Thursday, December 1, 2011

Study: Obama tax proposal would stifle business climate

Bay State jobs killer
By Frank Quaratiello
Thursday, December 1, 2011


President Obama’s jobs bill would have a devastating impact on the Massachusetts economy, according to a shocking new report that finds its proposed enterprise value tax provision would kill 5,400 Bay State jobs and trim private investment by $9.5 million and disposable income by $673 million each year.

The EVT would tax profits on the sale of investment management partnerships at ordinary income rates up to 35 percent. Proceeds from the sales of these businesses are now taxed at a 15 percent capital gains rate.

“The EVT would fall most heavily on states like Massachusetts and California, which are important centers of high-tech innovation and of venture capital and turnaround investment funds,” said David Tuerck, executive director of Suffolk University’s Beacon Hill Institute, which conducted the study sponsored by the Massachusetts Chamber of Commerce. “The EVT is a particularly misbegotten way to achieve deficit reduction. It punishes long-term investment and takes capital out of the economy.”

Hub industry leaders echoed concerns about the proposal yesterday.

“This would be a bad idea. It would be bad for Massachusetts and it would punish people who build successful companies,” said Paul Maeder, founder and general partner at Highland Capital Partners and chairman of the National Venture Capital Association. “I don’t understand why we tax work and value creation.”

Michael Greeley of Flybridge Capital Partners agreed: “The specifics (on EVT) have not been made entirely clear, but in general, you tax behavior you do not want to encourage or support, therefore I am quite concerned about taxes which stifle innovation.”



Congress is currently deadlocked over the president’s jobs bill, but Tuerck said the EVT is “high on the list of revenue sources that Democrats want.”

“This proposal could inflict lasting damage on the Massachusetts economy just as we are starting to recover from a recession,” said Debra Boronski, president of the Massachusetts Chamber of Commerce.

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