Commission Targets Corporate Tax Incentives

By Sarah Birnbaum

April 23, 2012

BOSTON — A Massachusetts commission comprised of elected officials from both parties as well as economists unanimously approved recommendations Monday to track and assess the performance of business tax breaks.
Massachusetts auditor Suzanne Bump, who serves on the panel, said the state pours billions of dollars into business tax breaks but often doesn't know whether the incentives are actually spurring job growth.
"For about $2 billion of business tax expenditures that we give out every year, about $1 billion of them had no mechanisms to provide for accountability and transparency," she said.
Corporate tax breaks have been under greater scrutiny on Beacon Hill since Fidelity Investments announced it planned to move more than 1,000 jobs out of state and Evergreen Solar decided to close a factory in Devens and lay off hundreds of workers. Both companies were receiving tax incentives.
The panel is recommending fewer tax breaks and regular reviews of the ones already on the books. It also wants the governor and Legislature to set a goal for each tax break and then establish metrics to measure whether the break is effective.
But economist Michael Widmer of the business-backed Massachusetts Taxpayers Foundation said that while the recommendations are well-intentioned, it's difficult to judge how well corporate tax breaks work.
"When an individual purchases legal services, he or she doesn't pay a tax. Or a haircut — no tax. How are we going to assess whether that's good or bad? That's a public policy decision," he said.
It's now up to the Legislature whether to adopt the commission's recommendations.

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