AIM Opposes Question 3 Sales-Tax Rollback
Associated Industries of Massachusetts will oppose Question 3 on the November ballot to roll back the state sales tax from 6.25 to 3 percent.
The largest employer association in the commonwealth will also oppose Question 2, which asks voters to repeal a law that encourages development of housing for low and moderate-income people. AIM will not take a position on Question 1 to repeal the 6.25 percent sales tax on alcohol approved by the Legislature last year.
AIM’s Board of Directors, made up of employers from throughout Massachusetts, cited concerns about maintaining public services and the commonwealth’s credit rating in deciding to oppose Question 3. The decision was announced Friday after a poll of directors showed overwhelming opposition to a rollback.
The board’s Executive Committee voted in April to support retention of the so-called Chapter 40B law allowing the issuance of a single comprehensive permit to build housing that includes low- or moderate-income units.
AIM expects to be one of many Massachusetts business organizations and chambers of commerce opposing a sales-tax rollback. The Massachusetts Taxpayers Foundation (MTF) has already taken a position against Question 3, which proponents say will reduce wasteful government spending and reduce a tax that disproportionately burdens middle-income and low-income people.
Why isn’t the business community supporting a measure that would lower taxes on the products it buys and sells? The answer is simple – Question 3 is an extreme measure that would irreparably harm the Massachusetts economy by doubling the projected state budget deficit and threatening services such as education and public safety upon which employers rely to run their businesses.
The Taxpayers’ Foundation estimates in a new report that reducing the sales tax will balloon the current $2 billion structural state deficit to $4.5 billion. Because half the spending contained in the commonwealth’s $32 billion annually budget is legally required, policymakers would have to close the $4.5 billion shortfall by cutting the non-required $16 billion half of the budget by an estimated 28.4 percent.
The spending reductions would fall heavily on local aid, triggering layoffs among teachers, police officers, firefighters and other municipal employees. The reductions would also increase tuition and reduce course offerings for some 270,000 students at the University of Massachusetts and 24 state colleges and universities. These are the same students who will fuel the Massachusetts economy for the next generation.
The thousands of member employers who belong to AIM dislike burdensome taxation as much as anyone. No organization has worked harder than AIM to create rational tax policy that supports job creation and economic growth. We concentrate on issues that may not make headlines, but create long-term benefits for employers – such as preserving the current four-year reduction in corporate excise tax from 9.5 percent in 2009 to 8 percent in 2012.
But no one knows better than employers the dangers that scattershot, across-the-board budget reductions pose to the operational viability of an organization. Question 3 pushes state and local governments over an organizational tipping point that leaves open to question their ability to deliver a range of services that are critical to the economic recovery, from educated employees to passable highways to timely fire response.
Economic issues also stand behind the decision by the AIM Executive Committee to oppose Question 2, the proposed repeal of Chapter 40B. The high cost of housing remains a persistent challenge for the Massachusetts economy – just ask employers who struggle to recruit key employees from less expensive areas of the country – and closing the books on the commonwealth’s centerpiece affordable housing law just doesn’t make sense.
Chapter 40B overrides local controls when it comes to the construction of affordable housing in communities in which less than 10 percent of the housing stock is deemed affordable. The law isn’t perfect but has created 58,000 units of housing and has thousands more on the drawing board at a time when the recession and slow recovery has put a home or apartment out of reach for many citizens.
The law helps Massachusetts retain talented young professionals, while allowing young families to afford a home near their workplaces. It also creates jobs in the hard-hit residential construction sector.
Employers take pride in giving Massachusetts citizens a place to work. These employers are just as proud to support laws like Chapter 40B that give people a place to live.