Beacon Hill Passes Health Assessment Without Reforms

Posted by Katie Holahan on Jul 7, 2017 12:10:00 PM

The Massachusetts Legislature today passed a Fiscal Year 2018 budget that requires employers to cover a financial shortfall in the MassHealth program, but does not make the long-term structural changes needed to solve the problem.

statehousedome1.jpg“The 4,000 employer members of Associated Industries of Massachusetts (AIM) are deeply disappointed that Massachusetts has refused to take the courageous steps necessary to reform the MassHealth program and to rein in the crippling cost of health insurance,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

“The proposed state budget would force employers already struggling with the rising cost of providing health insurance to their employees to also pick up the tab for bailing out the unsustainable MassHealth program.”

The budget turns away from key elements of a compromise forged by the business community and the Baker Administration that balanced restructuring of MassHealth and the private insurance market with a temporary, $200 million assessment on employers. The compromise was designed to address the structural cost imbalances in MassHealth and place the program on a sound financial footing.

The business community has instead been left with a reform-free plan that will create a new tax on employers without making any hard decisions on containing costs.

The assessment would increase the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan. The assessment would be partially offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

“On its own, the employer assessment negatively impacts thousands of businesses around the state.  That impact is only acceptable as one part of a broader package that begins to address underlying health care costs,” AIM and a coalition of employer groups said in a statement.

“Eleven years ago, employers joined with doctors, hospitals, patient advocates and lawmakers to forge a health-reform law that required all parties to share the responsibility for improving access to health care. The employer community calls for that same sense of shared responsibility now to solve the MassHealth shortfall,” Lord said.

Business Groups | Lack of Reform Unacceptable

Topics: Budget, Employer Health Assessment

Employer Confidence Strengthens Again

Posted by Christopher Geehern on Jul 5, 2017 10:08:03 AM

Massachusetts employer confidence rose for the ninth time in 10 months during June amid optimism about an economy that is finally attracting more people into the work force.

BCI.June.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 61.8 last month, leaving it 5.7 points higher than a year ago. The Index has gained ground in each of the past two months after slipping in April.

The results come a month after state officials reported a long-awaited expansion of the Massachusetts labor market – the labor-force participation rate rose to 66.7 percent in May, its highest mark since before the Great Recession.

“Employer confidence in both the state and national economies remains well above the level we saw a year ago, especially among manufacturers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Key Massachusetts indicators such as total jobs, wages and gross state product far exceed pre-recession levels and that is outweighing concerns about long-term growth.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The index has remained above 50 since October 2013.

The constituent indicators that make up the overall Business Confidence Index were mostly positive during June.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2.1 points to 64.2, leaving it 5.7 points higher than in June 2016.

The U.S. Index of national business conditions rose 2.8 points to 57.4 despite lingering uncertainty about federal economic policy. June marked the 87th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 1.5 points to 61.9 while the Future Index, measuring expectations for six months out, increased 0.4 points to 61.7. The Future Index was 5.1 points higher than a year ago.

The Company Index, reflecting overall business conditions, was unchanged for the month at 62.4 and up 4.7 points during the 12-month period. The Employment Index fell 0.4 points to 58.1 while the Sales index rose 0.6 points to 62.6.
The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 18 percent reduced employment. Expectations for the next six months are stable – 38 percent hiring and only 10 percent downsizing.

Alan Clayton-Matthews, a professor in the School of Public Policy and Urban Affairs at Northeastern University, said the supply of workers remains one of the most important factors in the ability of Massachusetts to maintain long-term economic growth.

“There is little slack left in the labor market. Unemployment rates are back to pre-recession levels, and employment rates are very close to pre-recession levels. The slack that does remain is largely among young workers, those with less than a high-school education, and part-time workers who have been unable to find full-time work, suggesting that many workers lack the skills that employers are seeking,” Clayton-Matthews said.

Overall participation in the labor force nationally has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.
Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.8 confidence reading in June versus 60.8 for employers in the west.

AIM President and CEO Richard C. Lord, also a BEA member, said employers are increasingly concerned about a passel of potentially expensive and disruptive Beacon Hill proposals, including a surtax on incomes more than $1 million, paid family leave and an employer assessment to close a budget gap in the MassHealth program.

