Tuesday, March 2, 2010

Chamber launches a plan to spur Massachusetts economy

Earlier today, the Greater Boston Chamber announced the unveiling of a new economic recovery platform aimed at strengthening Massachusetts’ competitiveness. “Renew the Massachusetts Economy,” or “Renew Mass,” is a two-year initiative, timed to coincide with the 2010 election year and the 2011/2012 legislative session. The Chamber will promote this platform to the state’s candidates for elected office, and looks forward to discussing these and other proposals that will lower business costs and make Massachusetts more competitive.

The platform consists of four tax proposals, each of which will make Massachusetts a more attractive place to do business. The proposals are:

1) A “3 in 3” Investment Incentive—A new 3% state capital gains tax rate on investments in Massachusetts-based startups held for at least three years, to encourage startups and patient capital. This proposal would not cost the state any lost revenue for the first two years, and its cost in each of the following three years would average $9 million. It would change Massachusetts’ tax rate on such investments from the 17th-highest in the country to the 3rd-lowest.

2) An ITC Expansion Incentive—An increase in the state’s investment tax credit from the current 3% to 5%, to spur capital spending and expansion of company facilities. This change would lower short-term state tax collections by $25.5 million per year, increase annual capital investment by $146 million, and spur the creation of 2,800 jobs, which would generate new long-term state tax revenues.

3) An NOL Innovation Incentive—Reform of the state’s net operating loss carry-forward rules, bringing them into parity with those utilized by most states and the federal government, to make Massachusetts more competitive for innovation-based industries. This proposal would not cost the state any lost revenue for the first two years, and its cost in the following three years will average $18 million. It would move Massachusetts from a tie for the worst NOL policy in the country, to having one that is in the upper half of all states.

4) An Elective Single Sales Hiring Incentive—Give all Massachusetts companies the option of electing single sales factor tax apportionment, to encourage in-state hiring, investment, and expansion. This proposal would be phased in over a five-year period, resulting in $20 million less in short-term state revenue collections in the first year and $100 million less in the fifth year. This proposal would spur the creation of 32,000 to 37,000 jobs when it is fully implemented, and those jobs would generate significant new payroll, sales and property tax revenues.

This platform will significantly improve Massachusetts’ competitive position and will stimulate the creation of 35,000 to 40,000 jobs. As outlined above, its short-term impact on state revenues is modest; two of the proposals will not reduce state revenues at all in the first two years. Its long-term impact on economic growth and state revenues will be strongly positive.

The Chamber is reaching out to state government leaders, the major gubernatorial candidates, our partner business organizations and media leaders in the days ahead to brief them on the platform, solicit their comments, and invite their support.

If you have any questions or comments, please contact Jim Klocke, executive vice president.

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