State business climate is worsening, survey says

Globe Staff

Massachusetts tax policy is the most important factor in determining the competitiveness of the state’s business climate, and the state's business climate is deteriorating because of poor tax policy decisions in recent years, according to a survey of chief executives of companies doing business in the Bay State.

The survey was conducted by the Massachusetts High Technology Council, a nonprofit business trade group in Waltham that seeks to promote the state as a mecca for high-tech companies and high-tech job creation. Roughly 100 companies are council members, and chief executives for about half those companies participated in the survey, the council said.

According to the council's 2010 annual CEO survey, 40 percent of respondents believe the business climate is “worsening." That's the highest level of pessimism since its 1991 survey, the council said.

Given the findings of the 2010 survey, the council said it is collaborating with the Pioneer Institute, a local public policy research organization, and IHS Global Insight, a consulting firm in Lexington, to develop a "dynamic analysis" of recommended tax policy changes that would improve the Massachusetts business climate. The council said it expects to make that analysis public in early October.

The analysis is tentatively titled "Keeping Massachusetts Competitive: The Business Climate in Context," and it is expected to argue that stable and predictable tax policies are needed to promote a healthful business climate, the council said.

The council and the Pioneer Institute issued a brief today that outlines some of the issues that the analysis will delve into in greater detail.

According to the brief, the analysis will focus on the corporate income tax rate, the personal income tax rate, research-and-development tax credits, unemployment insurance taxes, and the investment tax credit. The brief added that Massachusetts, in an effort to increase short-term revenues, has made numerous tax increases in recent years, including many changes to the corporate tax structure.