Dollars and sense
The ultimate proof of the fallacy in telecommunications companies' arguments for the continuation of a nearly 100-year-old law designed to help a new industry is the claim a wireless phone company needs poles and WIRES to perform its task. (Cell towers are another subject entirely!)
Naturally it is Verizon Wireless (which to be fair, has a slightly different corporate history from its eponymous cousin Verizon) who is at the center of this absurdity. It was "the phone company," you will recall, who pleaded poverty earlier this year by saying that without this tax break they could no longer afford to invest in Massachusetts.
Acting Administration and Finance Secretary Henry Dormitzer makes a counter argument brilliant in its simplicity in calling for enactment of Deval Patrick's proposal to close the loophole:
"One-hundred-year-old tax policy can hardly be called up to date," said Dormitzer. "Governor Patrick's proposal to remove the exemption from the personal property tax for telephone company property such as telephone poles is primarily based on fairness to cities and towns."The Globe's Carolyn Johnson also offers some interesting numbers, minus data from AT&T, formerly known as Cingular, formerly known as AT&T Wireless:
For Verizon Wireless, it's the difference between being taxed on property worth $4.1 million in fiscal year 2007, versus $492.8 million in fiscal year 2008 according to a central assessment by the state Department of Revenue. Nextel Communications of the Mid-Atlantic saw the state's assessment of its property rise from $1.9 million in 2007 to $55.5 million in fiscal year 2008. The state found that Omnipoint Communications, also known as T-Mobile, had $142,900 worth of taxable property in fiscal year 2007, versus $101.2 million in fiscal year 2008.Bringing it to the local level:
The city of Boston, for instance, taxed Verizon Wireless on $93 million worth of property in 2004, and collected $3 million. The following year, when Verizon Wireless reorganized and qualified for the exemption, it had only $274,900 worth of property and its tax bill dropped to $8,984.Who pays the difference? Let me guess.
Verizon Wireless's assets in Newton were valued at $6 million in 2004, yielding $118,000 in taxes, but in 2005 with the exemption, the company's property was valued at $17,400 and the city collected only $296.15. For 2008, the state's central assessment of the company's taxable property in Newton is $6 million.
While lawmakers have taken a couple of steps to helping cities and towns by giving preliminary approval to letting municipalities join the state health care and pension systems, they haven't taken the hugely important step of asking corporations to share the burden of living and working in Massachusetts.
Right now, corporations make money off us twice -- first from the sale of services, then from the tax breaks not available to others (Fidelity is small, family-owned company?)
Steve Bailey is correct in pushing for an answer to Deval Patrick's call for property tax relief. Spending one-time surpluses and rainy day accounts to pay for ordinary spending is bad practice. Rebates would be a good idea.
So would tax fairness.
For those of you who have been paying attention lately, I'll be off the grid for a couple of lazy, hazy days.