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Massachusetts' tax competitiveness


  • Robert Tannenwald


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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    References listed on IDEAS

    1. Helms, L Jay, 1985. "The Effect of State and Local Taxes on Economic Growth: A Time Series-Cross Section Approach," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 574-582, November.
    2. Charney, Alberta H., 1983. "Intraurban manufacturing location decisions and local tax differentials," Journal of Urban Economics, Elsevier, vol. 14(2), pages 184-205, September.
    3. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    4. Karl E. Case & Leah Cook, 1989. "The distributional effects of housing price booms: winners and losers in Boston, 1980-88," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-12.
    5. Grubb, W. Norton, 1982. "The flight to the suburbs of population and employment, 1960-1970," Journal of Urban Economics, Elsevier, vol. 11(3), pages 348-367, May.
    6. Albert M. Church, 1981. "The Effects of Local Government Expenditure and Property Taxes on Investment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 9(2), pages 165-180.
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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. Merriman, David, 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, 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, issue Jan, pages 2-19.

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    Massachusetts ; Taxation;


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