Back when Elizabeth Warren was running against then-senator Scott Brown, she ran ads criticizing companies like GE for not paying anything in taxes:
In her bid to unseat Sen. Scott Brown (R-MA), consumer advocate Elizabeth Warren is keeping up her populist message, with a new ad out today that notes she “grew up in a family hanging on by our finger tips to a place in the middle class.” It goes on to hit Washington for “let[ting] big corporations like GE pay nothing — zero — in taxes while kids are left drowning in debt to get an education.” The ad comes after Brown joined Senate Republicans in filibustering the Buffett Rule, and in the midst of new reports showing perilously high student loan debt posing a threat to the economy.
And back in November, she was still publicly calling out GE for its tax dodging.
GE’s effective federal income tax rate from 2008 to 2013 was, for instance, -9% despite over $33 billion in profits.
And looking at the state level, GE’s effective income tax rate for 2014 was -1.2%, with an only slightly less appalling 1.6% five-year average. Evan Horowitz at the Globe similarly said that the GE move is unlikely to lead to an increase in tax revenue for the state.
So it was rather disappointing to see her not able to muster a single word of criticism for the $145 million combined city-state tax giveaway that Baker and Walsh agreed to:
“Boston is a great fit for GE,” Warren said in a statement to Politico Wednesday night. “Our innovation economy leads the nation, and GE already has long benefited from a dedicated workforce in Lynn and throughout the Commonwealth. I’m glad that the company will be able to draw on the tremendous resources in the Greater Boston area as it continues to grow.”
The handout is especially galling as GE is fighting a toxic cleanup plan on the other side of the state.
The GE move illustrates how elected officials too often embrace beggar-thy-neighbor as an economic development strategy, rather than working towards real wealth creation. Relocated jobs are not new jobs; they are just poached from Connecticut. And the multiplier effects from having GE in Boston likely just offset the corresponding losses in Connecticut. Real economic development should not be zero-sum.
Last Friday, Charlie Baker unilaterally cut $50 million from the state budget, and Marty Walsh might be cutting $50 million out of the BPS budget. If we want a real economic development strategy, we should be investing in our schools, our infrastructure, and our residents rather than throwing away money at one of the worst corporate citizens.
GE is getting $145 million, which works out to something like $180 thousand for each one of the approximately 800 jobs.
But it gets worse: GE is simultaneously closing down a plant in Avon, costing 300 workers their jobs. So the amount of percapita amount of payola given to GE is actually considerably more for the net gain of 500 jobs.
I’ll have a more in depth post coming up looking at the specifics of the deal, but thanks for pointing this out. Glad I’m not the only one disappointed in her here. I did some digging and at least she hasn’t taken their money like Sen. Markey, but Charlie Baker got a decent amount in the last campaign.
It’s also worth noting that we are 25th in the country in corporate taxes, right in the middle of the pack which was already a bargain compared to NY or CT and we have a much more educated workforce and better transit than Fairfield. No need to shovel more money on top, LA knew the NFL was coming to them and not the other way around. That’s how we should look at businesses coming here. Some relocating assistance and maybe tax breaks to smaller companies and startups, but this doesn’t make any sense.
Yes, GE’s move to Boston is costing us money, but it’s a lot less than the Olympics would have cost us, and unlike the Olympics there may be long-term benefits, i.e., GE may start a parade of tech leaders to MA (I hope not all in Boston) — sans the blackmail. Our elected officials have to understand that like GE, they need us more than we need them. So yeah, for now Liz’s “bland hurrah” is sufficient.
That seems to be an argument against this deal. If we want new tech leaders, than maybe we should be giving the small to medium sized firms incentives to come here. I know the Cambridge Innovation Center has done a decent job incubating several companies and the Boston Innovation District will be doing the same thing, with very minimal public investment since most of their money comes from the VC community.
GE is an aging dinosaur trying to transition from industrial to tech (made obvious in all those annoying ads where that nerd can’t lift his grandpappy’s hammer) and leaving a massive and antiquated suburban campus in suburban CT to enter our innovation center was always part of their strategy. The innovation community on Roosevelt Island isn’t up yet in NYC, so that was probably their big reason to move here. Proximity to MIT and other universities doesn’t hurt, nor does the association with our life sciences and engineering firms. But sans blackmail won’t happen if you start your process by folding. I strongly suspect that’s what happened here.