Connecticut's Amended Tax Laws Not Enough for General Electric

It was reported by the press today that General Electric has decided to move its headquarters from Connecticut to Boston. This comes days after the Connecticut General Assembly amended its tax laws with the hopes of alleviating GE's tax concerns regarding Connecticut's law requiring combined reporting starting January 1, 2016.

On December 29, 2015, the Governor signed the 2016-2017 Budget Bill (SB 1601) which made several tax law changes including placing a $2.5 million cap on the amount by which a unitary group's tax liability computed on a combined bases could exceed the group's tax liability computed on a separate basis. The bill also replaced the current three-factor apportionment formula with a single sales factor apportionment formula. Regardless of these changes and the others included in the bill, GE still decided to move its headquarters. This raises the question once again - does state tax law play a major role in a company's location decisions?

Well, according to a Wall Street Journal article, GE had several motives for relocating such as GE's outdated Connecticut suburban campus. According to the article, the campus was not allowing GE to attract the most promising talent that now desires to live and work in urban areas. Notably, according to the article, GE has been getting ready to leave Connecticut for months. This begs the question as to why Connecticut amended their tax laws last month. 

The article also mentions the fact that other states were offering generous tax incentive packages. Consequently, perhaps state tax laws or incentives do play a part in where a company chooses to relocate, but not the only part.

Interesting side fact: Connecticut is ranked #44 on the Tax Foundation's 2016 State Business Tax Climate Index. Massachusetts is ranked #25.