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Massachusetts' tax competitiveness

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  • Robert Tannenwald

Abstract

One of the most important issues facing the Commonwealth of Massachusetts today is maintaining a hospitable climate for business. If Massachusetts' taxes are deterring firms from locating and expanding within its territory, then the Commonwealth should consider ways of making its tax system less repellent. On the other hand, if its tax system is not such a deterrent, the Commonwealth should devote more attention to issues of greater concern to its employers, such as high unemployment insurance taxes, workers' compensation premiums, health care costs, and energy prices. ; This article presents guidelines and analytical tools that policymakers will find useful in evaluating their state's business tax climate. Applying these tools to Massachusetts, the study concludes that Massachusetts compares favorably according to the tax burden that should concern profit-maximizing businesses the most: the extent to which taxes depress the long-run rate of return on business investment. On the whole, the Commonwealth's tax structure is neither an asset nor a liability in interstate economic competition.

Suggested Citation

  • Robert Tannenwald, 1994. "Massachusetts' tax competitiveness," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 31-49.
    • Handle: RePEc:fip:fedbne:y:1994:i:jan:p:31-49
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    File URL: http://www.bostonfed.org/economic/neer/neer1994/neer194c.pdf
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    References listed on IDEAS

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    Cited by:

    1. Robert Tannenwald, 2004. "Massachusetts business taxes: unfair? inadequate? uncompetitive?," Public Policy Discussion Paper 04-4, Federal Reserve Bank of Boston.
    2. David Merriman, 2016. "What determines the level of local business property taxes?," Working Papers 16-2, Federal Reserve Bank of Boston.
    3. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy if You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 863-881, December.
    4. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy If You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association, vol. 47(4), pages 863-81, December.
    5. William H. Oakland & William A. Testa, 1996. "State-local business taxation and the benefits principle," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 20(Jan), pages 2-19.

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    Keywords

    Massachusetts; Taxation;

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