Massachusetts’ Economic Assistance Coordinating Council is expected to give its approval to a $3.5 million tax break for JPMorgan Chase & Co. voted in by the Boston Redevelopment Authority (BRA) and City Council. The tax break includes a $2 million cut in property taxes and a $1.5 million break on state income tax.
It’s a good day to be JPMorgan Chase.
Proponents of the tax break claim that it’s a good thing for Boston, as well, since it will keep the company and its employees in Beantown. “The JPMorgans of the world have other options,” said BRA director John Palmieri.
Tax incentive breaks were originally intended for businesses building in blighted areas that needed a boost. However, companies like JPMorgan Chase are taking advantage of these programs to avoid taxation. In a tough economy, critics question why prosperous companies need a tax break to relocate to thriving urban centers.
As a resident of such as “thriving urban center” (Philadelphia), I concur. A few years ago, Philadelphia was host to a similar argument when the Cira Centre was built in a special zone that allowed for tax breaks – despite being literally minutes from a booming downtown Philadelphia and its universities – it wasn’t as if law firms like Dechert and Woodcock Washburn were being given an incentive to move to Kensington. The break allowed partners at Dechert to receive tax breaks, including not having to pay the city’s business privilege tax. The idea, as in Boston, was to encourage extending companies to locate into an area designated as blighted, thus expanding the city’s business district. The problem? The area wasn’t blighted. The bigger problem? Dechert’s law partners got the break as part of the negotiations – but associates and support staff didn’t get the same deal; they continue to pay the wage tax.
I’m all for urban revitalization – heck, I live in the City. I want to see it vital.
But massive tax breaks for companies to encourage them to “stay” in the City? Guess who’s funding those breaks? Yeah, you got it.
