So, I see a headline in today’s Herald: Murray: Senate will consider tax changes to improve business climate. I’ll admit it, I actually thought for a moment that someone in Massachusetts had noticed dozens of other states and foreign countries are waking up and removing smothering tax burdens and gelatinous red tape.
My moment of hope lasted until the fourth paragraph, when we learn what this tidal wave of positive change might entail. You can read the brief, but devilishly-complicated list in the Herald. Suffice it to say, these changes are microscopic. I doubt most small business owners even know the line items exist. This is the best they can come up with here? Really? This and some nefarious and ill-conceived tax credit for hiring new employees (which you will read about years from now in the Herald when they report on the shocking amount of fraud the system generated) ?
I looked into starting a small business in Massachusetts. The fee for setting up a Limited Liability Corporation (LLC) here is $500. FIVE HUNDRED DOLLARS. But wait, there’s more. Said LLC must then file an annual report with the Commonwealth. Guess what the filing fee is for the annual report? That’s right. FIVE HUNDRED DOLLARS. Ok, so start a Delaware LLC for $90. Nope. Don’t try that. Then you get to file a “foreign” corporation annual report. Guess what the fee for that is.
Now, I’m not saying for a venture-backed tech company that thousand bucks (not including legal fees) is gonna break the bank. But it will suck capital out of companies BEFORE they get to the venture-backable stage. That friends-and-family-and-Visa funding stage.
All this just goes to prove that very few in politics could get real jobs, or have even ever had a real job. They simply have no idea what business is about, and unless you understand what business is about, you cannot understand incentives.
Want to create jobs here in Massachusetts, home to several of the finest universities in the entire world? It’s not complicated:
1) Simplify. Stop trying to regulate Every. Single. Thing. I. Do.
2) Cut taxes to the point where MA is at least competitive; better yet, cut so that MA is a leader and people stop calling it Taxachusetts.
People and businesses respond to incentives. If the incentive says “Massachusetts will suck every last dime out of my business in taxes and fees,” and “there are so many regulators and regulations that my legal team will need to be half my staff,” then businesses and people will leave. And they have, and will continue to do so until the only people left here are the politicians and the people receiving benefits. How sad is it when one of the premier employers here moves to RHODE ISLAND? When Rhode Island becomes more attractive, time to look in the mirror and schedule that liposuction.