“Massachusetts employers have led what is now one of the longest and most consistent economic recoveries of the past 100 years. Much of that growth reflects the fact that policymakers have refrained from unnecessarily raising business costs and imposing inefficient regulation,” Lord said.

“We look forward to working with the Legislature and the Baker administration to ensure that those policies continue.”

Topics: Employers, AIM Business Confidence Index, Massachusetts economy

Infographic: Paid Leave Law Raises Benefit Costs by 87 Percent in California

Posted by Brad MacDougall on Jun 26, 2017 8:30:00 AM

The Massachusetts Legislature is considering a paid leave bill that would establish the right of employees to receive job-protected paid family and paid medical leave.  Benefits would include up to 16 weeks of paid family leave, and 26 weeks of paid medical leave.  Weekly benefits would begin at 50 percent of the employee’s weekly wage and capped at $1,000 per week.

But benefit costs would accelerate quickly if the bill becomes law. The 50 percent salary replacement level required at implementation in January 2019 would increase to 90 percent by January of 2021.

How fast will costs increase? Consider the following information about California's decade-old paid family leave law:

Paid Leave.jpg

 State of California
Labor and Workforce Development Agency

Register for the Paid Leave Webinar


Topics: Employment Law, Paid Family Leave

Governor, Business Community Reach Compromise on Health Assessment

Posted by Katie Holahan on Jun 20, 2017 2:00:00 PM

The Massachusetts business community has agreed to support a broad compromise plan to stabilize the Massachusetts Medicaid and Unemployment Insurance systems while offseting a two-year employer health-care assessment with savings elsewhere.

Baker.2017.jpgThe complex agreement, developed after months of intensive negotiations between the Baker Administration and the business community, would make structural changes to the MassHealth program to reduce ongoing financial shortfalls in the state/federal insurance program for low-income people. There would also be cost-saving changes to the commercial health-insurance markets, including increased incentives for patients to seek care at high-quality community hospitals.

The plan would use a temporary employer health assessment as “bridge financing” to capitalize the MassHealth program until the long-term reforms are implemented. The assessment would raise $200 million annually through the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan.

The assessment would be offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

The administration announced the agreement today in a letter to the chairs of the Legislature’s Joint Committee on Ways and Means.

“The comprehensive plan moderates the employer assessment that was originally proposed in January while offering the opportunity for meaningful structural reforms to the health insurance system and rate relief within the Unemployment Insurance system,” said Richard C. Lord, President and Chief Executive Officer of AIM.

The compromise will require approvals both from the Massachusetts Legislature and from federal officials.

Here are the key elements of the agreement:


  • Moves 140,000 people who are above the federal poverty level out of Masshealth and into the Connector market;
  • Restructures MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Shifts 30,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into Careplus, which does not;
  • Adds co-pays for MassHealth members;
  • Requires the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered affordable health insurance by an employer from seeking coverage through MassHealth.

Commercial Market Reforms

  • Imposes a five-year moratorium on insurance mandates (requires change to state law);
  • Increases the required premium differential for tiered network plans from the current 14 percent to 28 percent. (requires state law change);
  • Promotes transparency tools for employers and consumers. (requires state law change);
  • Increases access to lower-cost providers by expanding the scope of practice for optometrists, podiatrists and advanced practice registered nurses (APRN) and creating a new mid-level provider - dental therapists. (requires state law change).

Employer Assessment:

  • Applies to employers with six or more employees (both full and part-time);
  • Increases the EMAC contribution rate for all employees, statewide. Additional annual two-tiered assessment on any employees receiving health insurance through public programs.
  • Tier 1 is broad based, raising the current EMAC rate from 0.34 percent to 0.51 percent of annual wages, up to the annual wage cap of $15,000. Applies to all employers currently subject to EMAC; raises the maximum per-employee contribution rate from $51 to $77; state expects to annually collect $75M under this tier;
  • Tier 2 introduces a targeted payment that would require employers to pay an additional 5 percent of annual wages for each non-disabled employee on public coverage, up to the annual wage cap of $15,000; applies to all employers currently subject to EMAC with non-disabled employees on MassHealth (not in premium assistance) or subsidized Connector coverage (ConnectorCare); Tier 2 would result in an annual maximum per employee contribution rate of $750; state expect to collect an estimated $125M in Fiscal Year 2018 under this tier; the estimate is dependent upon the actual number of individuals on public coverage.
  • Waiver applies for anyone receiving insurance through parent, spouse or other household member;
  • Implementation date of January 1, 2018 and a sunset date two years later.

