, Salem, MA


October 1, 2013

Our view: Kicking the ‘Tech Tax’ out the door

State lawmakers have finally done the right thing with the so-called “Tech Tax.”

By an overwhelming margin, they have tossed it in the hopper of bad ideas. After only a few short weeks on the books, the delete button has been pushed.

It was a major retreat for Democrats, who just a few weeks ago had their arms twisted by their leadership to pass it. Late last week, they stampeded away from it.

It was an embarrassment that never had to happen.

Democratic leadership failed to heed all the warning signs indicating this was a bad tax, a job-killing, economy-stalling burden that our tech-heavy state didn’t need. It applied the state’s 6.25 percent sales tax to a large segment of our economy — software and technical services.

The tech tax was a poorly vetted policy, so broadly and vaguely written that even the state Department of Revenue was unclear about its scope. Democratic legislators had only a vague idea of what they were voting on but, nevertheless, followed their leaders.

House Speaker Robert DeLeo, one of those leaders, hailed the reversal after the fact, saying this year’s tax revenue windfall made it unnecessary to raise other taxes.

“I’m not interested in new taxes to replace the tax we cut yesterday,” DeLeo said.

Michael Widmer, who heads the Massachusetts Tax Foundation, a nonprofit group that studies state finances and policy, put it differently, crediting business lobbies for successfully pressuring legislators.

“The passing of the tax reflected a lack of due diligence on the part of lawmakers,” said Widmer, whose group lobbied against it. “The business community finally raised its voice.”

The tax was a solution in search of a problem. Billed as a way to pay for state infrastructure repairs, it came at a time when the state is hauling in tax revenues hand over fist, despite a still-sluggish economy that has seen employment numbers remain stagnant.

August’s revenue numbers are a good example. According to the state Department of Revenue, preliminary revenue collections for August were 8.5 percent higher than the previous August and $64 million above the monthly benchmark the state was aiming at. There was no need to pick the pockets of one of the brightest spots in our economy.

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