I’ve never seen a crowd like this show up for the truly arcane topic of taxing “global intangible low-tax income,” aka GILTI. But Raise Up has made it a major political cause.
The coalition of unions and other progressive groups is holding hearings across the state this fall to galvanize support for what it calls the “Corporate Fair Share” proposal. Jessica Tang, head of teachers’ union AFT Massachusetts, told the committee that the offshore tax bill is “the next logical next step” after the millionaires tax.
Raise Up and its supporters hope to increase the amount of offshore profits subject to the state’s corporate tax by 10 times the current level, to help pay for state services. But business groups say this change would simply add to the state’s many economic competitiveness woes.
The themes reflect the debate over the millionaires tax. But there are key differences this time.
Adding the income tax surcharge for people earning over $1 million required a constitutional amendment, a protracted process that culminated in a statewide referendum. Raise Up wants to increase the amount of offshore profits subject to the state’s 8 percent corporate tax through legislation.
Then there’s the amount of money at stake. The millionaires tax now generates more than $2 billion a year for transportation and education. The offshore tax change? Only a fraction of that amount.
Raise Up says Corporate Fair Share could bring in up to $400 million in new revenue each year. The state Department of Revenue, however, just issued its own estimate of $106 million to $151 million, after factoring in changes from the “One Big Beautiful Bill” that Congress passed over the summer (a tax bill that also changed GILTI to the harder-to-pronounce NCTI).
Phineas Baxandall, policy director at the left-leaning MassBudget think tank, says it’s still a smart policy. Whether there’s $400 or $100 on the table, he points out, you still should pick it up. Massachusetts faces a significant revenue crunch. He said this money, while not coming close to filling the gap, sure would help.
At the State House hearing, 1199SEIU political director Gena Frank told lawmakers that the bill would primarily affect companies with giant offshore tax havens. Her message: Those big companies are wealthier now than they were five years ago while many working people in Massachusetts are not.
If Massachusetts business leaders weren’t paying much attention to Raise Up’s campaign when it started in January, they are now.
The chief executives of the state’s most influential business groups — Associated Industries of Massachusetts, Mass. Business Roundtable, the Greater Boston Chamber, and the Mass. Taxpayers Foundation — sent their own missive on Oct. 3 to the revenue committee co-chairs, pleading with them to kill the bill. The proposal, the business leaders said, represents a “massive, unprecedented and misguided tax increase.”
If the proposal raises as much money as its supporters claim, the trade groups said, that would mean the largest tax increase on employers in the state’s history, adding more agita to an already uncertain business climate. One AIM member says the change would more than double the company’s Massachusetts tax liability; another anticipates a 60 percent increase.
Most states don’t tax offshore income at all. Of those that do, most states with economies similar to ours in size impose the tax on a fraction of offshore profits — though most New England states take the more aggressive approach that Raise Up is pushing.
Raise Up has a sympathetic ear in Senator Jamie Eldridge, co-chair of the revenue committee. Eldridge has been a previous sponsor of the bill, and an outspoken critic of corporate tax breaks in general.
Should the “Corporate Fair Share” proposal advance, he says, it would likely move as part of a broader tax bill; he sees it as a way to recoup a significant chunk of state revenue that will be lost to federal budget cuts.
A majority of lawmakers might agree on that last point, and indeed Raise Up says more than 100 of them support “Corporate Fair Share.” But what really matters is what the Legislature’s leadership thinks.
House Speaker Ron Mariano threw cold water on Raise Up’s concept in April when asked by reporters about it, expressing concern that it could hurt the Stop & Shop supermarket chain, which is owned by a European company but based in his hometown of Quincy. (At the revenue committee hearing, 1199’s Frank said Stop & Shop has nothing to worry about.)
Spilka sounded cautious in an interview this month with WBZ-TV political analyst Jon Keller, saying she does not want to look at any tax increases right now. Spilka also knows the DOR estimated that changes from the federal tax bill — she refuses to call it “beautiful” — will wipe out more than $650 million in tax revenue for the Massachusetts budget in the current fiscal year.
Closing gaps like that one won’t be easy. And Raise Up won’t give up on making lawmakers feel guilty about not adopting its proposal — until it is part of the solution.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
