Worcester Business Journal

wbjournal.com | January 21, 2019 | Worcester Business Journal 25 Tax breaks are a short-term win Feds must focus on trade, infrastructure V I E W P O I N T E D I T O R I A LS Y ou can't get what you don't ask for. It's easy to vilify businesses for taking tax breaks from local governments, even if they are bringing in jobs and invest- ment. In the same year Marlborough awarded retailer TJX Cos. a 50-percent, 20-year tax break on a $54-million expansion in the city, the company made $1.5 billion in worldwide profits and the Marlborough School Committee instituted a temporary hiring freeze. But economic development isn't that simple, nor is municipal tax policy. First off, the two aren't connected. Marlborough schools were running a multi-million-dollar deficit well before TJX received its tax break. And, like nearly all local government tax breaks, TJX received a tax-increment financing agreement, which means the 50-percent discount only applied to increases in its future tax bills. Marlborough received more tax revenue because the expanded TJX property increased in value, and TJX was able to move into a new headquarters without paying full price on the additional real estate value. Critics of local tax breaks would argue the city could have held out for someone to move in without a tax discount. But with development cyclical with the ups and downs of the economy, a bird in hand is preferable. In an ideal world, these tax breaks wouldn't be necessary. Worcester has utilized the TIF tool quite oen, and with its sky-high commercial property tax rate of $34.90 per $1,000 in valuation, it's no wonder Worcester has had to cut deals to attract development. Worcester has handed out more tax breaks (28) in the last 20 years than any other Cen- tral Massachusetts community. As one of the few cities in the region with a dual tax rate, Worcester's political leadership, despite constant urging from the business community, has continued to hammer its commercial tax payers while keeping the residential rates at almost half at $18.91. A more judicious split A s the 116th Congress commences this month, it does so with a daunting to-do list. Most urgently, leaders on Capitol Hill must come to an agreement with the president to end the shutdown. Beyond that, this year Congress must address important issues with a tremendous impact on the New England economy. New England's clout in Congress has shied significantly with Democrats taking control in the House of Repre- sentatives. Our all-Democratic House delegation now find themselves in the majority, with many members well-po- sitioned in leadership roles, including House Ways & Means Committee Chairman Richard Neal, House Rules Committee Chairman Jim McGovern, and Democratic Caucus Vice Chair Rep. Katherine Clark. Of the items on Congress' agenda, e New England Council believes several are of critical importance to our region's continued economic wellbeing. First, our region would benefit from a major federal infrastructure investment package. And fortunately, the need for such investment is one area where leaders on both sides of the aisle can agree. Questions remain about how it will be paid for. An increase in the gas tax or a vehicle miles trav- elled tax are the two most discussed options. But with our harsh weather and aging infrastructure, there is no question that upgrades are desperately needed in our region. Nearly 65 percent of our region's 18,000 bridges are rated as either fair or poor by the Federal Highway Adminis- tration. Yet, the number of drivers on New England roads increased by 1.45 million from 1996 to 2016, and vehicle miles travelled increased by nearly 19 percent. Another critical issue for New England is trade, partic- ularly ongoing free trade with Canada and Mexico. In late 2018, President Donald Trump signed a modernized trade agreement with these key partners, the US-Mexico-Canada Agreement, and announced withdrawal from its prede- cessor, the North American Free Trade Agreement, in six months, pressuring Congress to approve the USMCA. e importance of trade with Canada and Mexico for our region cannot be understated. Our neighbors to the north and south are top export markets for all six New England states. In 2017 alone, New England exported $8.3 billion in goods to Canada, and another $4.4 billion worth to Mexico. Given our region's strengths as a global medical inno- vation hub, a third priority for New England is federal research funding, particularly for the National Institutes of Health. Not only does federally funded research bring about new treatments and cures for diseases ranging from Alzhei- mer's to ALS to cancer, but it's a huge economic driver in New England. In 2017, NIH funding totaled $3.64 billion for the six new England states, and supported 44,705 jobs in the region, including 32,000 in Massachusetts alone. James T. Brett is president & CEO of e New England Council, an alliance formed to promote economic growth. BY JAMES T. BRETT Special to the Worcester Business Journal James T. Brett The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. between residential and commercial rates would not put a stop to the TIF agreements, but it would cer- tainly attract more incentive-free development and spread the benefit out among all commercial owners, not just the big guys who can leverage a tax break. Oxford's Russian non-oligarch Valentin Gapontsev, the founder and CEO of Oxford laser manufacturer IPG Photonics, sued the U.S. Treasury in December over his listing as a Russian oligarch. According to Gapontsev's lawsuit, the Treasury in a slapdash effort to fulfill a Congres- sional requirement, copy and pasted Forbes' Russian billionaires list onto a list of Russian oligarchs with close ties to the Kremlin. Despite that Gapontsev is an American citizen, owns a company headquartered in America, and has an amazing story of American entrepreneurial success, his Treasury listing has had very real consequences for the company. e suit claims because of his inclusion on that list, clients have become concerned they shouldn't do business with the Oxford firm, particularly for U.S. govern- ment contracts. Gapontsev is a wealthy man, and that's not going to change, but the idea of the region's most successful public company of the last decade losing hard-won business momentum because of an inaccurate characterization by the Treasury is galing. Russian meddling in the 2016 election cast a pall on many things Russian, and combined with the more vexing anti-immigrant rhetoric, it's a perfect storm for dark conspiracies. It can make us forget the important role immigrant entrepreneurs play in driving our economy. Millions of immigrants with fewer resources than Gapontsev bringing value to the economy are in the crosshairs. It can be easy to forget what makes our country great, and new Americans arrive every year to pursue dreams. We're only going to sustain our economic leadership when we remem- ber to celebrate, not denigrate, those contributions. W W WO R D F R O M T H E W E B Tweets of the week "Not only is it not working, but corps already found a workaround that benefits their bottom line." - Veterans for Safe Access and Compassionate Care (@ VSACC), Jan. 9, on a WBJ story about the lack of mi- norities in the legal cannabis industry in Massachusetts "Urgent care services for #mentalhealth are crucial – would love to see them as widely available as medical urgent care centers." - Amy McHugh, (@amyemchugh) Blue Cross Blue Shield of Massachusetts' director of media relations, Jan. 16, on a WBJ story about Community Health- link restoring urgent care services after a grant from BCBSMA Facebook feedback "Congratulations I know it will be amazing!" - Tracy Haley Bosselait, Jan. 15, on a WBJ story about the Crompton Collective owner Amy Lynn Chase opening a second store in Worcester "Probably a better idea than the restaurant there. (The little coffee kiosk is decent)." - Mike Baker, Jan. 10, on a WBJ story about a brewery and arcade bar looking to move into vacant retail space in the Union Station parking garage

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