AIMBlog_Logo_Resized

John Regan

Recent Posts

The Millionaires Tax is a Failure

Posted by John Regan on Apr 11, 2019 8:34:11 AM

The “millionaires tax” is a failure.

Small BusinessEvidence from states that have already imposed a surtax on incomes of more than $1 million shows that the policy causes irreparable harm to the economy while generating far less tax revenue than promised.

A millionaires tax will cause the same harm in Massachusetts, Associated Industries of Massachusetts will tell the Legislature’s Joint Committee on Revenue today.

Lawmakers have refiled a proposal to amend the state Constitution to impose a graduated income tax, adding a four percentage-point tax (representing an 80 percent increase in the personal income tax rate) on all incomes more than $1 million. The amendment would dictate that the revenue be spent on transportation and education.

An identical proposal was struck down by the Supreme Judicial Court last year in a suit brought by AIM President Rick Lord and the leaders of four other business groups, but the current proposal operates under different rules because it was filed by legislators.

A graduated income tax would eviscerate the small, family owned businesses that form the heart of the Massachusetts economy. The surtax would take an estimated $2 billion from some 17,000 Main Street businesses and others that pay taxes at the individual rate and who would otherwise use the money to hire additional employers or expand their companies.

These companies are already drowning in more than $1.5 billion in new taxes and fees to pay for a financial shortfall in the Medicaid program and to fund the new paid family and medical leave program.

How do we know that surtaxes don't work?

Because our neighbors in Connecticut just drove their economy off a cliff by raising taxes three times in the past 10 years.

Connecticut in 2009 added a 6.5 percent income tax bracket for those earning more than $500,000 per year. The state followed up with a comprehensive $1.5 billion tax increase in 2011 to deal with a budget shortfall. A final round of tax increases took effect in 2015.

According to information compiled by Pew Charitable Trusts, tax revenue for all 50 states is averaging 6.3 percent higher than it was at the start of the 2008 recession. Connecticut tax revenue, on the other hand, is only 3.8 percent higher, despite the three tax increases.

Once the economic heavyweight of New England, Connecticut is the only state in the nation which has yet to recover the jobs lost during the economic downturn.

In addition, the state has seen an out-migration of residents since 2013 and the loss of major financial investors. Data from the Internal Revenue Service showed a spike in residents earning more than $200,000 per leaving the state in 2015 and studies conducted by Connecticut state agencies and commissions have confirmed the loss of higher income residents to other states.

Income surtax laws have failed in other states as well.

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.

Many of the business owners who fled Connecticut, Maryland and New Jersey moved to states that have worked to reduce, rather than boost, taxes:

  • North Carolina revenues grew 3.8 percent in 2016. As a result, it has reduced its 5.49 percent income tax to 5.24 percent in 2019.  It also will reduce its corporate tax to the lowest in the nation at 2.5 percent and will repeal the corporate levy as more businesses move in and revenues increase.
  • New Hampshire, a state with no income tax, is reducing corporate taxes two years in a row because of revenue growth of 2 percent.
  • Georgia is also reducing income and corporate taxes in 2019 because of a strong revenue growth rate of 4.5 percent.
  • Tennessee only taxes interest and dividends and reduced tax rates from 6 to 3 percent as its population grew 6.7 percent from 2010-2017 and revenues increased 2.4 percent.

Topics: Massachusetts Legislature, Income Surtax, Taxation

Maximum Unemployment Duration Drops to 26 Weeks

Posted by John Regan on Mar 26, 2019 6:49:33 PM

An obscure provision of the 2005 Massachusetts Unemployment Insurance Reform Law will next week accomplish what employers have sought for several decades – a reduction in the maximum duration of unemployment benefits from 30 weeks to the 26 weeks common in most states.

The provision mandates that if the unemployment rate drops below 5.1 percent in the 10 labor market regions of the state, then UI benefits are available for 26 instead of 30 weeks.  The Executive Office of Labor and Workforce Development certified today that the jobless rate in all Massachusetts labor markets has dropped to less than 5.1 percent so new UI recipients as of next week will be able to collect for 26 weeks.

The benefit period will return to 30 weeks if during any month of a claimant's 26-week benefit period the 12-month average monthly unemployment rate in any one of the metro areas rises above the 5.1 percent threshold.

Cost savings associated with the 26-week maximum benefit period are $40 million in the first year and $84 million in the second year, state officials said

“I don’t think anyone at the time this provision was negotiated believed it would ever take effect,” said AIM President and Chief Executive Officer Richard C. Lord.

