By Tom Hopcroft
A lot has been written about the Tech Taxthat went into effect at the end of July, and the impact it will have on our innovation-based economy if it is allowed to remain on the books. Here's what's been happening behind the scenes and what you can do to help.
MassTLC and other business groups have been working diligently over the past couple weeks to mitigate the impact of the tax, or get it repealed outright. We've been educating lawmakers, tech companies and the public about the unintended consequences the tax will have on our economy. We even petitioned to put the repeal to the voters on the ballot next fall.
The voices of the tech and innovation sectors are beginning to make it through to Beacon Hill. Recognizing that "technology is at the heart of our innovation economy and key to our future prosperity," Senator Spilka announced today that she's filing a bill to repeal the tech tax. While we applaud her courage and leadership on this issue, we still have a long way to go.
You see, Senator Spilka is perhaps the most tech-friendly legislator we have on Beacon Hill. She gets out and rubs shoulders at tech sector events -- and not just when she's on the speaking agenda. She's created a Technology Caucus in the Legislature to provide a forum for direct dialogue between the technology sector and legislators. She "gets tech" and its importance for our economy. But we need Beacon Hill to get it too.
So my "call to action" involves educating the rest of Beacon Hill. The tech tax went through a legislative process and represents about 20 percent of the revenue sought in the Transportation Finance bill. This means that, unless we educate every lawmaker to the impact that the tax will have in their districts, we will have a hard time getting the tax repealed.
Lawmakers need to hear the voice of every affected company. Tech leaders should contact state Senators and Representatives in whose district they live and those in which their companies are located. We've made online tools available in our Legislative Action Center that will help you identify the right lawmakers, compose letters, and send them in a matter of minutes.
Here are five reasons its worth taking five minutes to help us repeal the tech tax:
Keeping companies in Mass. -- Having the highest software tax in the nation hurts our ability to keep companies -- particularly when 15 other states are offering them tax breaks. Fewer companies mean less available talent.
Attracting companies to Mass. -- Returning to the days of "Taxachusetts" hurts our ability to attract companies. We get great energy, ideas, and investments from companies moving here.
Undercutting innovation -- The law distorts incentives by encouraging reuse if it is "good enough" to avoid the tax. It favors the old over the new and puts a damper on innovation.
Compliance burden -- The law puts an onerous compliance burden and potential liability on innovative tech companies who need to figure out what is taxed and how to bill it.
Anti-small business -- While large companies have in-house resources, smaller companies outsource work that will now be taxed, putting an added constraint on job growth engine.
We are competing with Silicon Valley, New York, and the world at large. If we want technologies of tomorrow to make Massachusetts their home, we need to repeal the tech tax today.
Help support the bill to repeal the tech tax, click here.
Tom Hopcroft is President and CEO of the Massachusetts Technology Leadership Council