of Somerset, demurred when asked whether she agreed with Fallon's comments about the governor.
"I don't like to call names. I will just say that when we make a decision we make it with the best information possible," Haddad said.
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