iStock photo
While the federal government has pumped billions of one-time dollars into state economies, some legislative Democrats believe the state still should be looking to wealthy corporations for additional revenue to fund education, transportation and other priorities when those funds inevitably dry up.
The Joint Committee on Revenue held a hearing Wednesday on dozens of bills related to corporate tax structures, including proposals to return the state’s corporate tax rate to pre-2010 levels and to increase the minimum tax companies without other liabilities must pay.
Committee co-chair Sen. Adam Hinds said the committee experimented with written-only testimony on the more than 500 bills assigned to the panel this session, but is moving back to virtual oral testimony and has an “aggressive” schedule with about a hearing a week planned through January.
Rep. Mary Keefe, a Worcester Democrat, proposed increasing the corporate tax rate from 8 percent to 9.5 percent, the same level it sat at more than a decade ago. She said there are only eight other states where business pay a smaller share of state and local taxes than they do in Massachusetts.
Testifying that the adjustment could bring in $375 million to $500 million annually, Keefe said the money will be needed to not only fund the state’s ongoing COVID-19 pandemic response, but meet the state’s financial commitments made to public schools under the Student Opportunity Act and address problems like food insecurity and the high cost of child care, which she said are not going away.
“We need to generate more progressive revenue,” Keefe said.
Corporate tax reform, she said, would also improve equity in the tax code because she said business taxes are paid disproportionately by white, high-income households who are more likely to own stock.
“I don’t like to use the word raising taxes,” she said. “This is about restoring the tax to where it was before 2010.”
Rep. Mike Connolly, a Cambridge Democrat, said he supported Keefe’s bill, which has also been filed in the Senate by Sen. Sal DiDomenico, but he also proposed increasing the $456 corporate minimum tax that had not been adjusted since 1989.
Connolly’s bill (H 2853) would establish a nine-tier structure for companies that otherwise don’t pay taxes on income, topping out at $150,000 for companies that do more than a $1 billion in sales a year. Corporations with less than $1 million in annual sales would see no change to their minimum tax of $456.
“When we say those words, progressive revenue, we’re really saying tax fairness,” Connolly said, noting that New York, New Jersey and Oregon have similar tiered systems.
The House previously voted to support an increase in the corporate minimum tax as part of a transportation financing package that stalled in the Senate in 2020 as COVID-19 disrupted the course of the legislative session, and life in general.
Connolly cited the Massachusetts Budget and Policy Center when he told the committee that in some years more than 200 companies in Massachusetts with more than $50 million in gross annual receipts have paid just $456 in corporate taxes.
The additional taxes, supporters said, were appropriate given the cuts many wealthy corporations received on their federal tax bills in recent years as part of the 2017 Republican tax cuts signed by former President Donald Trump.
Groups including the Alzheimer’s Association and AARP also testified Wednesday in support of creating a family caregivers’ tax credit of between $1,500 to $3,000 for individuals who care for a sick loved one at home and often have to leave the workforce as a result.
