Testimony of

Bill Vernon, State
Director

National Federation of Independent Business

In Support of House
Bill No. 2480, an Act Relative to Estimated Quarterly Corporate Tax Payments

Before the Joint
Committee on Revenue

June 9, 2015   

Chairman Rodriques, Chairman
Kaufman, and Members of the Committee on Revenue:

My name is Bill Vernon. I am the Massachusetts Director of
the National Federation of Independent Business (NFIB). A non-profit,
non-partisan organization, NFIB is the nation’s and our state’s largest small
business advocacy group. The average NFIB member in our state has six employees
and annual sales of about $450,000. In short, NFIB represents the small Main Street
business owners. On behalf of the thousands of small business owners who are
members in the Commonwealth, I urge your support for House Bill No. 2480, to equalize
estimated quarterly payments of corporate excise taxes.

In 1989, the legislature voted to accelerate the estimated
tax payments made by corporations for the purpose of bringing in revenues
earlier and faster. As a result, 40% of quarterly corporate excise tax payments
are due 15 days before the end of the first quarter of the corporation’s fiscal
year. In subsequent quarters, 25%, 25%, and 10% of the annual tax payments are
due. House Bill No. 2480 would equalize each required quarterly payment at 25%
of the amount of total annual tax due. 

The issue is one of equity. This legislation has no
long-term impact on revenues to the Commonwealth. This proposal would result in
no net revenue loss to the Commonwealth (other than a loss in interest earnings
on cash balances in the first year the proposal is implemented), just a
shifting of revenue out of FY2016 into FY2017, if the law were to become
effective on January 1, 2016. In other words, the same total revenue will be
collected by the Commonwealth. Enactment of the proposal would however increase
fairness and equity in the tax code, requiring corporations to pay their fair
share of taxes throughout the year.

The current law requires that corporations pay nearly
two-thirds of the annual corporate tax liability fifteen days before the first half
of the year has passed! A flatter schedule for quarterly payments of corporate
excise taxes reflects a more equitable tax policy without loss of revenue. To
improve the Commonwealth’s pro-business image with no long-term impacts on
revenue, House Bill No. 2480 is a good starting point.   

The House and Senate have approved this change in the past. Unfortunately,
Governor Patrick vetoed that portion of the bill citing a need to “pay for” the
change. I reiterate that the “cost” of these bills is zero net loss in revenue
to the Commonwealth.

I urge you to give House Bill No. 2480 a favorable
recommendation. Thank you.