One tax break, three companies, $281 million in lost revenue.
That’s one of the key findings of a recent analysis, conducted by the Massachusetts Department of Revenue (DOR), of a provision included in the Commonwealth’s corporate tax reform legislation in 2008. As the Massachusetts Budget and Policy Center (MBPC) explains, the provision, added under questionable circumstances during legislative debates, was designed to ”give a new tax break to companies ‘if book-tax differences … result in an increase to a net deferred tax liability or decrease to a net deferred tax asset for any taxpayer affected by this section.’”
Yet, as the MBPC points out, at the time the provision was added to the legislation, there was no publicly available explanation of what it would cost or any description of the policy goals it was intended to achieve. The DOR’s analysis finally puts some numbers to those expected costs: over the next seven years, 128 corporations will realize tax reductions totaling $535 million due to the provision, with over half -- $281 million – going to just a trio of companies.
Needless to say, given Massachusetts financial woes, the DOR’s report has some legislators rethinking the wisdom of this particular feature of the tax code.