Wednesday, January 13, 2016

GE is coming to Boston and it is a very bad deal

It was announced today that General Electric picked Boston as the site for a new corporate headquarters fleeing its long time base in Fairfield County, CT. While the final site has not been picked it looks like there are two contenders in the Seaport District of Boston. So the irony is that they probably picked the only other spot in New England where property values are as high as Fairfield County. So it is not surprising that along with the announcement came word that the City of Boston and Commonwealth of Massachusetts are promising tax incentives of up to $150 Million dollars over some period of time (probably 20 years) to sweeten the pot.

graphic from Citizens for Tax Justice

Keep in mind that this is the same GE, one of the largest firms by market value in the US, which had over $90 Billion in cash at the end of 2014. And now they must get millions of dollars per year to relocate to one of the hottest commercial and residential neighborhoods in North America. There is no way that these incentives will ever be worth the money payed out to this firm. While Boston is chronically underfunding its schools and Massachusetts is looking at a billion dollar hole for next year's budget it might make more sense for GE to be giving money to the government. The only hope is that since GE doesn't really deign to pay state taxes anyway so that the incentives which are based on state income taxes won't ever be used. That leaves Boston holding the bag for the property taxes forgiven as part of the horrendous TIF.

As I will have a longer piece coming soon to this point I won't belabor it here but these incentives are most effective at making politicians look good in the face of weak coordination of job and workforce development efforts. Smiling and holding a big pair of scissors is good for big votes. It is not good for public finances or public policy.

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