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To create jobs, lower taxes

March 19, 2009 By bostonshepherd

This story from CEO Magazine shows MA near the very bottom of CEO opinion of states’ business climates.

As has been repeatedly demonstrated, if you would like to increase government tax revenues, growth is the best way to do it.  That means job creation.

Massachusetts cannot tax its way out of a budget deficit.  How about we think of ways of improving our status among CEOs so some of them relocate or expand here?  Hate to sound like a broken record, but perhaps if we reduced or eliminated the corporate tax rate, firms would be enticed to be here.

That means jobs, that means increased tax revenues.

I note that the states with the most favorable business climates also had some of the most robust % and gross population increases, too.

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Comments

  1. kbusch says

    March 19, 2009 at 10:14 am

    This sounds like a recapitulation of the whole supply-side economics silliness of the Reagan Administration — which only succeeded at expanding the deficit. I’m not sure how to take “as has been repeatedly demonstrated”.

    • old-scratch says

      March 19, 2009 at 10:22 am

      Is moving all the locations it can out of Massachusetts because the cost of doing business here is too high.

    • centralmassdad says

      March 19, 2009 at 1:06 pm

      The fallacy of supply side thinking was the Laffer curve itself, which seemed to suggest a rather direct relationship between taxation and business activity.  Lower the tax rate, presto! more revenue!

      <

      p>Of course this is not so, because the relationship is not so fluid.  It is sticky.  Another tax here, another tax there might not make any particular employer depart, or not come, but there is a tipping point when it makes a difference.

      <

      p>Laffer Scoffers have a different fallacy:  because the relationship between the two is not fluid and smooth, they assume that there is no relationship at all, as if business activity is simply not responsive to taxation, ever.

      <

      p>Massachusetts is indeed a very expensive place to conduct business.  You have to pay your people a lot so that they can afford to live here.  Income and corporate taxes, while not as high as some nearby states, aren’t exactly low.  In addition to the taxation, other fixed costs are simply high here.  Real estate taxes.  Excise taxes.  Unemployment Insurance, casualty insurance, workman’s comp, casualty.  Transport, which is about to get even more expensive for businesses that use trucking.  Worse, as business revenues slide a bit during hard times, the burden of all of this goes up in order to account for declining tax revenues.

      <

      p>On the other hand, we have a well educated and highly skilled workforce. And for many businesses, they must be near their market of well educated and highly skilled people.  But for businesses that don’t require such people in numbers, or require proximity thereto, it probably makes a lot more sense to establish your business somewhere else.  That makes Massachusetts a lousy place for the less-eduacted, less-skilled worker.

      <

      p>This isn’t all necessarily a bad thing.  But it is  frustrating to know that all of this expense doesn’t fund improved infrastructure, etc.– much of it funds early retirement packages and stare-at-the-ceiling jobs on beacon Hill.  And more frustrating that political leaders react to each story of such abuse as an isolated incident– only $60,000!– and are completely oblivious to the symbolism and imagery–that is, the politics, of their own actions in light of all those isolated incidents.

    • bostonshepherd says

      March 19, 2009 at 4:54 pm

      Deficit estimates — without the stimulus spending — are projected to be the highest EVER.  I guess you don’t think if it was bad when Reagan did it, then it’s bad when Obama is doing it (and then some!)  Reagan bad, Obama good.

      <

      p>Remember, that’s without the stimulus spending.

      <

      p>Regan’s largest deficit, 6.2% of GDP, will be eclipsed by Obama’s BUDGET SPENDING ALONE which will create an 8.0% deficit.

  2. sabutai says

    March 19, 2009 at 10:30 am

    With the slashed tax agreements with these companies, it’s not hard to question the actual tax benefit.  “Hostile business climate” is merely CEO-speak for “expects us to pay their fair share”.

    <

    p>The biggest problem for Massachusetts is that it is really cold in winter, and lots of baby employees don’t want to deal with that.  Heck, a lot of these companies move to the “Sun Belt”, then blow lots of money trying to entice well-educated, employable New Englanders to move there.

  3. edgarthearmenian says

    March 19, 2009 at 10:43 am

    • kbusch says

      March 19, 2009 at 11:44 am

      You cannot tax your way to prosperity, certainly.

      <

      p>The idea is to make wise use of government revenue. Then taxes can be part of the prosperity-inducing potion.

      • bostonshepherd says

        March 19, 2009 at 4:57 pm

        The idea is to make wise use of government revenue.

        <

        p>Always promised by progressives and spendy liberals, but never delivered.

        <

        p>What happened to “Yes We Can!”?

      • bostonshepherd says

        March 19, 2009 at 5:01 pm

        Then taxes can be part of the prosperity-inducing potion.

        <

        p>If taxes induce prosperity, shouldn’t government tax at a 100% marginal?  That would, mathematically, create unlimited, never-ending prosperity, into infinity.

        <

        p>I’m on board!

  4. liveandletlive says

    March 19, 2009 at 11:14 am

    CEO Magazine shows MA near the very bottom of CEO opinion of states’

    <

    p>And we are suppose to do what? with this exactly.  The acronym “CEO” is enough to make anyone cringe in this climate.  How about this instead…

    <

    p>Massachusetts voter’s opinion of CEO’s has his rock bottom. They can take their greed and shove it.

    <

    p>If there is any tax relief made available to any business, it should be to the small businesses that struggle to stay afloat, not to these greedy losers.

    • bostonshepherd says

      March 19, 2009 at 4:25 pm

      with this …

      <

      p>

      The acronym “CEO” is enough to make anyone cringe in this climate.

      <

      p>then this …

      <

      p>

      They can take their greed and shove it.

      <

      p>Don’t let the CEOs of Partners, Genzyme, Raytheon, State Street Bank, Smith & Wesson, or Charles River Ventures hear you talk like that.  Very unkind.  Please go into nursing and not management.

      <

      p>Small companies feel this pain, too.  Your goal is what? To have only small, local businesses and no major employers (except the Commonwealth’s own workforce?)  Why not, let’s make all of Massachusetts look like Central Square!

      • liveandletlive says

        March 19, 2009 at 6:50 pm

        Well ,you know I would have to look into the financial records of the companies you mentioned in order to make a judgement on whether those CEO’s are greedy or not. And perhaps I made an across the board statement regarding greedy CEO’s, but If you have not learned yet that the whole “lower taxes, increase jobs” chant is a farce, then you must make over $250,000/yr.

        <

        p>Just reading this

        How about we think of ways of improving our status among CEOs

        makes my stomach churn.

        <

        p>If you want to push this issue, I would wait until this CEO
        debacle is far past over, and the name itself no longer has a sickening sound to it.

  5. power-wheels says

    March 19, 2009 at 11:52 am

    in the fourth quarter of 2008. North Dakota, Alaska, Texas, Wyoming, and Oklahoma. 4 out of those 5 do not impose a personal income tax. But all those states also raise relatively high percentages of their state revenue from mineral severance taxes. Maybe a solution for Massachusetts could be to get rid of it’s income tax while discovering oil. Everyone wins!    

    • edgarthearmenian says

      March 19, 2009 at 2:04 pm

    • bostonshepherd says

      March 19, 2009 at 4:27 pm

      Great sample data.  Besides, I said corporate taxes, not personal income taxes.

  6. sabutai says

    March 19, 2009 at 7:22 pm

    It occurs to me that prioritizing job creation over responsible budgeting is a quintessential trait of European Socialism.

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