MA Is Ninth Best State For Corporate Taxes: Study

BOSTON, MA — Taxachusetts? Not so, at least for corporate taxpayers, according to reports being released this by the Massachusetts Budget and Policy Center. MassBudget found that only eight other states have a lower total effective business tax rate. The reports also conclude that Massachusetts will lose out on $400 million in corporate tax revenu this fiscal year, thanks to the "single sales factor," a special tax break for multi-state corporations.

"Together, these three reports help us understand that Massachusetts currently has a favorable business tax environment, despite regular claims to the contrary, and that two business tax provisions we highlight here appear outdated, ineffective, and unnecessarily costly to the Commonwealth," Marie-Frances Rivera, MassBudget's president, said in a statement.

The single sales factor was enacted to boost manufacturing jobs in Massachusetts. But since it was passed, Massachusetts has lost about 40 percent of its manufacturing jobs. Only four states have lost a larger percentage of their manufacturing jobs than Massachusetts between 2000 and 2014.

"The single sales factor is an expensive tax break that has performed poorly," said Rivera. "Every dollar lost to the single sales factor is a dollar that can't be invested in transportation or education or that must be replaced by other taxes. We can't afford to leave special business tax breaks unscrutinized- and we need to end those that don't deliver."

The report also says lawmakers should consider updating the state's corporate minimum tax. The tax rate is currently $456 and has not been updated in 30 years. The report found that 70 percent of all businesses that filed corporate excise taxes in Massachusetts paid the minimum of $456 in 2015.