Unemployment Insurance

  • An automatic increase of three levels to schedule F due to take effect on January 1 would be replaced with a one-level jump to schedule D for 2018 and another single increase to schedule E for 2019.

Governor Baker in January proposed to close a $600 million shortfall in MassHealth by levying a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, or do not make a minimum contribution of $4,950 annual contribution for each full-time worker. AIM opposed that plan because it would penalize the majority of companies that provide good health insurance to their workers.

Topics: Controlling Health Care Costs, Charlie Baker, Employer Health Assessment

A Better Idea to Reduce Carbon Emissions...

Posted by Bob Rio on Jun 19, 2017 8:30:00 AM

Massachusetts could reduce carbon emissions far more significantly by streamlining existing greenhouse-gas reduction initiatives than by implementing a bureaucratic new carbon tax.

trafficsmall.jpgThat’s why Associated Industries of Massachusetts will oppose a carbon-tax bill and offer an alternative strategy during a Beacon Hill hearing tomorrow.

An Act Combating Climate Change would establish in its first year a carbon tax of 10 dollars per ton of carbon dioxide emitted, rising steadily to 40 dollars per ton in year seven on all fossil-fuel use (gas, diesel, natural gas) in transportation (on and off road vehicles, trucks, recreational and commercial vehicles, including buses, trains and vans) and residential and business heating and process.

Fuels used to generate electricity would be exempt because there is already a carbon tax on those sources.  

The money generated – almost $600 million dollars the first year and rising to $2.4 billion in year seven - would be returned as rebates to residents and business by a mechanism to be developed by the state Department of Energy Resources (DOER). Rebates would be made in rough proportion to what each sector pays. Based on current usage, approximately 60 percent of the funds would come from the transportation sector.

AIM opposes the carbon-tax bill because the rebate mechanisms is expensive and overly bureaucratic. Collecting and rebating money to nearly 7 million residents and 250,000 or more businesses will be an enormous administrative burden that will cut into the rebates.

AIM estimates that the average payer will get back through rebates only 50-60 percent of the amount paid into the tax. Certain groups could get more than they paid.    

Rather than establish an entirely new program, AIM suggests fixing the current programs; and if a carbon tax is desired, replace the current funding for the existing programs with the proceeds of a carbon tax.

Massachusetts already surcharges both residential and business electricity and natural gas users to support programs that reduce greenhouse-gas emissions. Those surcharges generate almost $2 billion dollars per year.

These programs could be more efficiently managed through the one source of revenue envisioned in this legislation.

Our recommendations include:

  • All carbon emissions, including the electricity sector, should be subject to the carbon tax.
  • The carbon tax should replace the carbon tax instituted under the state’s participation in the Regional Greenhouse Gas Initiative (RGGI).
  • All current programs that deal with energy efficiency and renewable energy that are funded by ratepayers or taxpayers should be eliminated, including those currently directed at the transportation sector.

With all programs eliminated, the single funding source would be overseen by a new advisory council – the Carbon Reduction Advisory Council - made up of a diverse group of stakeholders. Under the direction of this advisory council, the funds would be channeled to programs that would compete to provide the best carbon-reduction strategies.

This would be a bold change to the way Massachusetts operates these programs. But a bold change is needed. Many of the existing programs have become hidebound and uncoordinated. New ideas that could help our collective carbon-reduction goals are not instituted because they do not fit into current silos.

This new thinking is not only better but necessary to attain the commonwealth’s greenhouse gas reduction commitments.

Please contact me at 617.262.1180 or a if you would like more information or updates on the carbon tax.

