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Big tax break proposed for company that earned $2.4 billion last quarter

$4 million package to keep JP Morgan in the city - by consolidating its local operations in a waterfront building, using city and state programs intended to help blighted areas. As the Globe notes:

... The tax breaks come as the city is struggling to fund its school system and Mayor Thomas M. Menino has proposed increasing parking fines to raise money. ...

However, the tax deal would run through 2022, with the estimated $4 million in breaks spread out over that period, so it's not like the city will have to close a school or two next month to pay for it.

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Comments

Companies like Fidelity are flooding out of "Taxachusetts" because it's expensive to operate a business here, and Boston city taxes are no help. While JP Morgan is doing well (particularly in light of the deal it worked with Berkshire and Goldman earlier this week), if the choice is between a tax break and losing thousands of jobs as they move many employees to Providence (like the aforementioned), I say give them the tax break.

A ridiculously slanted article.

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We were talking about several thousand jobs. But in terms of Boston, JP Morgan is most definitely not Fidelity, and as a Boston taxpayer myself, I think it's a legitimate question to ask at what point you start forcing homeowners out of the city because they can't afford the taxes, either. The answer might still be the same - job preservation is still worth a tax break over 15 years or whatever - but it's really no different from asking if oil companies should still be getting tax breaks on top of their already huge profits.

And, yes, I say that knowing Boston does provide a tax break for people living in their own homes, and taxes residential property at a much lower rate than commercial property, but also knowing that residential property taxes for many people have gone up dramatically in recent years.

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I think others have said it better in other threads - with stats and everything - but MA taxes aren't very high anymore. They used to be, but that tired label passed it's pull date years ago. If you travel at all, you might note that most states have much higher sales taxes and certainly higher income taxes than what we pay.

Tax burdens aren't what drives people out of MA. What drives people and jobs out is the extreme cost of living, which results in high property costs (rent) and necessitates higher wages for workers.

Never mind that these same workers still can't afford homes on those higher wages, and many won't relocate here or transfer away for that reason alone.

If you are a large employer, it isn't the taxes that are the problem, at least not directly. It is the wages, the costs, and the difficulty in getting desirable employees to locate or stay here. MA taxes aren't high by just about any measure, and they are not even supporting the level of public infrastructure and maintenance of public infrastructure required by many of these corporations. If you can't get the water, sewer, electricity, or roadway/highway access you need, you won't locate here.

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45 states and DC have lower state tax rates than Massachusetts. This is including those with graduated rates, counting the low end. However, even if you count just the maximum rate, there are still 20 states with lower rates.

Suldog
http://jimsuldog.blogspot.com

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Tax rates are only a part of the picture - tax burden is the bottom line for individuals and corporations. Tax burden = entire amount of taxes paid, including property taxes, excise taxes, etc. NH has no sales or income tax, but ask somebody in NH about their property tax bill and the kinds of fees they have to pay and you will hear plenty.

MA may have a high tax rate, but the exemptions and deductions are substantial. It seems that you have to make quite a bit of money before you even start to pay any taxes if you have a house and kids - 2007 was the first year in the last six that we paid much of anything.

There is also the issue of sales tax and what it applies to. MA has a pretty low sales tax and a lot of exemptions for food, etc. compared to WA, CA, and (if my last trip serves as a guide) PA.

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True, it's the total picture that counts.

I paid property taxes in New Hampshire, so I know a bit about them. Yup. High, as a percentage. However, the cost of property is way lower than in Mass, and there are no sales taxes or state taxes, so I say it's a better deal overall. Since we can argue for months at a time about whether services are (better/wanted/needed) there or here, your mileage may (probably) vary.

Do you know of any independent sites (that is, with no political agenda) that tote up all of the various taxes and deliver some figures both as a percentage of income and in real dollars? That would be something I'd like to see.

Suldog
http://jimsuldog.blogspot.com

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You could try the tax foundation.

They put the MA individual tax burden below the US median (28 out of 50).

I assumed you were talking about corporate taxes earlier, or I would have brought them up. Yes, MA corporate taxes are among the highest in the nation. No, MA individual taxes are not.

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Thanks for the link, Gareth. Lots of useful information there.

It will take me awhile to digest it, but I'll probably be back to rant incoherently once I do :-)

Suldog
http://jimsuldog.blogspot.com

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That's exactly what I wanted to see - I have never found simple tax rates to be a true indicator of expense.

What is most interesting is how big a movement MA makes when federal tax burden is added in - from 28 to 7! So if our taxes are high, it is because of federal policy, not because of state policy.

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MA makes the jump in percentage terms when federal tax burden is added in..
(drum roll please)
because we make so much money!

