Governor Deval L. Patrick
Tax Loophole Testimony
March 5, 2008
Many thanks to you and to the members of your Committee for hosting this morning's hearing and for your support of House 4499, "An Act Improving Tax Fairness and Business Competitiveness."
I want especially to thank both of you, the chairs, for all the hard work you have already done on this subject as members of the Study Commission on Corporate Taxation. Your recommendations were developed in numerous open meetings, in consultation with national experts on the issue, and through a public hearing at which almost 50 witnesses testified. I appreciate the very detailed final report and firmly believe that the bill before you faithfully reflects the Committee's recommendations and those recommendations were indeed considered and balanced. I look forward to further collaboration on this important issue with you and whole committee.
As a matter of tax equity and modernization, House 4499 seeks to eliminate unintended gaps in our corporate tax code that some large, mostly out-of-state companies are using to "game" the system. Many of our largest companies - some with revenues in the billions of dollars - are paying the minimum corporate tax of $456. Small and local businesses are subject to much higher tax responsibilities. For that matter, most homeowners pay more in property taxes. We contend it is only fair for our largest companies to share responsibility for supporting public services they and their employees need and want. Moreover, no other state in America provides the combination of loopholes that we do here in Massachusetts.
While we close these loopholes, our bill also proposes to provide real and substantial tax relief to between 15,000 and 20,000 mid- and small-size companies by reducing the corporate excise tax rate. Our bill strikes a fair balance between modernizing the tax code and cutting the tax rate. We feel we have struck a prudent balance and that a deeper cut in the rate would be unwise. Secretary Kirwan, Commissioner Bal and Counsel Sullivan, who is just behind me, will have more to say about that in a minute.
I am very pleased to have your support and the support of legislative leaders in both houses for the broad outlines of this approach. We look forward to working with you through our remaining differences. I thank the Committee again for your work and for your many courtesies to the members of my team. I appreciate it very much thank you for having me.