Budget Amendment ID: FY2016-S3-68

OTH 68

Ending Special Interest Corporate Tax Loopholes

Messrs. Montigny and Eldridge moved that the proposed new text be amended by inserting after section___ the following new section:-

"SECTION __. The inspector general in consultation with the department of revenue shall no later than March 15, 2016, submit to the speaker of the house of representatives, president of the Senate, and chairs of the house and senate committees on ways and means a report regarding:-

(a) the creation of a mandatory sunsetting program for the following tax credit programs: (i) the U.S.F.D.A. user fees credit in section 31M of said chapter 63 and subsection (n) of said section 6 of said chapter 62; (ii) the film tax credit in subsection (b) of section 38X of said chapter 63, subsection (l) of said section 6 of said chapter 62 and Subsection (ww) of section 6 of chapter 64H; (iii) the life sciences investment tax credit in section 38U of said chapter 63 and subsection (m) of said section 6 of said chapter 62 (iv) the investment tax credit in section 31A of chapter 63 when claimed by a manufacturing corporation, or a business corporation engaged primarily in research and development, which has been deemed to be such under section 38c or 42b; (v) the medical device tax credit in section 31L of said chapter 63 and section 61/2 of said chapter 62; (vi) the refundable research credit in subsection (j) of section 38M of said chapter 63; and (vii) the economic development incentive program in subsection (g) of said section 6 of said chapter 62 and section 38N of said chapter 63.  The report shall include, but not be limited to: (1) an analysis of the economic impact of sunsetting each of the commonwealth’s tax credits; (2) recommendations along with a description of the advantages and disadvantages of various legislative or administrative proposals for a tax credit sunsetting program; (3) recommendations for the frequency with which tax credits should be subject to review; (4) recommendations for factors to be considered in any possible review of a tax credit program based on metrics commonly employed in economic, or legislative analysis of tax programs nationally; (5) an accounting of the potential costs of reviewing tax credits; (6) an assessment of the institutional capacity available to effectively carry out review of tax credits, and (7) a description and comparison of the policies other states have in place regarding tax credit programs.

(b) an evaluation of the following tax credit programs: (i) the U.S.F.D.A. user fees credit in section 31M of said chapter 63 and subsection (n) of said section 6 of said chapter 62; (ii) the film tax credit in subsection (b) of section 38X of said chapter 63, subsection (l) of said section 6 of said chapter 62 and Subsection (ww) of section 6 of chapter 64H; (iii) the life sciences investment tax credit in section 38U of said chapter 63 and subsection (m) of said section 6 of said chapter 62 (iv) the investment tax credit in section 31A of chapter 63 when claimed by a manufacturing corporation, or a business corporation engaged primarily in research and development, which has been deemed to be such under section 38c or 42b; (v) the medical device tax credit in section 31L of said chapter 63 and section 61/2 of said chapter 62; (vi) the refundable research credit in subsection (j) of section 38M of said chapter 63; and (vii) the economic development incentive program in subsection (g) of said section 6 of said chapter 62 and section 38N of said chapter 63. The report shall include, but not be limited to: (1) Whether the tax incentive is achieving the policy goals and purposes that it was intended to address; (2) the revenue forgone to administer the tax incentive; (3) the benefit derived from the tax incentive; (4) the extent to which the tax incentive is helping residents, businesses, or other entities within the commonwealth; (5) number of jobs created by the tax incentive (if applicable); (6) the impact of transferability and refundability on tax credit effectiveness, including an accounting of the amount of funds lost to the commonwealth and the impact on industry of transferability and refundability, and (7) any other information the subcommittee deems valuable in considering whether or not the tax incentive program achieved its desired public policy outcome.

(c) as part of its analysis the study shall analyze and develop recommendations for effective clawback provisions for present and future economic tax credits which would permit the commonwealth to recoup foregone tax receipts from tax incentive recipients who have failed to achieve or meet stated goals or benchmarks, including but not limited to job creation goals set in the tax credit program. The study should include, but not be limited to, (1) a review of clawback provisions in other jurisdictions, (2) the general economic impact clawback provisions will have on taxpayers, (3) an estimate of how many taxpayers will be affected by a clawback provision, (4) an estimate of how many tax payers who claimed tax credits did not fulfill the stated goals, benchmarks, or conditions of the tax credit award, and (5) an estimate of the number of tax credits and the amount of money that would be subject to clawback for failure to fulfill the stated goals, benchmarks, or conditions of a tax credit award.

(d) The impact of lobbying on the creation of preservation of tax credit programs defined in section 1 of Chapter 62C. The report shall include, but not be limited to: (1) an accounting of the amount of money spent on lobbying for the creation or preservation of tax credit program beginning in the year 2005, (2) a description of the names of all lobbyists working to create or preserve tax credit programs, including any money received for their services and what entity provided such payment since 2005, (3) an accounting of all the entities that have expended money in an effort to preserve or create a tax credit program since 2005, and (4) any other relevant information relating to lobbying for the creation or preservation of tax credit programs."