According to Senator Adam Hinds, tax credits for the usage fees of port maintenance and medical device companies as well as a tax exemption for certain patent-related income “no longer serve the desired purpose”.
His Senate colleagues appeared to agree and voted Tuesday to pass his budget change that would remove these three tax breaks from state law.
Hinds, the chairman of the Senate Finance Committee, is a member of a state tax spending review commission set up under a 2018 law to analyze the various tax exemptions, deferrals, credits and deductions that have been made over the years with the Intentions were assumed to achieve certain goals and behaviors.
The commission published its first report in March and Hinds said his amendment was trying to “implement that report in us by responding to these recommendations and recognizing when a tax expense is out of date and no longer necessary”.
“We’re not taking the time to understand fundamental issues about this issue,” the Pittsfield Democrat said before its amendment was voted on. “Is it going to the intended beneficiaries? Is it a sensible incentive for the purpose we agreed to? Does it justify the cost? Is it relevant to our daily life in our modern economy? “
The commission said Massachusetts was the only state providing “dollar-for-dollar compensation for federal tax on port maintenance,” and that credit was claimed by a “small number” of applicants – there were 79 to 88 claims per year during the tax years 2015 to 2018.
“We conclude that while this loan is an incentive to use ports in Massachusetts, it has no measurable benefit and is of no relevance today,” the report said.
The members of the commission also disagreed that the medical device use credit used to reimburse companies for certain fees paid to the US Food and Drug Administration was “a significant incentive.” The report said, “The use of this loan by fewer than half a dozen large companies is a strong indication that it is not relevant. While the low cost suggests this is easy to justify, we conclude that the average tax credit is too small ($ 34,000) to provide any meaningful incentive to the relatively large companies that claim this. “
Massachusetts exempts income from sales or transfers of certain patents that support energy conservation or alternative energy from tax for five years and is approved by the Energy Resources Commissioner, according to the report, but the exemption is “so tightly structured that no one has it ever used. “
According to the report’s figures, the two port maintenance and medical device fee tax credits would add up to an estimated $ 2 million in lost revenue in fiscal 2022, the year covered by the $ 47.6 billion budget debated by the Senate .
When Senate Chairman Michael Rodrigues unveiled his committee’s version of his committee’s budget earlier this month, he also cited the Commission’s findings on the state’s film and television production tax credit.
The commission landed between “strongly disagree” and “strongly disagree” on whether the film tax credit justified the annual cost of $ 56 million to $ 80 million. Commissioners suggested that alternative approaches such as subsidizing the construction of movie studios directly in the Commonwealth could result in more investment than the existing loan, which instead encourages immediate short-term spending and encourages the creation of more permanent jobs in the Commonwealth at a lower cost “, It says in the report.
The loan expires in late 2022, and while the House unanimously voted during its budgetary deliberations to remove the sunset and make it permanent, the Senate plan is instead to move the sunset date to January 1, 2027 while revising the loan self.
To qualify for the loan, a production company must spend 50 percent of its filming budget or have at least 50 percent of its prime photo days in Massachusetts. The Senate (S3) budget would raise that threshold to 75 percent, plus the cap on salaries or compensation eligible for the $ 1 million loan, and remove loan portability.
The Senate on Wednesday rejected a number of amendments proposed by minority leader Bruce Tarr related to the film tax credit. The House-Senate differences over film tax credits and the changes to the tax law passed by the Senate on Tuesday will be reconciled by a six-member conference committee.