Small tech companies, entrepreneurs, and freelancers = tech lords (aka the new Tech Lords, according to the Globe) ~ who knew?
But first, two important notes:
• The collection deadline for the tech tax has been extended to Oct. 20th.
See info here.
• The repeal is not final. It is very important to stay in touch with your legislator and ensure it is successfully voted down. If repealed, maybe we can all convince customers to spend that money on additional services vs. getting refunds!
So, how did the repeal effort get as far as it has? There were many different angles and many different people who put pressure on the issue. It was truly a situation where the sum of the parts made the difference – no one person or event caused the tax to topple.
Here’s my story, and the perspective I had:
THE ALARM SOUNDS
Andy Singleton, a client and CEO of Assembla, brought this up to me in July. Andy went on to have a critical role as unofficial spokesperson and showing a great ability to cut to the most critical and damaging aspects of the tax. The Governor of Florida’s letter to business owners showed that the tax could be used as a weapon against Massachusetts. Reputational damage was immediate.
THE THREE PRONGS OF ATTACK
The effort to gain a repeal quickly formed into three efforts:
- The ballot initiative, led by MA High Tech Council and Massachusetts Taxpayers Foundation – highly professional representatives of bigger businesses. The ballot initiative put pressure on the legislature and Governor, ensuring the issue would be central to the 2014 elections.
- The injunction, this was led by SPARK Coalition President Joe Baz and Scott Foster, an attorney from Springfield. The SPARK coalition started as loose group of tech business owners, and formalized into a 506c6 to be able to push the injunction. This threat put another strong wall of pressure against the legislature and Governor.
- The repeal efforts. This was initiated by Senator Spilka and pursued aggressively by both the now-awakened tech community and the Republicans (who were always against the tax).
- The tech community looked at this as a non-partisan issue; it was about making the state great, not politics.
- Senator Spilka noted that if 5 people contact a legislator, it is considered a high number. Our goal was to get that number much higher.
- Numerous tech companies chipped in with help – it was effectively a 24×7 very hard-working, loosely organized volunteer effort. The revolutionary militias came to mind because what we lacked in knowledge and resources we made up with hustle. I cannot speak highly enough of the people I was fortunate enough to meet and work with.
- The Republican caucuses made it clear this would become a major rallying point for them, and keep the issue in the news.
- MA High Tech Council provided guidance about the political landscape and kept the issue in the press.
THE TURNING POINT
Governor Patrick came back from the Labor Day holiday and immediately called together legislative leaders to deal with the rising tide of protest. The leadership position at that point was behind “repairing” the tax by asking the Department of Revenue to make clearer and more limited rules for its application.
Industry representatives were saying it could not be repaired, and when people actually looked at the details of tax, they tended to agree. Plus, there were issues of “reputational damage”.
Mike Widmer of the MA Taxpayers Association had a study showing that MA had the highest tax rate in the nation for IT services. Patrick by that time was considering “repeal and replace.”
We are on the verge of winning and stopping this horrendous tax and blot on the innovation economy in Massachusetts. There were so many people and so many moving parts, it’s very difficult to say what, if anything was the most effective – other than the power of it all together.
It is very important to stay in touch with legislators and to ensure that the vote goes through successfully.
Before this, I pretty much viewed politics as something to avoid – occasionally watching as sport. Now I see that has to change, but how? The community tech entrepreneurs is now asking the same thing. Should they lobby? Educate? Ensure their voice is heard?
The techtax had fatal flaws because it was designed by people with no knowledge of software. It’s critical that people who really understand software are at the table as future policy is set. It’s also clear that connection of the small tech companies, freelancers, and entrepreneurs to existing organizations and chambers needs to be improved.
I would like to thank both Representative Patterson and Senator Moore for being responsive – I initially sent an email, not expecting a response, but got personal ones. It was pleasant to see that my voice could be heard.
I learned a very valuable lesson there. I also especially appreciate the initiative and leadership that Representative Peterson and Senator Spilka showed around getting the tax repealed.
Jim Henderson is the founder and CEO of The Exemplary Group, as well as moderator and contributing blogger for Chief Executive Boards International. He has helped numerous founders and executives navigate and execute solutions to
their most challenging people, product, and pipeline issues.
He moved to Grafton last year and currently spends most of his free time enjoying time with his wife and 11-month old son.
He is a career software entrepreneur, having bootstrapped a company into the Inc. 500 as one of America’s fastest growing company. Jim can be reached at 774-545-5184.