Within the halls of Beacon Hill, calling for affordability and competitiveness appears to be all the trend, however is the coverage matching the rhetoric? In the course of the State of the Commonwealth tackle, Governor Maura Healey invoked her so-called “Affordability Agenda,” a associated working group, small enterprise house owners, and “actual cash that makes an actual distinction.”
However regardless of the situation – taxes, healthcare, power prices – the fact is, as at all times in Massachusetts, extra of the identical. No actual aid from excessive taxes, no critical discount of burdensome laws, no enhancements for beleaguered housing, power, and medical insurance markets, simply rearranging deck chairs on the Titanic. A subsidy right here, a regulatory modification there, however no substantive change on the finish of the day.
To “observe the cash” is the surest technique to see lawmakers’ recreation, and with Beacon Hill pols it’s at all times tax and spend. Our state’s current “down fee” on tax reform? Nicely, that now seems to be the entire fee. These newly enacted federal tax saving measures? Massachusetts taxpayers don’t want these straight away, attempt us once more in 2027. And as for brand spanking new state taxes? We’ll let the municipalities hike the Commonwealth’s levies. Simple.
Sure, “The Municipal Empowerment Act” is again. Following final 12 months’s State of the Commonwealth tackle, Gov. Healey informed reporters she had no plans to boost taxes on account of slowing income collections. The next day she introduced to municipal leaders that she was submitting a invoice to permit cities and cities to not solely elevate meals and lodging taxes but additionally create a brand new tax on autos. Happily, final 12 months small companies, eating places, and the lodging trade reacted shortly to forestall such a misguided and unbalanced proposal, and lawmakers received chilly toes.
However they haven’t given up, and legislators have to be educated but once more on the hazards of native tax hikes. A current instance, somewhat than instantly calling for cities and cities to rein in municipal spending, some policymakers as an alternative tried to “empower” Mayor Michelle Wu to permit Boston to additional shift extra of town’s tax burden onto business properties. Equally troubling is a invoice filed to allow town of Salem to enact a neighborhood choice 5% gross sales tax on high of the state’s 6.25% fee. And if one city will get the go-ahead for a neighborhood gross sales tax, different municipalities would observe, leading to an 11.5% gross sales tax benefiting tax-free Salem, New Hampshire as shoppers store throughout state strains.
It’s arduous to overstate how troubling this proposal is for Most important Road companies. Massachusetts’ eating places struggled to outlive throughout the pandemic, the shutdowns, and the hovering inflation, labor value hikes, and employee shortages that adopted. Enabling the native meals tax to be elevated by a 3rd could be stinging for restaurant house owners and clients. Equally, state tourism was additionally battered, and permitting additional hikes within the native choice resort and lodging taxes to 7%, and to 7.5% in Boston, is plainly absurd.
Most troubling within the proposal is permitting municipalities to create a brand new 5% annual tax on the worth of autos. Along with the present excise tax of $25 per $1,000 of your automobile’s price, motorists would pay an additional 5% tax to generate income for cities and cities. Whether or not a restaurant delivering a pizza, a plumber driving to a house to repair pipes, a truck transporting heating oil, or a pick-up carrying tools to mow lawns, small companies require autos to conduct enterprise. And staff throughout the state want vehicles to journey to their jobs and earn a residing. This tax could be a steep burden throughout the Most important Road economic system.
Massachusetts small companies are nonetheless coping with one other Beacon Hill tax disaster: the Commonwealth’s damaged Unemployment Insurance coverage (UI) Belief Fund. Massachusetts is persistently ranked among the many worst within the nation, now forty seventh, for the UI taxes that replenish the belief fund. Worse nonetheless, small companies are repaying $2.7 billion in a UI COVID evaluation as a result of our legislators solely provided $500 million in federal aid cash to shore up the fund, which is now projected to be bancrupt and on the highest UI tax fee schedule by subsequent 12 months. This horrible scenario was compounded by a critical state accounting error that prompted employers to now must pay again a further $2.1 billion in UI debt to the federal authorities over the following decade.
Massachusetts might have used much more of its federal COVID aid funds to pay again the federal mortgage and replenish our UI belief fund, simply because the aid cash was supposed and most states did. New York helped clear UI debt by offering over $7 billion. However that will have left much less cash for the politicians to spend and waste, simply as with the brand new federal tax financial savings legislators are eager to delay for taxpayers.
With all this affordability double-speak on Beacon Hill, it’s little marvel taxpayers are trying to put common sense tax aid measures on the poll this fall. Predictably, particular pursuits are already combating like hell to disclaim voters the chance for tax aid. Simply final Sunday, Gov. Healey warned the tax discount could be “catastrophic” and decimate funding for schooling. With such scaremongering, it’s clear why the poll field appears to be the one recourse for significant reforms, when our lawmakers refuse to steer and enact sincere, good coverage.
On this 12 months’s WalletHub “Greatest & Worst States to Begin a Enterprise” research, Massachusetts ranked forty fourth of the 50 states for enterprise prices. On the taxpayer entrance, based on the U.S. Census Bureau late final month, “33,000 extra folks moved out of state than arrived to Massachusetts in 2025.” And on Jan. 29, Cape Cod Potato Chips introduced that the favored eponymous snack will not be made within the Commonwealth. The Campbell’s Firm is shuttering its Hyannis manufacturing facility and transferring manufacturing to crops in Wisconsin, North Carolina, and Pennsylvania.
Apparently, these states should have higher affordability agendas and smarter coverage working teams. In any case, small enterprise house owners not often have these choices. When it turns into too costly to function, they’re pressured to remove jobs, scale back companies, and, lastly, shut doorways.
Christopher Carlozzi is the Massachusetts State Director of the Nationwide Federation of Unbiased Enterprise (NFIB), the nation’s main small enterprise affiliation.
