The Soft Cost of Doing Business In Massachusetts?

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If you talk with business leaders, you hear stories about the hidden costs of doing business in Massachusetts – huge building projects idled by recalcitrant local building inspectors, regulators blithely ignoring legitimate concerns raised by companies, and a general lack of understanding of how businesses work.

I’ve always wanted to quantify these ‘soft costs’ to see if they amounted to much, or were just so much complaining. As I compiled information for my last post on business rankings, one pattern in the data caught my eye.

If you look at Massachusetts strictly by the taxation and business cost numbers, we come out in the mid-30s. This year, we were ranked 32nd for tax climate by the Tax Foundation and 39th on business costs by CNBC.

But measures of softer tax and cost issues look worse. CEO Magazine’s survey puts us at 45th (as in the 45th best state to do business). CFO Magazine’s survey rates Massachusetts as the 4th worst tax environment (and dig deeper into their submeasures if you want to get a feel from the broad-based nature of CFO’s dislike of the tax environment here.)

So, why the difference between our mid-30s ranking on quantitative measures and mid-40s rankings on the quantitative and qualitative opinions of CEOs and CFOs? I welcome your suggestions but my best guess is that we are seeing the impact of the hard-to-quantify-but-you-know-its-there regulatory and legal environment of Massachusetts.

Crossposted at Boston Daily.