Federal income tax is heavily graduated, so MA residents pay much more on a percentage basis than residents of most other states because incomes are much higher here.

Check out CT's jump to #1. Easy reason: highest median income in the country.

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It makes sense to live in a state with low (or no) income taxes if you make lots of money. That way, your money isn't redistributed to those with lesser incomes.

It makes sense to live in a state with high tax rates if you make little (or no) money. That way, those with higher incomes will have some of their money redirected to you.

Well, I'm certainly glad I finally figured that out! Now I can watch the Celtics tonight without having to ponder about anything heavier.

Suldog
http://jimsuldog.blogspot.com

P.S. If anybody wishes to argue with this, I refer you to my previous comment in this thread :-)

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MA may have a high tax rate, but the exemptions and deductions are substantial. It seems that you have to make quite a bit of money before you even start to pay any taxes if you have a house and kids - 2007 was the first year in the last six that we paid much of anything.

Well, so glad us single, child-less folk can oblige you so you can purchase luxury strollers and soccermom-mobiles as we struggle to save up enough to be able to afford to own our own homes so we're not Landlord ATMs For Life.

Tell me, what gives you a right to a tax break just because you're married and have kids?

Here's a funny exercise: what's the "carbon footprint" of one American person?

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Why, we're responsible for the production of future taxpayers, of course.

You know, the ones who will pay off Bush's follies.

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If you have your kids living with you, you get that same exemption for each one that you do for yourself and your spouse.

When I got married my taxes went up, not down, because MA decided that somehow our rent was halved and we got half the rent deduction as a couple, and the feds hit us with the "marriage penalty", a higher rate because you get some magic 10% discount on everything when you marry - not. So much for being married meaning lower taxes!

If you have an elderly relative living with you, they get a basic exemption too - on their taxes or on yours if you are supporting them.

One exemption per person. Get it? Each person eats, needs housing, clothing, etc. and that adds up to an exemption from taxation. Not that any tax break even begins to cover the cost of raising those kids. This is much easier to fathom if you consider that kids are individual humans and not growths budding off their parents.

Upscale strollers paid for with that? Puhleeze. Try copayments for doctor visits, dental bills, etc. Dream on.

Besides, the bulk of our deductions are in mortgage interest and taxes paid on our home, not from our kids. Mortgages and the attendant deductions are available to those with and without kids.

Our single neighbor has two cars, drives twice the miles in a year that we do, flies as much or more than I do, doesn't have solar panels or energy efficient lighting and appliances, and has a larger home. Carbon footprint, anyone?

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Why are you entitled to a get-out-of-taxes pass because you have two spawn? You just said you haven't paid any taxes in a couple years thanks to owning your home, being married, and having two kids.

It's not my problem that you CHOSE to raise children, and I still don't understand why those of us who can't own our own home should shoulder more of a tax burden than you.

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The only person who seems to have missed the point is you.

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Gee Brett, I really wish you would look beyond your seething categorical hatred toward breeders for just a moment and learn a little bit more about the tax code than you have been willing to hear. You might hear something that YOU can use!

If I had had no kids when I was in graduate school and my husband was under employed, I'd have had more money, but still wouldn't have paid much if anything in income taxes. A house with mortgage and taxes = big deductions that can wipe out a modest income. We'd have liked to have had one sooner - a house that is - but health issues and the economy precluded home ownership until I was 31 and my husband was nearly 36. The kids were around before then, but they didn't do anwhere near as much tax-killing as the house has. Now that my income more than doubled in 2007 versus 2006 and my husband made more in 2007 than he did in 2006, too, we paid a lot of taxes.

Got? And exactly what part of PERSON = EXEMPTION do you not get?

If that person is a child or a dependent spouse or elder, they merit an exemption. When the kids move on and pay their own damn taxes, they take their exemptions with them.

Simple.

Oh, and I want all my taxes back - the ones that I paid while I was single/married without kids that supported YOU while YOU were a CHILD. Gimme, right now, with interest! (just kidding)

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(1) This is a democracy;
(2) We elect officials who draft bills regarding revenue collection and pass them into law;
(3) Those legislators consider public policy and social values when they enact laws;
(4) The majority, if not vast majority, of Americans believe that it is better to own a house and to have children than to not own a house and not have children to live full and satisfying lives;
(5) Our elected officials drafted the tax code to promote these things, just as they drafted them to promote starting your own business and taking care of elders in your home.

Now calm down and deal with it.

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Commercial businesses are not subject to the same taxes as individuals and families. Many of the preceding comments confuse personal with commercial taxes. Businesses like Equity Office and Mellon are paying significantly more than you or I; and commercial taxes for businesses with an office in Boston are significantly higher - on average - than the rest of the country. Sales tax, for example, has little effect on a firm like Wellington or Putnam.


