Backroom Tax Credits in Massachusetts

March 31, 2010

Some companies will get sweet deals in Massachusetts; we just don’t know how sweet:

Liberty Mutual Insurance Co., Coca-Cola Co., and a half-dozen other companies could receive tens of millions of dollars in state and local tax breaks today from an obscure state economic development board.

But Massachusetts officials won’t say how much they plan to award the companies – or what the firms have promised to do in return – until after the board votes on the proposals, when, critics say, it’s too late to object.

…The decision comes despite complaints that the council, which awards tax breaks to com panies that promise to create jobs in beleaguered areas, has squandered millions of dollars in taxpayer money over the 16-year life of the program. A Boston Globe review published earlier this month found the council routinely approved projects that created few high-paying jobs, delivered many fewer jobs than promised, were located in affluent areas, or would have been built without subsidies.

Obviously, policy decisions affecting which businesses have to pay how much in taxes should be public. But there are a couple of reasons why Massachusetts politicians would want to keep the deals private. For one, it might be advantageous to not let some companies know how much you are offering to others. Second, as the article mentions, once the deals are made public it might be too late for critics of the program to respond effectively.

Of course, this is all misguided policy. Massachusetts should focus on providing an even and low–tax milieu for businesses—not pick favorites using tax expenditures.

More on Massachusetts here.


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