GE’s move muddles economic development debate
General Electric’s corporate-headquarters move from Connecticut to Boston has been inaccurately described as a decision based solely on taxes. This characterization might be understandable, given GE’s public outcry over the legislature’s adoption of a common-sense policy known as mandatory combined reporting, which requires profitable corporations to pay their fair share. On the other hand, Massachusetts has long had such a policy on the books and is also seriously considering a millionaires tax.
So there had to be more going on than taxes. And it turns out there was.
They cited such Massachusetts assets as education, skilled workforce, infrastructure and the state’s commitment to support research and development. Taxes were not mentioned. The move is also consistent with corporate trends of moving headquarters out of suburbs into the densely populated, walkable communities that many highly talented workers prefer these days.
These important characteristics require public investments, which require everyone, including profitable corporations, to pay their fair share. There’s some irony in this, as GE, in 2014, didn’t pay a dime of state income tax on $5.7 billion in U.S. profits.
CEO Jeffrey Immelt – who has recently held governments and GE employees in the U.S. hostage over public policy decisions that reduce corporate welfare – has stated publicly that in its pursuit of a new headquarters, GE was not looking “for special deals.” Yet according to the nonprofit research organization, Good Jobs First, even as Northeastern states competed against each other for to provide GE the biggest giveaway, the company has amassed more than 1,200 local, state and federal subsidies totaling more than $1.5 billion dollars.
According to the Boston Globe, Boston is offering up to $20 million in property tax breaks and Massachusetts is offering up to $120 million in tax subsidies. That’s nearly $145 million to transfer 800 jobs 175 miles, a cost of more than $180,000 per job, despite that the fact that GE likely would have made the move without the giveaway.
From the standpoint of a highly educated, productive, healthy and innovative workforce, Connecticut is in a position to compete. What’s really needed is an honest debate on the economic competiveness of states’ business climates. And that should include issues like relieving uncertainty surrounding state debt and public investments that build the thriving communities that attract talent.
Those are the things policymakers and firms need to talk about – not who will give them the biggest fruit basket.
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