As for whether companies should still be getting tax breaks on top of their already huge profits, of course they should. I want to keep my job, and regardless of how much a company makes, if it can make more by outsourcing its IT to India or moving manufacturing to Taiwan, I would rather cut their taxes so I can keep my job and put food on the table for my kids.


Am I saying it's the right thing to do or okay? No. Am I saying it is sometimes necessary to retain companies that might otherwise leave? Yes.

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Although outsourcing to foreign countries - and even other states - is certainly a problem and perhaps worthly of tax breaks, the case of JP Morgan discussed in the article is even a bit more complicated. JP Morgan isn't shopping internationally or to other states - its just shopping the suburbs to see if it can get out from under Boston's taxes. Therefore, chances are people in the State wouldn't lose jobs, Boston would just lose tax base. The real issue is whether Boston should try to compete with other local jurisdictions through tax cuts. Ultimately, its a failure (indeed absence) of regional planning and the arcane system of town-centric government that we have in New England. Cities and towns end up competing with eachother for jobs, development, and tax dollars on a microcosmic scale rather than cooperating on a regional scale to allocate all of these things.

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Or both?


If the cause is inter-town competition, then what can be done about it? Towns certainly are not going to get together in an OPEC fashion to set a standard rate; is this something the state itself should address? While JP Morgan might just be shopping regionally, there have certainly been cases of moving jobs out-of-state.


And if the state did get involved, what would it do, exactly? It's a tough question.

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Fair points. However, as for the town OPEC, many states in the west refer to those as "county governments." We have counties too, but for whatever reason (probably arcane and odd), our county governments are very weak and do little except maintain the court systems. Counties have their drawbacks too, but they do a good job of setting taxes, building roads, establishing health and pension benefits etc. over larger portions of their states and populations. As for land management, Oregon actually has a regional plan for Portland that has become renowned in the planning field. They essentially manage where developement can occur and where it can't, as well as how transit is built. Chief complaints are that its commynism'(!!) but benefits include protection of farm land for farmers, unified transportation planning, and sustainable density planning. I certainly agree that none of this addresses inter-state competition or, god knows, inernational competition but I think these kind of things would make Mass. work better.

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Commercial businesses are not subject to the same taxes as individuals and families. Many of the preceding comments confuse personal with commercial taxes. Businesses like Equity Office and Mellon are paying significantly more than you or I; and commercial taxes for businesses with an office in Boston are significantly higher - on average - than the rest of the country. Sales tax, for example, has little effect on a firm like Wellington or Putnam.


As for whether companies should still be getting tax breaks on top of their already huge profits, of course they should. I want to keep my job, and regardless of how much a company makes, if it can make more by outsourcing its IT to India or moving manufacturing to Taiwan, I would rather cut their taxes so I can keep my job and put food on the table for my kids.


Am I saying it's the right thing to do or okay? No. Am I saying it is sometimes necessary to retain companies that might otherwise leave? Yes.

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Since when did it become acceptable to use the argument, "Well, if we don't do xxx we'll lose ALL the money, so it's better to have it?"

This is the argument when it comes to casino gambling in Massachusetts, giving state revenues to out-of-state movie studios, and now, giving city tax credits to private employers.

If you're going to play that game, then NO ONE should pay taxes, EVER.

Right?

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Personally, I'd rather have the employers here at a high cost than not at all. If you have a better option, I would like to hear it.


I'm not trying to be a jerk, I'd just like to hear a better solution if there is one. Personally, I'd rather have all of those revenues in-state than not, with the possible exception of the casinos (but that's a personal preference, rather than a fiscally-motivated one).

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Why we shouldn't give tax breaks to prospective companies or existing companies threatening to leave:

amazon.com/Great-American-Jobs-Scam-Corporate..1576753158

Also, small businesses employ more people than large companies, and they're owned in-state so the money sticks around and is spent again. No funneling profits into a Deleware corporation or a Cayman holding co.

That $4M, divided into small business loans, would allow a lot of small companies to make capital improvements or maybe hire staff to grow or provide better service, AND the state would get the money back with interest to loan out again. THAT is sustainable. Bribing JP Morgan (or Evergreen Solar, which got $44M despite not creating a single job like it promised it would) is not, especially since they're liable to keep shopping for another city willing to give them a bigger freebie, and jump ship when they do (or threaten again, and use that to get more from MA.)

There are probably a lot of small businesses that would benefit from a cheap 20-40k loan, and you could do 100 40k loans...that's a lot of spread love...

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