Last Friday, Massachusetts governor Deval Patrick ended a two-month controversy by repealing the 6.25% “tech tax” levied on all computer and software services as part of a transportation bill passed in July. Software companies across the state challenged the tax the moment it passed into law, claiming it inhibited their ability to compete with firms in neighboring states who were not subject to the tax. Apparently, the state government shared this view: after two months of debate, both the Massachusetts House and Senate voted overwhelmingly in favor of repealing the tax.
Now, the challenge remains to keep the state budget balanced after the removal of the anticipated $161 million in anticipated revenues from the tech tax. The Patrick administration is confident that the budget will even out, and may rely on its rainy day fund pending an income tax cut to be made later in the year. Massachusetts Senate president Therese Murray said that Massachusetts is “over benchmark for year to date, so we will have the revenue” even without levying the controversial tax.