The state of Massachusetts returns an estimated $26 billion in tax breaks each year. That means, the state could have an additional $26 billion in the coffers if it changed its various tax incentives and exemptions for businesses. A panel convened last year by Gov. Patrick and the state legislature called the Tax Expenditure Commission approved the group’s final report calling from less tax breaks and a periodic review of our current tax breaks to ensure they are meeting goals.
The commission was chaired by the state’s secretary of administration of financed and examined several Massachusetts tax codes including tax exemptions, credits and deductions. The idea of tax breaks is that the state forgives taking a tax in a certain area, because there is a promise of gaining some sort of benefit by doing so. This analysis found that of 92 tax breaks provided to business, only a handful had quality assurance measures in place to for examining their effectiveness or ways to recoup state revenue if the exemptions fail to provide any economic benefit.
The commission made up of bipartisan lawmakers, government officials and economists also recommended reducing the overall number of tax breaks and stabling a specific set of criteria to establish them in the future. They also recommended requiring automatic reviews of all tax breaks to research their effectiveness at east every five years. The group also wants to establish provisions to allow the state to recoup the value of the tax break if the company fails to live up to its commitments.
Our current state policy on tax breaks came under scrutiny after a company filed for bankruptcy and laid off hundreds of employees even after receiving millions in grants and tax breaks.
Source: cbsnews.com, “Panel urges restraint on Massachusetts tax breaks,” April 24, 2012