Left In Lowell

Margaret’s (and Jackie’s too) posts about the debate “frame” on taxes always strike me. Margaret also points us to a Sun columnist, John Edwards, who breaks down the myths surrounding corporate taxes - do they affect a business’ decisions on location (and hence, regional economic growth), and are Massachusetts’ corporate taxes really that bad? The answer is no, and no. The whole article is worth reading, but here’s some highlights:

A recent Greater Lowell Chamber of Commerce Legislative Breakfast focused on the region’s lack of job growth. With job creation identified as being “compulsory,” it makes sense that Beacon Hill politicians and candidates for office offer tax breaks to stimulate economic growth and create jobs. Except this approach seldom makes sense, and studies show it does not work.
[…]
Numerous studies on how businesses decide where to locate support this claim. Surveys that ask business leaders how they choose a location do not identify taxes as a primary motivator. Statistical analyses of the impact of state tax incentives show very little contribution to the economy. In fact, the economic benefits of such incentives are less than the lost tax revenue.

Why do companies say they need tax breaks? Why not? Consider what you would do in a similar situation — you may have been there already.

Edwards goes on to describe negotiating tactics when you might use when offered a job. What do you ask for? More money, of course, even if the employer can’t affect any of the real factors that you might list as issues for your acceptance (like high cost of living, schools, etc).

So, if you might use such a tactic to get more money, don’t you think a company would, Edward posits? Indeed, since the lawful goal of a corporation is to make money for shareholders or owners, they would be stupid not to.

However, the hue and cry that corporate taxes (or not doling out that new loophole or tax break incentive) are the reason a company relocates is completely off the mark. Sal DiMasi (and several of our area Reps) would do well to figure that out someday.

On the second myth, Edwards busts it like a mylar balloon in the hands of a three-year-old weilding sharp teeth:

…Taxes are a cost of doing business.

How much of a cost? Not much in Massachusetts. Not relative to other states, and not relative to other costs. Studies that compare corporate taxes to the size of the state’s economy show we have one of the lowest corporate tax burdens in the country. Analysis of the costs of doing business finds that, relative to other expenses, taxes are a very small portion — about 1 percent.

POP! (Cue screaming child, a.k.a. the Boston Chamber of Commerce.)

Edwards goes on to pin the tail on the answer (bold mine):

If Massachusetts wants to offer incentives to companies, there are much better ways to go about it. The same concerns you would probably have when considering a job are what businesses consider when deciding where to locate. Good school systems that provide an educated work force, affordable housing, affordable health-care costs, and improved transportation (and communication) infrastructure will do a lot more to create job opportunities than giving tax breaks to corporations. Initiatives underway to streamline and speed up the permitting process for new businesses will help as well. [Note: You know, like what Patrick is doing…]

A while back, I had a discussion on the issue of taxes with Robert Tannenwald, the well respected vice president and research analyst from the Federal Reserve Bank of Boston. One observation he made was that “if we paid more attention to neutrality and fairness perhaps competitiveness would take care of itself.” Neutrality means that firms and individuals should not receive preferential tax treatment in order to influence behavior. The one study that grades Massachusetts poorly on competitiveness and corporate taxes does so not because state taxes are high, but because our tax system lacks neutrality.

Someday, sanity, and not knee-jerk stupidity, might return when that “T” word (Taxes) is brought up. In other countries, they’ve already worked this one out. America, sometimes, is like the lumbering doofus of a baby sibling who gives his older, smarter sister a very puzzled look when she tells him a clever joke, and then twenty minutes later, finally gets it and then starts laughing.

So I’m waiting for us to figure out the punch line, sooner or later.

A smart move from the Eldridge campaign, and a great way to start a discussion with voters:

Eldridge Continues Health Care Debate
Holds Viewing of Sicko

ACTON Jamie Eldridge (D-Acton) is hoping to heat up the debate on health care. Eldridge, a strong advocate for universal, single-payer health care is inviting the four other Democratic candidates from the MA-05 race, as well as the community, to a viewing of Michael Moore new film Sicko. The film takes a look at the American health care system and the need for reform.

Eldridge said he hopes to continue the dialog about health care reform.

“There are 47 million Americans without health insurance including many children,” says Eldridge. “This can be fixed by universal, single-payer health care, and when I get to Washington I will help lead that charge.”

Eldridge hopes that the other candidates will adopt his stance on health care after seeing the film.

“Representative Eldridge has been a leader on health care reform and will be as a Congressman,” says campaign manager Jeremy Wade. “We want to bring the other candidates to the discussion we are having with the community.”

The showing will take place at 12:40pm Thursday July 5th at the National Amusements Showcase Cinemas on 32 Reiss Avenue in Lowell. The Eldridge campaign is paying for tickets to the showing. Eldridge will be taking questions before the film at 12:15 and at the conclusion of the film. If you would like to attend the event please contact neel@jamieforcongress.com.

My husband and I went to see it last night. The movie has a very convincing premise: our health care is broken, and it’s because of the for-profit system we are mired in…the only industrialized nation in the world with such a system. It goes over the facts about how America’s health care system is no where near the best in the world; tackles the myths about single payer system; and does so in a very entertaining and often poignant way. The stories of the so-called insured people in the film will tear your heart out. Join Jamie for this viewing and discussion about the issue. You truly won’t regret it.