Our Opinion: Corporate tax break needs better argument
The dispute over a proposed corporate tax change last week on Beacon Hill wouldn't have attracted much notice if it hadn't exposed a generational and gender rift that may shake up the change-resistant House. But the dispute also attests to the fact that even though legislators often act with frustrating deliberation there is occasionally something to be said for due deliberation.
House leadership has been pushing for a change in the state tax code advocated by business groups before the Nov. 15 deadline for corporate tax returns that the IRS had agreed to extend past the April due date. Associated Industries of Massachusetts and its allies assert that the federal Tax Cuts and Jobs Act of 2017, which established new limits on the deduction for the interest that corporate taxpayers pay on their debt, was overly burdensome and merited a correction from the state. Rep. Mark Cusack, the chairman of the Joint Revenue Committee, asserted, according to the Boston Globe, that any loss in state revenue caused by the change would be offset by gains in economic growth, adding that "There is a trickle-down effect any time you allow something like this to happen."
The phrase "trickle-down effect" should set off alarms for anyone who has been hearing about the alleged magic of trickle-down theory since the Reagan era. The argument that tax cuts always pay for themselves in economic growth also made by the two Bush presidents and a series of Republican congressional leaders since has not been supported by independent economic analysis. Most recently, according to Bloomberg Economics, the 2018 tax cuts for the wealthiest Americans passed by a Republican Congress and signed by President Trump produced only a modest, short-term boost for the economy, contrary to GOP predictions, and will dramatically increase the deficit. And yes, the wealthy will disproportionately benefit. "The rich are already using the new limits to create dynasty trusts for generations of their descendants," reported Bloomberg.
Massachusetts business groups will need a better argument than the one presented by Rep. Cusack if they are to get their change to the 2017 law passed. They will also have to address the report from the Massachusetts Budget and Policy Center claiming that the state would lose $37 million a year in revenue if this change is passed. While this is less than 0.1 percent of the state budget, the flawed process here is as significant if not more than the revenue figure.
The advocates will have time to better make their case, however, as the Senate has made it clear it will not be rushed by the House. Rep. Cusack's Senate counterpart, Pittsfield Democrat Adam Hinds, told the Globe that he prefers to "allow for the due diligence and work at the committee level." That is where this debate belongs.
This was also the argument against passage of the legislation brought forward in the House by freshman Democrat Maria Robinson, who claimed that it "has not gone through the traditional means of vetting." The Globe reported that Rep. Robinson was not given a chance to speak after House leaders criticized her amendment to the supplemental budget bill containing the tax law change and Reps. Lindsey Sabadosa of nearby Northampton and Tami Gouveria were also denied an opportunity to speak before the amendment was voted on and defeated.
All three women are first-term progressives and all three went on social media to protest that they were silenced by the hierarchy. Democratic House leaders in Boston and Washington, D.C. have been perturbed by outspoken freshmen lawmakers who don't believe they should be seen and not heard and patiently wait for their chance to move up the ladder. They expect to be heard now, and with the Senate's delay of a tax change executed in haste, the three women lawmakers will be heard on that issue. And surely many more.
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