A STATE’S long-term economic health is built most reliably through sustained investments in its people and infrastructure. Ineffective special-interest tax breaks, by contrast, drain public resources, making these public investments that much harder to achieve.
The front-page story “Fidelity’s Mass. workforce shrinking: Down 4,000 jobs, more than 25% drop, since ’06’’ (June 8) reminds us that once these special-interest tax breaks are passed, they remain on the books indefinitely and are seldom revisited to see whether they are meeting their intended purpose.
In 1996, Massachusetts passed a tax break estimated by legislative sponsors to be worth $70 million annually for the mutual fund industry (in 2010 dollars) on the promise that companies increase employment 5 percent a year in Massachusetts for five years. While company-specific data are not available to the public, industry-level data show that robust job growth allowed mutual funds to collect tens of millions in tax relief over that period. But the employment requirement has lapsed. Fidelity now is shedding its Massachusetts workers even more rapidly than its workers worldwide. Nevertheless, it continues to benefit from the ongoing tax break.
With general state aid to local communities having fallen 30 percent since 2008, and with more cuts likely on the way, perhaps it is time to look again at our economic development tax credit programs — particularly when it is clear that they are not producing their intended results.