Tax credit pitched to entice small biz hires

  • The Massachusetts State House in Boston

State House News Service
Published: 6/7/2023 9:35:34 AM

BOSTON — The Legislature could boost local businesses, combat recidivism, and promote racial equity in one fell swoop, supporters of a tax credit proposal told the Revenue Committee Tuesday.

Rep. Carlos González pitched his colleagues on a tax incentive for so-called microbusinesses to hire formerly-incarcerated Bay Staters and people who receive transitional assistance benefits.

It’s a chance “for somebody that may have been a tax burden to become a taxpayer,” González said. He added, “And the way we do that is through the microbusiness, because many of the residents that are coming from the Department of Corrections are going back into the communities where this will have major impacts.”

The Springfield Democrat’s bill (H 2811), cosponsored by House Majority Leader Michael Moran of Brighton, calls for a $2,000 tax credit for each such person hired, along with a $15,000 grant from a new microbusiness “worker development and training program.”

González framed that as “no different than a tax incentive [that] goes to major corporations to develop major employment opportunities” and said it would “play a significant economic impact in hiring individuals from particularly Black and Latino communities, and women, and veterans.”

Microbusinesses are defined in the bill as having 10 or fewer employees and not more than $250,000 in gross profit in the previous taxable year, and González said that covers 68% of all businesses.

Tomás Gonzalez of Amplify Latinx said the microbusinesses that stand to benefit include the “Latino businesses which are the one- and two-person operations that you walk by every single day, that you see on your way to work and from work” and were “sorely impacted by the pandemic.”

To Phineas Baxandall of the Mass. Budget and Policy Center, small local businesses “get extolled when we’re talking about business tax cuts,” but “all too often, do not end up receiving the kinds of benefits that get passed.”

“One of the things that we really like about this bill is that it actually ensures that the money will go, and will go only, to these businesses that fit [microbusiness] definitions,” Baxandall said.

Caregivers and tuition

The Revenue Committee solicited public comment on 48 other bills Tuesday, touching on a range of topics from the purchase of new tractor trailers for interstate commerce to incentivizing cosmetic companies to stop using photoshopped pictures of models.

Several tax break bills are aimed at improving the affordability of life in Massachusetts. Even if those standalone bills do not advance, the topics — like deductions for college tuition and family caregiver expenses — could surface again soon when the Senate takes up a promised tax relief bill.

Two representatives on the Revenue Committee, a Democrat and a Republican, spoke up to tell Sen. Moore they liked his proposal to let taxpayers deduct up to 50% of tuition payments made for themselves or a dependent to public higher education institutions (S 1884).

Moore called tuition “one of the most prominent areas of rising expenses” and said watching the University of Massachusetts hike its pricetags “can feel like an annual event.”

Rep. Michael Soter, a Bellingham Republican, referenced his 12-year-old daughter and said he is “thinking about where we’re going to be in six years.” He told Moore he was “100 percent behind [him].”

Natick Democrat Rep. David Linsky said he is “certainly well aware” of tuition expenses after sending three kids through college, and called a state-level deduction the “first step.”

Looking past college to the other end of a lifespan, former Rep. Mike Festa touted the AARP’s support for a maximum $1,500 tax credit (H 2932) to help certain family caregivers with out-of-pocket expenses related to helping keep a loved one living in their own home.

“When we keep people at home longer, when we’re giving them the opportunity to have a quality of life where they live, it’s ultimately going to reduce the impact on the kinds of costs and services that are provided by the state,” Festa said, adding that family caregivers spend an average of more than $7,000 each year on out-of-pocket expenses “to help that loved one stay at home.”

Renewable heat

At some points on Tuesday, the committee sounded more like the Legislature’s energy policy panel as lawmakers heard from supporters and opponents of “renewable propane,” one of the subjects dealt with in a bill filed by Rep. Jeffrey Roy.

Roy’s 17-page bill aimed at incentivizing renewable heat (H 2938) features several types of heat sources including air source heat pumps, ground source heat pumps, and equipment fueled by renewable hydrogen and renewable propane.

It would establish a tax credit equal to 30% of “total qualified expenditures incurred in connection with the purchase and installation of qualified heating equipment during the taxable year.” And it would set up a new state fund to “stimulate investment” in developing certain “renewable heating fuels.”

Renewable propane can be developed from sources like soybean oil or used cooking oil and is already being used in California, said William Malloy, lobbyist for the Propane Gas Association of New England.

He also told lawmakers that MIT researchers have developed a way to produce renewable propane from plastic bottles, which he called “another great shot in the arm for this energy source.”

Co-chair Sen. Susan Moran told Malloy it “sounds like a promising product.” The Falmouth Democrat said the state has “a real commitment to move away from carbon,” but in her Cape Cod district people rely on backup generators if they have medical devices or “just don’t want to be freezing cold.”

Later in the hearing, Karen Kraut from environmental activism group Mothers Out Front took issue with some “renewable” heat sources promoted by Roy’s bill.

“The term renewable sounds promising and climate-friendly at first glance, but it simply means energy from a source that is not depleted when used. ... Does renewable mean it doesn’t emit greenhouse gasses? No. Does it mean it’s safe? No. Does it mean it’s not polluting and healthy? No,” Kraut said. She added, “Why, then, would the Legislature even consider incentivizing gas production?”

First-term Methuen Democrat Rep. Francisco Paulino pushed back. He referred to “landfills full of plastic that would take centuries” to break down, and he seemed excited about MIT’s plastic-to-propane research.

“I believe it’s not as clean as we want it, but at least we are recycling, converting something that’s contaminated the whole environment into something that we can use until we can go fully green. ... I agree with your point, but in some way we have to find a middle, we have to be in the middle,” Paulino said.

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