Governor Deval Patrick today vetoed a section of the jobs bill that would have eliminated the requirement that employers make most of their estimated tax payments early in the year.
The provision would have changed the current schedule under which employers pay 40 percent of estimated taxes in the first quarter, 25 percent in the second, 25 percent in the third and 10 percent in the fourth, to one in which companies would make four equal payments of 25 percent.
A statement by the governor’s office indicated that the quarterly payment measure was one of several provisions that Patrick vetoed because they “would create unaffordable tax benefits that are inconsistent with the recommendations of the Tax Expenditure Commission.” The governor also vetoed an extension of the Brownfields Tax Credit, an increase in the Historic Preservation Tax Credit and a $456 tax credit for a new corporation for three years.
AIM has long supported a return to equal quarterly tax payments and is disappointed that the governor vetoed it.
“Most companies don’t generate 40 percent of their sales in the first quarter, but still have to pay 40 percent of their taxes at that time. It’s a real impediment to growth, especially for small hospitality and retail enterprises that do most of their business later in the year,” said John Regan, Executive Vice President of Government Affairs at AIM.
AIM acknowledges the $191 fiscal impact on the commonwealth’s budget as a result of equal quarterly payments, although ultimately the impact is merely one of cash flow as corporations will still be required to pay the same amount of taxes by the end of fourth quarter. We look forward to working with the Legislature and the Patrick administration to address any fiscal concerns while correcting this unfair corporate tax policy.