Health & Fitness
Mass. Should Have Fewer Corporate Tax Breaks
Panel follows up on Auditor's investigation.
Last April the Boston Globe editorialized about the impact of corporate tax breaks given by the Commonwealth on the State’s economy. It stated:
“To her credit, State Auditor Suzanne Bump recently examined 91 of the business-tax exemptions granted by the state; they total more than $2 billion a year — a figure that doesn’t include the full impact of economic-development measures that the state negotiates with individual companies. Bump found that few of the tax breaks have expiration dates or so-called “clawback’’ provisions allowing the state to get money back if the beneficiaries fall short of their promises.”
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Well, it’s nice to know that someone is listening to the Auditor. A group of state leaders has concluded that Massachusetts needs to overhaul its tax system to eliminate many breaks that siphon billions of dollars from public coffers, setting the stage for a debate over how the state should encourage economic growth.
A task force of elected officials and policy makers, known as the Tax Expenditure Commission, plans to call on Governor Deval Patrick and the Legislature to reduce the number and amount of tax exemptions the state offers, according to a preliminary outline of its report. The final report is scheduled to be released by the end of next month.
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The Department of Revenue recently found that Massachusetts has roughly 200 tax credits, deductions, and exemptions, covering things like funeral items and cement mixers and costing the state more than $26 billion in revenue a year - or $4 billion more than it collects.
Supporters of tax breaks, which often target particular industries, argue they can attract businesses, encourage expansion, and create jobs. Typically, economists favor simpler tax systems with fewer special provisions and lower rates as more efficient and less likely to encourage people to contort their behavior to take advantage of a deduction.
“If you have a system with lots of tax deductions, people are going to waste a lot of time and effort trying to fit into those special provisions,’’ said Mark Robyn, an economist with the Tax Foundation in Washington.