Q & A on the Carbon Tax

Topics: Regulation, Environment, Carbon Tax

Income Tax Surcharge Would Harm Business

Posted by John Regan on Jun 14, 2017 2:07:38 PM

We call ourselves a commonwealth.

From the preamble of the Massachusetts Constitution:

“The body politic is formed by a voluntary association of individuals: it is a social compact, by which the whole people covenants with each citizen, and each citizen with the whole people.”

This notion, affirmed in the language of Article XLIV of the Constitution, states that taxes “shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property.” Everyone is treated the same.

Now the Legislature is considering a petition to amend the language of Article XLIV in a manner that would increase by 80 percent the taxes paid on incomes in excess of $1 million, adjusted annually by the same method used for federal income tax brackets to reflect any cost-of-living increases. According to the ballot question language, every dollar of income more than $1 million would face a tax of 9.1 percent.

Those earning $1 million of income per year currently pay 95 percent more tax than those making $50,000 annually - an income of $50,000 generates a tax obligation of $2,550, while the $1 million dollar income generates $51,000 of income tax (all things being equal).

Some additional facts to note:

  • This significant new tax burden will fall on individuals and certain business entities paying taxes at the individual rate. It is hard to imagine that this new obligation will not impede investment, employment, and certain locational decisions.
  • The Department of Revenue estimates (with some assumptions) that the proposal will generate between $1.6 billion to $2.2 billion, with $1.9 billion identified as the median.
  • The $1.9 billion tax increase will be paid by roughly 19,500 filers, 80 percent of whom are anticipated to file with some business income.
  • Those 19,500 filers represent half of 1 percent of all tax returns filed with the Department of Revenue.
  • Eighty-six percent of the affected taxpayers will be married couples filing jointly, and 11 percent will be individual filers with earnings of more than $1 million.

Advocates for this constitutional amendment focus on the revenue derived therefrom rather than the uneven or inequitable method of its generation. The amendment requires that generated revenues shall be used:

“…to provide the resources for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation, all revenues received in accordance with this paragraph shall be expended, subject to appropriation, only for these purposes.”

However, Section 2 of Article XLVIII of the Constitution clearly enumerates so-called “Excluded Matters” by stating in part: “No measure… that makes a specific appropriation of money from the treasury of the commonwealth shall be proposed by an initiative petition…” For a petition to be constitutionally valid, the Legislature must retain the ability to use tax revenues for any public purpose the Legislature deems appropriate.

It follows that a “yes” vote necessarily diminishes the authority and responsibility invested in the members of the Massachusetts General Court. Our Constitution gives members of the House and Senate the sole authority to authorize how tax revenues are appropriated. Any assertion by the petition's proponents about limiting how the money is used is folly and prohibited by the Constitution. By passing the amendment, legislators abdicate their constitutionally protected authority.

The 4,000 member employers of Associated Industries of Massachusetts therefore urge a “No” vote on this measure.

Before we approve a policy that raises so much from so few we must ask – does this imbalance make the commonwealth a better, or a worse place?

We would suggest that it makes Massachusetts an unfair place.

Topics: Taxes, Income Surtax

Paid Leave Proposals Not Reasonable or Manageable

Posted by John Regan on Jun 13, 2017 1:00:00 PM

Editor’s Note: The following testimony opposing paid leave was delivered to the State House by AIM today. The testimony was provided to the Joint Committee on Labor and Workforce Development regarding HB 2172 and SB 1048.

My name is John R. Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts (AIM.); the state’s largest nonprofit, nonpartisan association of Massachusetts’ employers.

StateHouse-resized-600.pngWith thousands of members employing nearly one out of every five workers in Massachusetts, AIM’s mission is to promote the well-being of its members and the prosperity of the Commonwealth of Massachusetts by improving the economic climate, proactively advocating fair and equitable public policy, and providing relevant, reliable information and excellent services.

Thank you for the opportunity to present our testimony today.

We respectfully ask that HB 2172, SB 1048, and any similar bills receive adverse reports from this Committee.

