United Technologies' move casts doubt on tax incentives
A Raytheon facility in Orlando, Florida. Photo: Paul Hennessy/NurPhoto via Getty Images
As part of its merger with Raytheon, United Technologies expects to move its headquarters to the Boston area and out of Connecticut, the state it has called home for nearly a century.
Why it matters: A new research paper from the right-leaning Yankee Institute says it's just the latest piece of evidence that the mix of higher taxes and "economic development incentives" don't work.
What they're saying:
- The incentives, "spend more of the state's income every year than is raised by the administration's 2015 corporate tax increases — the increases that drove away General Electric and other major Connecticut corporations," Suzanne Bates, a Yankee Institute senior fellow, and Mark Gius, professor of economics at Quinnipiac University, write.
- "The results, meanwhile, appear ineffectual: even the corporation that received the most of such incentives has recently announced plans to leave the state."
What happened: Bates and Gius' study finds that the combination of higher taxes and development grants ended up costing Connecticut taxpayers $35 million.
- The tax increases were estimated to generate $481 million in receipts from corporations for the 2-year period, but produced just $323 million — about one-third less than projected.
- On the other side, the state's developments grants awarded nearly $358 million in grants or loans to businesses to either move to Connecticut or to remain in the state.