Commission perhaps endorses part of Patrick business-tax plan

A new report ostensibly written by a special commission studying the state's business tax structure recommends legislators immediately adopt a key element of Gov. Deval Patrick's proposed tax overhaul, but at least two panelists say commission members were uninvolved in drafting the findings.

"This kind of one-sided treatment undercuts the validity and purpose of this commission, which was to take, I thought, an honest and comprehensive approach to overhauling the corporate tax code. This is the furthest thing from that," Michael Widmer, a commission member and president of the business-backed Massachusetts Taxpayers Foundation, said Monday.

Rep. Bradley H. Jones Jr. of North Reading, the House Republican leader, said the report superseded another draft he proposed two weeks ago, which counseled that the commission continue studying the proposal.

"Quite frankly, the report is laughable in that it tries to reflect that the whole commission feels this way," Jones said. "You couldn't sit through the meetings I sat through and then believe this report reflects those meetings. You'd have to be devoid of any sense of reality to do that."

But another commission member, Alan Clayton-Matthews, a public policy professor at the University of Massachusetts-Boston, said he considered himself involved in the report's production.

"Indirectly, yes, because much of it came from the discussions of the group in the prior meetings," he said, reserving further comment until Tuesday, when the full panel was scheduled to vote on the report.

Cyndi Roy, an administration spokeswoman, said it would not comment on a report that had not been made public.

In a draft report, e-mailed to the members by the administration and obtained by The Associated Press, an unnamed author recommends closing a loophole that allows businesses to claim one tax status in Massachusetts and another on their federal tax returns.

The report says: "This avoidance has helped reduce business tax receipts as a fraction of corporate profits from 11.5 percent in 1989 to an all-time low of 5.1 percent in 2005 and 5.5 percent in 2006 all while corporate profits were doubling."

The report adds, in language similar to that used by Patrick on the campaign trail: "The commission's evidence demonstrates that insisting on greater shared responsibility by our commonwealth's future principally by asking a fairer share from larger, multistate businesses will not harm competitiveness and economic growth in Massachusetts."

The report estimates the change would increase state revenues by $108 million in the fiscal year beginning July 1, and $169 million in subsequent years.

The panel was chaired by Leslie Kirwan, who as secretary of the Executive Office of Administration and Finance is the chief proponent of the governor's economic plans. One-third of the 15-member panel also was appointed by Patrick. The remaining members were appointed by Senate President Therese Murray and House Speaker Salvatore DiMasi, whose branches passed budgets earlier this spring that did not endorse the proposed loophole closure.

Aides to Murray and DiMasi were reviewing the report before offering comment. Jones and Widmer were among DiMasi's appointments, while Clayton-Matthews was appointed by Murray.

Widmer said at least seven panelists were opposed to the tax closure. He also said the commission was uninvolved in the report's drafting, having met once to organize, once to hold a public hearing and twice to discuss substantive matters.

"It's a very one-sided report that ignores the fact that roughly half the commission members have a very different view of the potential impact of these large corporate tax increases, namely that they will hurt job creation and further undercut business development in Massachusetts," Widmer said. "None of that diversity is reflected in this report. Essentially, the administration is writing the report as it did its state budget earlier this year."

The commission was charged with studying ways to modernize and simplify business tax laws, promote tax fairness, encourage business growth and innovation and strengthen the Commonwealth's global competitiveness. Its charter called for an initial report with recommendations by Friday, two weeks before the start of the new fiscal year.

A final report is due Jan. 1.