We agree with the proponents of these bills that Massachusetts’ citizens need to balance the needs of work and family. In fact, according to the 2016 AIM Benefit Survey, 87% of responding companies offer short-term disability to their employees with benefits ranging from 51 to 70% salary replacement; 79% offer long-term disability insurance and 59% have a leave of absence policy, all in addition to the leave benefits under FMLA.

However, we do not agree, and do not believe, that the legislation before you is a reasonable, manageable, or affordable approach to address those needs, either from an employee or employer perspective.

Last session, we asked a series of questions that we would like to ask this Committee again.

We strongly believe that the Committee should have answers to each of these questions before any bill can be reasonably released from your consideration. (For this portion of our testimony, we will be using section references to the language of Senate 1048. Similar language and concepts are found in the House bill as well.)

  • Section 2, of the proposed new Chapter 175M, creates a new office within the Executive Office of Labor will be created to administer the new leave program for the Commonwealth; does the Committee know the costs associated with this new office?1
  • Sections 3 & 4 creates the benefit durations and levels of wage replacement for the leave program; does the Committee know what the estimated take-up rate is for individuals taking both the maternity leave and disability leave? For cost estimating purposes, take-up rates per program are critical to know.
  • Further, what is the Committee’s estimate of the total program costs incurred by employers and the Commonwealth for administering this program and providing these new benefits?2
  • In Section 8, the director of the fund is charged with “assessing” the tax to fund this new program. Is this Committee aware of any precedent for the creation of this type program as well as the power to set and raise revenue by a non-elected individual? Are we sure that this is constitutional?
  • The director will become responsible for numerous operational duties in managing the funds related to this bill. Is there a cost estimate for this function?
  • In addition, has anyone determined what the tax assessment per employee might be for this program and, if so, could we see that analysis?3
  • Lastly, the bill requires that claims for family and medical leave benefits shall be filed with the department and handled under the procedures prescribed in sections 1, 10, 11, 12, 14, 15, and 16 of chapter 30A. Is there an estimate of the number of claims to be adjudicated and the costs for that process?4

The terms of this legislation are far-reaching. Although the initial implementation in January of 2019 would require 50% salary replacement levels, that level is increased to 90% by January of 2021 and the average weekly wage is then tied to the Consumer Price Index for the Boston-Cambridge-Quincy consolidated metropolitan statistical area. Not only is this an extraordinarily high rate of compensation, but it also derives the wage rate from on the area of the Commonwealth with the most expensive cost of living. This will not accurately reflect the economic complexity of different areas in Massachusetts, placing an undue burden on employers and employees living in less costly areas.

Of late, many have wondered why with a recovered economy and lower unemployment rates Massachusetts own-source revenue continues to fall below even relatively conservative benchmark levels. One reason cited by our members is lack of wage growth.

According to the Pew Charitable Trust, personal income growth in Massachusetts has only grown by 2.0% since Q4 of 2007.5 Employers in the Commonwealth are faced with considerable non-wage job costs for health care, unemployment insurance, workers compensation insurance, and other Massachusetts-only high costs, like electricity rates. Combine these with higher than average base wage costs, and you restrict employers’ ability to raise wages in a manner similar to other post-recessionary recovery periods.

Inevitably and necessarily, this lack of wage growth affects tax revenue growth for Massachusetts.

A new, and expensive paid family and medical leave program, as envisioned by these bills, will contribute to a diminished pool from which to fund additional jobs and additional wage growth.

Register for the Paid Leave Webinar

Topics: Employment Law, Mandated Paid Leave

The Constitutional Amendment Tax Trap - Myths and Facts, Part 4

Posted by John Regan on Jun 13, 2017 9:08:03 AM

Editor's note - Beacon HIll lawmakers will vote on Wednesday whether to place on the 2018 statewide ballot a proposed constitutional amendement that would impose a four percentage-point surtax (an 80 percent increase) on incomes of more than $1 million. AIM opposes the Constitutional Amendment Tax Trap and will look at the myths and facts surrounding the issue each day through Wednesday.

Myth: High income earners in Massachusetts are not paying their “fair share” to support the cost of state government programs and investments.

