This edition of the Scorecard focuses on Massachusetts' corporate tax burden and the competitiveness of the state's business climate, and shows that:
- In FY 2009, Massachusetts' corporate tax burden was the 8th highest in the country. This burden is 39% higher than the national average, and higher than a number of states that compete with the Commonwealth for job growth and business expansion. To cite just a few examples, compared to Massachusetts' corporate tax burden Colorado's is 76% lower, Connecticut's is 63% lower, North Carolina's is 55% lower, and Maryland's is 40% lower. More examples are provided in the Scorecard.
- In FY 2010, Massachusetts ranked the 4th worst on the Tax Foundation's corporate tax index. The Tax Foundation, a nonpartisan, nationally-recognized tax research organization, bases its index ranking on a formula that weighs corporate income tax as well as policies governing net operating losses (NOL), credits, deductions and exemptions, and related tax base issues.
In order to make Massachusetts a welcoming place for business and restore competitiveness, the Chamber proposes its "Renew Mass" economic recovery platform which consists of three proposals to make the state's corporate tax code more competitive, and one proposal to improve the cost and investment climate for startups. The "Renew Mass" platform proposals are as follows:
- NOL Innovation Incentive -- This proposal will narrow the tax code disparity between cyclical and non-cyclical industries, and ensure that companies are taxed on their average profitability over time by allowing a 20-year net operating loss carry-forward period.
- ITC Expansion Incentive -- This proposal will make the state's corporate tax code more competitive for manufacturers and R&D companies that invest in Massachusetts by increasing the state's investment tax credit from the current 3% to 5%.
- Elective Single Sales Hiring Incentive -- This proposal will remove disincentives to job creation in the corporate tax code by giving Massachusetts multi-state companies the option of electing single sales factor tax apportionment.
- "3 in 3" Investment Incentive -- This proposal will strengthen the capitalization and long-term viability of innovation new companies by creating a new 3% state capital gains tax rate on investments in Massachusetts-based startups held for at least three years.
"Enactment of these four proposals will capitalize on the state's core economic strengths," said Paul Guzzi, president and CEO of the Greater Boston Chamber. "When fully implemented, they will spur the creation of 35,000 to 40,000 new jobs, drive hundreds of millions of dollars in new capital investment, and generate sufficient state and local tax revenues to make the platform revenue-positive in the long term. By improving Massachusetts' corporate tax climate, the state's economy will be on path to long-term competitiveness and prosperity."