The Greater Boston Chamber of Commerce is calling for four key tax reform proposals designed to enhance the state’s overall business competitiveness. A report by the Chamber, produced with PricewaterhouseCoopers US, found that Massachusetts has the fifth highest corporate tax burden in the country, and calls for action to remediate the "competitiveness gap" in the Commonwealth’s corporate tax structure.

"Current policy makes Massachusetts’ corporate tax burden the 5th highest in the country," said Paul Guzzi, president and CEO of the Greater Boston Chamber of Commerce. "Our region has many attributes that boost our competitiveness [but] we are lagging when it comes to business cost structure, notably the corporate tax system."

According to the report, as a percentage of private sector GDP, Massachusetts’ corporate tax burden is 0.54 percent-74 percent about the national average of 0.31 percent of GDP. In addition, Massachusetts’ for-profit corporate sector is smaller, as a portion of the total economy, than in all but eight states.

"When a state’s corporate tax system is uncompetitive, it is at a significant disadvantage in the never-ending competition for jobs and investment," Jim Klocke, executive vice president of the chamber, said in a statement. "Corporate tax policy is one of the primary tools state governments have to influence economic development, and we are advocating for a series of important reforms to our current policy."

The chamber’s recommendations include:

1.         Adopting the elective single sales factor for all industries, so the tax code doesn’t penalize companies for locating facilities and jobs in Massachusetts;

2.         Adopting net operating loss (NOL) carryforwards for the state’s financial services and utility sectors, placing these key sectors on an equal footing with all other Massachusetts sectors and with their peers in nearly every other state;

3.         Aligning the state’s economic substance doctrine, which is extreme in both substance and process, with related federal provisions to make the tax process clearer and more predictable for companies in all industries;

4.         Phasing-out the balance sheet tax, a second corporate tax on inventories and financial assets that few comparable states utilize, and which must be paid even if a company is losing money or the economy is in a steep recession.

The Chamber recommends that each reform adopted begin on or after January 1, 2015, with all but the economic substance reform being phased-in over multiple years.