GEe, what will Amazon do?

GEe, what will Amazon do?
Tuesday, January 17, 2018

Just as GE is set to move into Boston, word comes that the multinational conglomerate that city and state officials wooed here with a multi-million dollar package of tax breaks and
incentives will look nothing like the corporate anchor that was envisioned to launch the Seaport into the future.

Everything coming from GE CEO  John Flannery 
seems dark. Since he took over in August from Jeffrey Immelt, Flannery has cut the company's portfolio and slashed costs to try to right the ship. But stockholders are having none of it. On Tuesday, he announced a $6.2 billion write-off that triggered a 3 percent drop in the stock price, which is down more than 40 percent over the last year in a bull market. That's not the kind of stability Mayor Marty Walsh and Gov. Charlie Baker foresaw when they put their collective heads and purses together to beat out other contenders.

It now raises the question of what will happen with of American capitalism? Fewer breaks out of fear of being burned again?
 
There is some historic context for this but what it shows is that past is prologue only in a willingness to commit public funds for promises that aren't binding. More than 20 years ago, the state passed a series of tax credits to keep Fidelity Investments and other mutual fund companies from moving out of state. The incentives were tied to job growth but the employment mandate was set to sunset after five years and after that, mutual fund firms had carte blanche to take the credits whether they expanded or contracted.


Between 2006 and 2011, Fidelity reduced its Bay State footprint while taking the credits. At the time, though no individual accounting ever came from the Department of Revenue, the mutual fund tax credit cost the state $1.7 billion over 15 years.

There's not a lot of information available about how the incentives are tied to GE's growth. But if we learned anything from past tax credits, it's always more conducive for the company than for taxpayers.

Amazon has announced its search for up to 1 million square feet of space in the Seaport, leading to speculation that Boston has moved into top-tier contention to land HQ2. Will it change how city and state officials reengage with Amazon as it nears its decision? Jeff Bezos probably hopes not.

JACK SULLIVAN