Tuesday, May 16, 2023
Chair Moran, Chair Cusack, and Members of the Joint Committee on Revenue:
My name is Jonathan Cohn, and I am the policy director at Progressive Massachusetts. We are a statewide, multi-issue, grassroots membership organization focused on fighting for policy that would make our Commonwealth more equitable, just, sustainable, and democratic.
This year so far, the Legislature’s discussion about “tax reform” has centered on how to roll back taxes. The framing of “tax relief” has unfortunately warped discussion of the major issues facing our Commonwealth. “Tax relief” implies that taxes are a burden harming our Commonwealth rather than our collective investments in our collective well-being. And the framing of “tax relief” displaces discussion from the real burdens faced by residents of the Commonwealth: the high cost of housing, the high cost of health care, the high cost of child care, the high cost of higher education, long hours in traffic, a malfunctioning transit system—the list goes on.
Addressing those true burdens that Commonwealth residents face requires many disparate policy solutions, but they share one thing in common: they all require money. If we want to ensure that our students get the best education possible from pre-K to postsecondary, that everyone has the best health care possible, that everyone has a safe roof over their head, that everyone can get to where they need to go efficiently, cleanly, and safely, that everyone has clean air to breathe, then we need to raise the revenue to do it. Our new Governor has outlined proposals to move us closer to such goals, but they will exist only on paper if not backed by funding.
As such, we urge you to broaden the discussion of “tax reform” to think about how the Commonwealth can make a more progressive tax code that enables us to do right by all our residents.
Please give a favorable report to the following bills:
- H.2708/S.1925: An Act to close corporate tax loopholes and create progressive revenue (Barber & Uyterhoeven / Rausch)
- H.2743 / S.1835: An Act establishing a tiered corporate minimum tax (Connolly / Gomez)
- H.2967 / S.1858: An Act establishing a tax on excessive executive compensation (Uyterhoeven / Lewis)
- H.2856 / S.1788: An Act relative to restoring corporate tax rates (Keefe / DiDomenico)
- H.2725/S.1875: An Act requiring public disclosures by publicly-traded corporate taxpayers (Capano / Miranda)
To provide a quick note on each of these bills:
- H.2708 and S.1925 would increase the share of GILTI income (“Global Intangible Low-Taxed Income,” or offshored income made in Massachusetts) that the state taxes from 5% to 50%. This could raise up to $450 million in additional revenue each year and would bring us in line with Maine, New Hampshire, and Rhode Island.
- The corporate minimum tax—namely, the tax that corporations pay if they are able to wipe away all tax obligations through accounting tricks—is $456 and hasn’t budged since 1989 (the year after I was born, I might add). H.2743 and S.1835 would create a tiered structure for this minimum tax so that large corporations are paying their fair share.
- By imposing additional taxes on corporations with excessive imbalances in how much they pay their C-suite executives versus their median employees, H.2967 / S.1858 would both raise revenue and reduce the Commonwealth’s sky-high income inequality.
- A decade ago, Massachusetts lowered the tax rate on corporate profits from 9.5% to 8.0%. H.2856 and S.1788 would reverse that change to, again, make sure corporations are paying their fair share. According to MassBudget, each 1 percentage point increase in the rate could generate between $200 -$300 million in additional annual tax revenue.
- Large corporations pay teams of lawyers to help them avoid paying taxes. We know that this problem exists, but without disclosure, we cannot understand the totality of the problem and best calibrate our response. The disclosure requirements required in H.2725/S.1875 would help us do that.
Our Commonwealth has the resources to ensure the best for all our residents, but we need to commit to realizing such a vision through our policy.
Sincerely,
Jonathan Cohn
Policy Director
Progressive Massachusetts