Fact: The existing Massachusetts income tax is highly progressive, with the highest income earners paying the highest share of taxes and the highest effective tax rates.

According to data from the Massachusetts Department of Revenue, the top 20 percent of earners already pay 73 percent of all the income taxes paid to the state. (The top 1 percent of earners alone account for 28 percent of all income taxes paid.) Furthermore, the top 20 percent of earners had an average effective tax rate of 4.7 percent, nearly double the average effective rates paid by the lowest 40 percent of earners.



Myth: The proposal will help to narrow wealth and income gaps and enhance our status as a true “commonwealth.”

Fact: The proposal is intentionally divisive and misleading. Special interest groups are using the popular vote and their ability to spend unlimited campaign funds to advance their own narrow self-interests by targeting a minority of citizens to foot the bill.

The proposal will not increase any citizen’s income, lower anyone’s tax rate, provide any new tax credit or deduction or provide any guaranteed benefit to anyone. There is no guarantee the revenue raised will benefit lower income citizens-or any citizen at any income level in any way.

Topics: Taxes, Income Surtax

The Constitutional Amendment Tax Trap - Myths and Facts, Part 3

Posted by John Regan on Jun 12, 2017 2:32:49 PM

Editor's note - Beacon HIll lawmakers will vote on Wednesday whether to place on the 2018 statewide ballot a proposed constitutional amendement that would impose a four percentage-point surtax (an 80 percent increase) on incomes of more than $1 million. AIM opposes the Constitutional Amendment Tax Trap and will look at the myths and facts surrounding the issue each day through Wednesday.

Myth: Without new tax revenue, Massachusetts’ economy will suffer.

Craneandworkerssmall.jpgFact: Massachusetts is thriving right now and our economy is expanding. Unemployment rates remain low and state tax revenues are at an all-time high.

During the past 20 years, Massachusetts has taken positive steps to shed much of its “Taxachusetts” moniker and high-tax brand. Adoption of the proposed tax increase would be a damaging step backward for the state. It will send the wrong message to many job creators and entrepreneurs: namely if you come to Massachusetts and succeed, we’ll punish you.

Myth: The new tax will help stabilize and strengthen the state’s financial foundation.

Fact: The proposal would inject significant instability into the state’s finances by adding billions of dollars in new, permanent special-interest spending to the state budget based upon on a volatile, non-recurring revenue stream.

Other states that have made the same mistake have found themselves in dire budgetary crises when estimated revenue failed to materialize. This year, Connecticut budget makers saw anticipated tax revenues drop by a staggering $450 million, putting the lie to a long history of promises that new and additional taxes on high income earners would solve the state’s fiscal challenges.

On April 28, Connecticut’s Democratic Governor Dannel Malloy was forced to acknowledge the state’s failed policy of trying to support ever-increasing state spending a too-narrow group of high income earners, publicly admitting "Connecticut is too dependent on our highest-income earners for our revenue.”

(Sources: Maryland Public Policy Institute; Hartford Courant 4.28.17)

Myth: Impacted taxpayers will remain in Massachusetts and pay the increased taxes.

Fact: The recent experiences of other states indicate that retirees and high-income earners often relocate to lower tax states in response to increased taxes.

Within three years of Maryland enacting its “millionaire tax,” 40 percent of the state’s seven-figure earners were gone from the tax rolls - and so was $1.7 billion from the state tax base.

Similarly, in 2010 Boston College researchers released a report on the migration of wealthy households to and from New Jersey. They concluded that wealthier New Jersey households did in fact consider the high-earner taxes when deciding whether to move to or remain in New Jersey.

The researchers’ data analysis found that from 1999 to 2003 - before the millionaires’ tax was imposed- there was a net influx of $98 billion in household wealth into the state. After the tax was implemented, an increasing number of wealthy families left the state, resulting in a loss of $70 billion in wealth.

(Source: Wall Street Journal, 2.7.12; Center on Wealth and Philanthropy at Boston College)

Topics: Taxes, Income Surtax

Paid Leave Bill Would Create Massive New State Bureaucracy

Posted by Brad MacDougall on Jun 12, 2017 8:30:00 AM

If you’re an employer who enjoys navigating the endless disputes, hearings and paperwork of state bureaucracies – think the unemployment system – then you’ll love the proposal now before the Massachusetts Legislature to mandate paid family leave in the commonwealth.

