The compromise reached by Massachusetts Gov. Deval Patrick and House Speaker Sal DiMasi on closing corporate tax loopholes should prove beneficial to taxpayers without any negative impact on business.
Neither man got exactly what he wanted, but it is a solid step toward closing the state’s $1.3 billion budget shortfall.
Closing the “check the box” tax loophole, so businesses can no longer claim one status for federal taxes and another for state taxes, is a prudent move. The measure will also prevent businesses from shifting income to out-of-state subsidiaries to avoid paying Massachusetts taxes.
DiMasi’s recommendations to cut the corporate excise rate from 9.5 percent to 7 percent over the next three years and to freeze the unemployment insurance rate were also sensible.
However, DiMasi’s push for a $1 increase in the cigarette tax — from $1.51 to $2.51 — to raise another $152 million a year is unrealistic. Many smokers, especially those living in border communities, already drive to New Hampshire and other states to buy cigarettes. A hefty tax hike will only inspire others to follow their lead.
More revenue is needed to fund the state’s health-care plan and provide local aid. The big question is the source of that money?
It is clear the state doesn’t have the stomach to make real spending cuts, and we can’t build our revenue on the backs of low-income residents, so new revenue must be found.
What’s wrong with exploring Gov. Patrick’s plan for casino gambling? Frankly, we see no way out of the state’s fiscal dilemma without engaging in a serious debate on legalized gambling.
To heavily tap into Massachusetts’ rainy day fund — as both Patrick’s and DiMasi’s budgets do — is a mistake. We urge Speaker DiMasi to allow in-depth debate on legalizing casino gambling.