The state Senate will consider a series of corporate tax policy changes aimed at helping grow small businesses in Massachusetts and spawning new companies, Senate President Therese Murray plans to announce Friday morning.
In remarks prepared for delivery at an Associated Industries of Massachusetts breakfast in Waltham, Murray, who has assented to a wave of controversial budget-balancing tax increases over the past 18 months, will describe proposals “to create a more favorable and stable business tax climate.”
The proposals, which she describes as “relatively low cost” without attaching an estimate, include:
-- Extending the net operating loss carry-forward period from five to 20 years, starting with losses incurred in tax year 2010. The Greater Boston Chamber of Commerce included a similar proposal in its recent job creation plan, saying it would bring the state in line with 25 other states and aid cyclical industries and start-up companies.
-- Offering a tax credit for new business formation in the amount of the corporate minimum ($456). The credit could be claimed for the first three years of the corporation's existence – regardless of whether the corporation pays the minimum excise;
-- Applying a special 3 percent capital gains tax rate to investments made by individual investors in Massachusetts-based start-up companies, and held for more than three years. The Boston Chamber also called for this proposal.
-- Exempting business-to-business downloads of software from the sales tax. Murray said such transactions appear to be the only business input in Massachusetts not exempt from the sales tax.
To spur immediate job creation, Murray says the Senate will consider “variations” on Gov. Deval Patrick’s proposed $2,500 credit against withholding for each new job a business creates between now and April 1, 2011 and retains for one year. The Senate is considering a ceiling on the salaries that would be compensated by the credit “to promote the creation of lower-paid jobs,” Murray says.
Massachusetts has lost a total of nearly 250,000 jobs since 2003 while the national economy added jobs. “This has to change, especially as we continue to push our way out of this recession,” Murray says in her speech.
In her remarks, Murray cites a Pioneer Institute study showing that between 1990 and 2007, the number of firms in Massachusetts increased 67 percent, but the average firm size shrunk almost 40 percent. In 1990, the average firm in Massachusetts employed approximately 17 people; by 2007, the average firm size here was almost 10 people.
The Senate continues to work on efforts to consolidate and coordinate state economic development agencies, with a plan possibly coming up for a vote “soon,” according to Murray. “Soon” is also the timeline for a plan to provide small businesses with relief from rising health insurance costs, she said.