StateHouse-resized-600.pngThat’s because the paid leave proposal, which will be the subject of a State House hearing tomorrow, would create a new office Department of Family and Medical Leave within the Executive Office of Labor to administer the new leave program. No one on Beacon Hill will say publicly how much it will cost to run the department, but AIM projects that employer-paid family leave will require an operation similar in size to the state Department of Unemployment Assistance, which operates with a budget of $70 million.

And that doesn’t account for the cost to employers of the new leave program itself. AIM estimates that the likely cost per week per employee to fund the program will exceed $520 per employee yearly, more than the average $508 per employee that companies now pay for the $1.3 billion Massachusetts Unemployment Insurance program.

The Senate paid leave bill creates a new Massachusetts law establishing the right for employees to receive job protected paid family and paid medical leave under certain circumstances.  Benefits include up to 16 weeks of paid family leave, and 26 weeks of paid medical leave.  Weekly benefits initially are 50 percent of the employee’s weekly wage and capped at $1,000 per week.

But benefit costs would accelerate quickly if the bill becomes law. The 50 percent salary replacement level required at implementation in January 2019 would increase to 90 percent by January of 2021.

Furthermore, the average weekly wage would then be tied to the Consumer Price Index for the Boston-Cambridge-Quincy consolidated metropolitan statistical area. This an extraordinarily high rate of compensation that would focus the wage rate on the area of the commonwealth with the most expensive cost of living. The result will distort the economic complexity of different areas in Massachusetts, placing an undue burden on employers and employees living in less costly areas.

Senate President Stan Rosenberg said recently that the paid family leave issue will go to the statewide election ballot in 2018 if the Legislature does not approve it.

“I am hopeful that the legislature will take this question up during this term and get it to the Governor's desk," Rosenberg wrote during a question-and-answer session on Facebook. "If we fail to do so, I expect there will be a ballot question putting this matter into the hands of voters. It would be far better to do it in the legislature than the ballot. Everyone concerned about this should contact their State Representative, their State Senator, and the Governor."

Associated Industries of Massachusetts opposes the bill and will testify against it on Tuesday. John Regan, Executive Vice President of AIM, said that the last thing employers need is another regulatory bureaucracy to divert time, energy and resources from business growth.

“We agree with the proponents of these bills that Massachusetts’ citizens need to balance the needs of work and family.  We do not agree, and do not believe, that this legislation is a reasonable, manageable, or affordable approach in addressing those needs, either from an employee or employer perspective,” Regan said.

Many AIM member employers already provide paid leave through disability insurance.

According to the 2016 AIM Benefits Survey, 87 percent of member companies offer short-term disability to their employees with benefits ranging from 51 to 70 percent of salary replacement. Seventy-nine percent offer long term disability insurance and 59 percent have a leave of absence policy.

AIM believes a mandated paid leave law will prompt many of those companies to discontinue their current policies and direct all employee leaves through the state program.

The leave bill provides that family leave is leave taken by an employee to provide care for a family member.  Family is defined as spouse, domestic partner, child, parent, parent of a spouse or domestic partner, an individual who stood in loco parentis to the employee when the employee was a minor child, grandchild, grandparent, or a sibling of the employee.

Leave may be for any of the following reasons: to bond with the employee's child during the first 12 months after the child's birth or the first 12 months after the placement of the child for adoption or foster care with the employee; for a serious health condition of a family member; or because of a qualifying exigency pursuant to the Family and Medical Leave Act, 29 U.S.C. 2612(a)(1)(e), arising out of a family member of the employee being on active duty in the armed forces of the United States.

Medical leave is leave taken by an employee from employment due to a serious health condition of the employee that renders the employee unable to perform the functions of the employee’s position.

AIM will conduct a complimentary Brown Bag Webinar at noon on June 27 to review the details of the paid family leave proposal. Bring your lunch and your questions.

Register for the Paid Leave Webinar

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