Liberty Mutual Doesn't Need Tax Subsidies

Shirley_Kressel150sq.jpgLooking for another $46.5 million for state and city services? Mayor Menino and the Boston City Council have granted Liberty Mutual Insurance Company $24 million in property tax relief in a so-called Tax Increment Financing (TIF) agreement to build a new Boston office tower for its employees just around the corner from its existing Boston building.  As part of the TIF, Governor Deval Patrick has given Liberty Mutual an additional $22.5 million in state subsidies. These subsidies are being granted to a corporation so wealthy that it is on the Forbes 100 list, earning over a billion dollars a year in profit, and testified to City Council that it did not even need to take out a construction loan, but could simply build the $300 million tower with cash on hand.

This subsidy money is being taken from our city and state services – even as the funding for schools, libraries, parks, transit, community centers, youth jobs, and other essential services is being slashed. 

Liberty Mutual’s project site, in the Back Bay, was falsely declared “blighted” to qualify for this subsidy. However, Back Bay real estate is among the most valuable in the region; no area could be less “blighted.”  Further, this site has already been developed in the past, without subsidy, proving that there are no physical obstacles requiring public assistance, as the Liberty Mutual claimed. What's more, the Boston Redevelopment Authority has permitted development of this tower at triple the legal zoning height, vastly increasing the value of this property for Liberty Mutual.

Liberty Mutual would have not have built this tower elsewhere if they had not received this subsidy. This is the centennial celebration tower for Liberty Mutual, built in the city that helped it become a world-wide success.  The threat that the company would have built this 300’ signature tower in the hamlet of Dover, New Hampshire, or any place other than its headquarters city, is not credible. The company has over the years assembled a large block of property near its office building, in planning for this project. It was not considering any other place. The company testified at a public, video-recorded City Council hearing that they never had any intention of pulling up their hundred-year roots and leaving Boston.

Ask the city and state revoke these unnecessary subsidies to Liberty Mutual. Sign our petition!


Liberty Mutual will not “create 600 jobs” because it receives this tax subsidy. No tax subsidy “creates jobs.”  Companies hire employees, and only when they can sell more product – not because they get tax breaks.  Liberty Mutual’s tax-break application promised 600 hires over the course of 20 years, an insignificant 30 employees a year, and, based on current patterns, 6 of them are likely to be Boston residents.  This is an invisible “job creation” prospect.  In fact, it is 75% FEWER employees than Liberty Mutual had been hiring (125 employees a year) at this office in the previous 6 years.  Liberty Mutual is being rewarded for promising to hire fewer workers.  Moreover, Governor Patrick’s staff falsified the Liberty Mutual application, raising the promised hires from 600 to 750, in order to justify an even larger subsidy than the state’s formula would have allowed; when informed by the press of this falsification, Liberty Mutual expressed surprise and denied that the 750 number was valid.  Nonetheless, the Governor’s staff insisted on giving the expanded subsidy.  Liberty Mutual is not going to hire 600 desperate unemployed people for new jobs in that new tower.  The current employees of the company, now working in nearby buildings the company owns (which happen to have received tax exemptions before it bought them), will be consolidated to fill the tower. Liberty Mutual will lease out those nearby buildings as another profit-making enterprise. Again, this is not a “job-creation” project. 

The temporary construction jobs the tower will provide would have been created in any case, since the project would have been built without any taxpayer subsidy.  Further, the April 4, 2012 Boston Residents Jobs Policy report indicates that the project is meeting under half of its Boston resident and female hiring goals.

It is not true, as some elected officials believe, that forfeiting future taxes is not the same as giving away public money.  Government operates with an ongoing tax revenue stream.  Reducing that revenue stream is exactly the same as granting money from the treasury.  Every year, that money will be missing from the budget, while the project increases service needs.  It is true that the City and state will get some tax revenue from the project, but we could have gotten it all.  We residents pay our fair share of taxes to operate out government, on the premise that that much is needed; every corporation must do the same.

We should not subsidize Liberty Mutual in return for its philanthropic donations to non-profits.  That nullifies the philanthropic purpose.  Moreover, charity is not justice. The company scatters small grants of a few thousand dollars to many charitable organizations, buying good-will cheaply.  The needy recipients of this charity should have had all of this $46.5 million, instead of having to be grateful for Liberty Mutual’s trickle-down largesse.  The money should have been allocated via a publicly accountable budgeting process, not as part of Liberty Mutual’s advertising strategy.  As Martin Luther King said, “Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.” 

Such corporate subsidies are given because they serve the interests of the elected officials, who claim false credit for “job creation.”  Further, Liberty Mutual executives and employees have given campaign contributions to elected officials totaling about $150,000, including $65,000 to Governor Patrick and $10,000 to Mayor Menino.

There is never a good time to squander the public money, but it is especially harmful in times of government austerity. The people of Boston and of the Commonwealth are suffering devastating service cuts.  Redirecting fifty million dollars to city and state services would make  a real difference in many people’s lives. 

Ask the city and state revoke these unnecessary subsidies to Liberty Mutual. Sign our petition!

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