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Protestors put GE deal under fire

Tax breaks, incentives benefit GE more than public, objectors say

Jule Pattison-Gordon
Protestors put GE deal under fire
Former City Councilor Chuck Turner spoke at the demonstration downtown, where the governor and mayor would be meeting with GE executives.

Dozens of protestors picketed in the falling snow on Monday outside 60 State Street, where, inside, Governor Charlie Baker and Mayor Martin Walsh were scheduled soon after to meet with General Electric executives to discuss the company’s move to Boston.

The protestors represented a coalition of 34 housing, social justice, faith-based, environmental, community and peace organizations that object to GE’s arrival for wide-ranging reasons. Particularly under fire: the hefty incentive package offered to entice the company here in the midst of budget woes for the MBTA and public schools. Demonstrators also ripped the company for tax-dodging and unfinished cleanup of pollution.

When the wallet opens

After GE announced intentions to move its 800-person headquarters from Connecticut, Boston competed with 40 other locations to attract the company.

To persuade GE to come, the Walsh and Baker administrations offered incentives including $25 million in city property tax breaks; $120 million in state grants; $25 million in state-financed improvements to streets, transit, bikeways and water transportations services and a $100-million city project to replace the deteriorating Northern Avenue bridge.

At BPS budget protests, many advocates have decried the GE deal as a symbol of misaligned government priorities, pointing to the tax breaks and grants offered to GE while BPS scrambles for revenue and faces shortfalls. Monday’s demonstrators said that city and state resources are better focused directly on pressing issues of homelessness, beleaguered public transit, cash-strapped public schools and need for more well-paying jobs.

In a press release, Aubri Esthers of the Boston Homeless Solidarity Committee criticized Walsh for failing to replace the Long Island bridge, while providing a bridge for GE.

“The mayor should rebuild the bridge to Long Island for Bostonians in recovery, rather than a bridge at Fort Point for GE execs,” Esthers said.

Meanwhile, Walsh said in a speech to the Boston Municipal Research Bureau that the tax breaks ultimately will generate far more revenue than is given up.

“These agreements are not expenditures, but net positives that unlock new taxable developments,” Walsh said. “I’d like to put to rest the notion that our pro-active growth strategy comes at any cost to schools, parks, affordable housing or other vital investments in community wellbeing. The very opposite is true: we depend on new development to fund city services at the level they deserve.”

Demonstrators in Boston opposed the property tax break offered to GE and criticized the company for federal tax-dodging and unresolved Housatonic River pollution.

Weighing GE’s offers

The Walsh and Baker administrations assert that bringing GE will stimulate state and local economies. GE is expected to do some local hiring, as well create a reason for complementary and related businesses to come to the area, representing more jobs and more property taxes.

Economist Daphne Kenyon said that the cost to the city and state per job generated is high enough to be a red flag. Between tax breaks and state grants the city and state offers $145 million, while directly receiving fewer than 800 GE jobs, as many employees are likely to transfer from Connecticut. The cost: more than $180,000 per position offered. She said that if GE stays less than ten years, the deal is unlikely to balance out.

Meanwhile, GE CEO Jeffrey Immelt predicted the ripple effects would produce thousands more jobs, according to statements made when he met business leaders at the Boston College Chief Executives Club last month.

“We think by the time it’s all said and done there should be, you know, let’s say 4,000 jobs around the ecosystem in Boston,” Immelt said.

GE also seems to have started trying to woo the city. The company pledged on Monday to give $25 million to BPS over five years, $15 million to community health centers and $10 million for manufacturing-oriented training opportunities for small business owners and students outside of Greater Boston.

Rep. Nick Collins, whose district will host GE, told the Banner that GE is “an incredible win for the city and state,” with the company expected to give students access to lab facilities, assist with gearing curriculum towards future jobs, provide summer jobs and invest heavily in the schools.

“My understanding is we’re going to see the largest investment, both financial-, human- and partnership-wise out of any organization outside of the school district partnering with the school to take it to the next level,” Collins said, speaking a few days before GE’s announcement.

However, Nathan Tran-Trinh, member of the Boston Student Advisory Council, called the contribution to BPS “too little, too late.”

Setting incentives

Did Boston have to offer as much as it did to get GE — and the promised benefits?

When announcing GE’s move to Boston, Immelt noted the city’s concentration of higher education institutions, heavy spending on research and development and diverse and technologically-savvy workforce.

Tax breaks are rarely cost-effective incentives. According to a report co-authored by Kenyon, property taxes on average comprise less than 1 percent of the U.S. manufacturing sector’s total costs. As such, tax breaks are a notable cut to government revenue but a minor benefit to businesses. Peter Enrich, professor of law at Northeastern University, said tax breaks are rarely a deciding factor in a business’s national location search.

Yet, Kenyon and Enrich said, the city and state had to offer GE something to win it — despite the compelling reasons Immelt listed for coming to Boston. According to Enrich, the current business climate is such that if local governments did not provide an incentive package, it would send a message of disinterest.

“If [the city and state] didn’t put something on the table, GE would say, ‘Oh, so you’re anti-business. They don’t want us to come. We’ll go somewhere else,’ ” Enrich said. “Now, did they have to be as generous as they were? There’s a big question about that.”

In some cases, Keynon said, incentives deals are a game. A company already may have decided where it will move, but is seeing what benefits it can get before declaring.

Instead of tax breaks, better incentives include worker training and transportation improvements, which benefit both the public and the company, Enrich and Kenyon said.

“Depending on what’s done for infrastructure, like if there was money spent on serving the T that served GE, now that would help a lot of people,” Kenyon noted.

On the web

“Rethinking Property Tax Incentives For Business,” co-authored by Daphne Kenyon:


Many demonstrators expressed distrust also in what they regard as a company that prioritizes profit and tax avoidance.

“GE is one of the biggest corporate tax cheats in the world. In America, for sure,” said Michael Kane of the Massachusetts Budget for All Coalition.

A 2011 New York Times article states that GE for years has leveraged tax loopholes and accounting strategies — including directing profits offshore — and lobbying for tax breaks to protect much of its revenue from U.S. taxation while claiming refunds and credits. In 2010, GE reported generating $14.2 billion in profit worldwide, including $5.1 billion generated in the U.S., but managed to pay no American taxes, according to the article.

GE’s current arrangement has allowed it to dodge $37 billion in federal taxes, Kane said.

Some coalition members decried GE for pollution of the Housatonic River from 1930 to 1970, the cleanup of which is incomplete and the subject of dispute between GE and the Environmental Protection Agency.