Massachusetts Legislature Forks Over $177 Million in STATE TAXES to PENTAGON

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12. The $177 million is still "profitable" for the state. They'd take a bigger hit without it.

Consider it "operating expenses". A store has to spend money on inventory so that it has something to sell.

Look at it this way: The Pentagon supports around 100,000 jobs in Massachussets with these bases. If the median wage for those jobs is $40,000 a year, we're talking about $4 billion a year just in INCOME for Mass residents. A quick check shows that the base income tax rate for Massachussets is 5.3%, so those Pentagon jobs net the state over $200 million a year in income tax revenue alone. If the Pentagon shuts those bases, the $200 million a year goes away anyway. From that perspective, spending $177 million really cost the state nothing, as its simply giving back tax revenue that the Pentagon had sent to the state in the first place.

This is worthwhile for two reasons. First, it keeps people employed. Secondly (and probably more importantly), the state gets to keep taxing and profiting from the OTHER $10 billion a year that the Pentagon ALSO injects into the Massachusetts economy. That tax revenue dwarfs the income tax hit they're taking.

When it comes right down to it, the state had two choices. They could take a $177 million dollar cut in the tax revenue they derive from the Pentagon, or they could take a 100% cut in the tax revenue they derive from the Pentagon. There was no "cut-free" option. The Pentagon is closing the spigot, and Massachusetts is trying to minimize the damage.