We stand up for a Massachusetts where everyone gets a fair shot, does and pays their fair share, and plays by the same rules.
It is true that tax credits can create jobs by incentivizing industry and hiring. But the problem is that — without oversight and accountability — we have no guarantees we’re getting anything that resembles “bang for our buck.” And, if we aren’t careful, these tax programs become a corporate handout free-for-all.
The Globe reported last week that the film tax credit cost state tax payers $108,000 per local job.
That’s not good. I’m upset about that, and a lot of other people are too.
But at least it’s not what Nevada is paying per job to land the Tesla factory …. in fact it’s about half that astronomical sum. But at least that factory will bring in actual jobs. There are many very expensive tax credit programs that cost the taxpayer billions of dollars cannot credibly claim they produce a single new job.
Think about that for a second.
This is something that happens across the country, and it’s undercutting schools, infrastructure and social services while making large, profitable corporations more money. Why, at a time when corporations are sharing their profits with workers at historic lows, are we bribing them with tax breaks we can’t afford to create jobs they were going to create anyway?
There are a couple issues here, so let me break them out for you.
1) Site location hostage-taking
When a company like Tesla announces plans to build a new factory, obviously everyone wants that factory in their state. A lot of people are going to get good jobs at that factory. But what ends up happening is a kind of “race to the bottom” of tax incentives, where “site consultants” get different states or cities to offer more and more lucrative tax programs to lure that company. Nevada offered Tesla $1.25 billion in tax credits to move there.
It used to be that states lured business by doing a set of programs that ALSO just happened to help everyone. They improved education, they improved transportation, they added parks and police officers. Now, in order to lure business, you have to take away from parks, schools, roads and police. Now, in order to lure business, politicians just fork over cash.
And even if your city or state won’t be dragged into the boondoggle, the more aggressively your neighbors embrace it, the more you lose. It’s a race to the bottom and we need to put a stop to it.
2) Weak or non-existent accountability for corporate tax programs
Massachusetts gives out about $3 billion in corporate tax programs — things like the film tax credit, and many other programs.
Some of these programs report what they spend, and require businesses to report how these credits were used. That reporting helps us find problems, like that fact that we’re paying $108,000 per film job. But interestingly enough, many of these programs have ZERO oversight. We don’t know who gets what and what they’ve done to qualify. No one is asked to prove they deserve the huge tax credits they receive. Many of these credit programs also have no maximum limit and no renewal date.
That’s just insane. State Auditor Suzanne Bump proposed a bill to review how these businesses uses these tax credits, which failed in the Legislature this year. While this bill is a good start, it doesn’t go far enough. We, the taxpayer, should be able to see exactly which company got what money in tax breaks, and what they are doing to justify that money.
While you can say that Massachusetts has better transparency than many states, that doesn’t solve the problem.
It’s time for us to stand up and demand better from our tax policy.