To keep jobs, don’t kill tax incentives

To keep jobs, don’t kill tax incentives

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In recent days the debate about the state economic policy has escalated and it is due to the decision to move hobs to neighboring state of the fidelity.  It is a must to have an open and honest conversation about the economic policy of the state and the discussion should be focused narrowly. Thousands of companies in Massachusetts are making decisions about locating adding and reducing jobs every month. The best way to make more of this decision goes in favor of the employee by sustaining the leading industries of the states including the financial services. Financial services is a under realized and huge contributors to the economic strength of Massachusetts which employs nearly 170000 people directly. The tax benefits which are from these jobs are immense that is income tax payments represent hundreds of millions of dollars in the state sales taxes, 20 percent of total income tax collections and hundreds of millions in the property taxes.  The main question is that how this economic cluster can be nurtured and protected in the face of technological innovation and competition which enables many of it functions to be performed in any part of the world.  The forward thinking tax policy which was enacted in the mid of 1990s that is the single sales factor apportionment can be the best answer for the question.

In Massachusetts the single sales factor bases the state income tax of the firm on their sales instead of on a combination of property, sales and payroll. Fidelity tax break is the label and the unfairness is because it affects an entire industry. Since it is not a tax break it affects an entire industry and not just one company. In the mid of 1990 the Massachusetts has passed a single sales factor law and it lowered the cost of employing people in Massachusetts. Some form of single sales factor has been adopted by more than half of all states. The adoption of single sales by competitor and neighboring states will lead the people not to question its validity or effectiveness and must preserve it. The tax policies and the large impacts of the financial service should promote the growth and must equally apply to high technology, manufacturing and other critical industries.  People can win more than the fair share of battles for investment and job if they preserve the single sales factor.

 

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