“The change underscores the fact the the duration of Unemployment Insurance remains one of the major competitive disadvantages that affect companies doing business in Massachusetts. We urge the Legislature to move to 26 weeks permanently.”

Topics: Unemployment insurance, Massachusetts employers

Health Insurance Costs Top Employer Concerns Heading into 2019

Posted by John Regan on Nov 29, 2018 8:00:00 AM

The rising cost of providing health insurance to employees remains the most pressing issue facing Massachusetts employers, a new AIM survey shows.

health_careThree-quarters of the employers who participated in the association’s biennial Issues Survey from September to November identified the cost of health care as one of their three policy priorities. Other major challenges include work-force availability (64 percent), regulatory issues (53 percent) and the new paid family and medical leave law (51 percent).

AIM conducts the survey to solicit employer opinions on its policy agenda for the upcoming two-year session of the Massachusetts Legislature.

“AIM members understand the value of providing good health insurance to their employees, but employers are telling us clearly that they need relief from the relentless cost increases generated by the health-care system,” said Katie Holahan, Vice President of Government Affairs at AIM.

“AIM looks forward to addressing the health-cost issue on multiple fronts, from working with industry partners on health-plan design to resolving the employer MassHealth assessment to leading an employer effort to reduce unnecessary use of emergency rooms.”

One hundred sixty-eight employers participated in the AIM survey. The top 10 issues were:

  1. The cost of health care – 74 percent
  2. The availability of work force – 64 percent
  3. Regulatory issues (including compliance) – 53 percent
  4. Paid family and medical leave – 50 percent
  5. State and local taxes – 42 percent
  6. Minimum wage & the cost of electricity (tie) – 28 percent
  7. Transportation & federal taxes (tie) – 21 percent
  8. Trade issues – 15 percent
  9. Education – 12 percent
  10. Housing – 2 percent

Several employers expressed concern about the cumulative burden of government-imposed expenses – including the $200 million MassHealth assessment, unemployment insurance and minimum-wage increases – on their ability to grow and create jobs.

Health-insurance costs have been a dominant worry for Massachusetts employers for decades.

The Massachusetts Center for Health Information and Analysis (CHIA) reported in September that health care-spending in the commonwealth grew 1.6 percent from 2016 to 2017, with costs totaling $61.1 billion, or about $8,900 per resident.

While 2017 was the second consecutive year that overall growth came in below the 3.6 percent benchmark set by the Health Policy Commission, small-business premiums rose on average 6.9 percent. Deductibles, co-pays, co-insurance and other out-of-pocket expenses were up 5.7 percent.

Contact John Regan at jregan@aimnet.org

Topics: Skills Gap, Health Care Costs, Health Care

Potential Legislative Involvement in Lockout Sets Dangerous Precedent

Posted by John Regan on Nov 2, 2018 8:34:04 AM

Proposed legislation that would penalize National Grid during the ongoing lockout of gas workers represents a troubling – and perhaps unconstitutional – foray by Beacon Hill into a private-sector labor dispute.

State House 2015The bill, called An Act relative to the employment of certain workers by National Grid, would prohibit National Grid from:

  • receiving public funds for the upgrade, repair, installation or maintenance of its gas distribution system
  • applying for funds to assist in paying the costs of gate box maintenance and improvements, or
  • receiving from the Massachusetts Department of Public Utilities any increase in its rates for consumer gas or electric distribution.

The bill would also require National Grid to continue to provide health insurance under its expired collective bargaining agreements with Steelworkers Locals 12003 and 12012-04.

The House of Representatives has admitted the bill, but no hearing has been scheduled. The measure is unlikely to pass before January since the Legislature remains in informal session when a single legislator may stop a bill.

National Grid, which provides natural-gas service to 116 Massachusetts communities, has 85 communities impacted by a lockout of 1,250 workers after the Steelworkers rejected a five-year contract offer that will boost the current average employee salary, including overtime, from $120,000 a year to $137,000.

The offer also includes a 10 percent increase in the pension plan for current employees, while new employees would be assigned to a completely company-funded defined contribution plan with a 3 to 9 percent company match, in addition to a regular 401 (k) with a company match. The company’s health insurance proposal would also introduce modest deductibles and coinsurance, which the unions currently do not pay.

Intervention in a private labor dispute is beyond the scope of the Massachusetts Legislature and sets a dangerous precedent for the ability of government to takes sides in negotiations between companies and their workers. If lawmakers interject themselves in the National Grid lockout, what would prevent them from also becoming involved in disputes involving manufacturing, service or technology companies across the commonwealth?

The bill would tread upon and regulate a sphere of private sector collective bargaining that is intended to be unregulated by the U.S. Congress.  As such, the legislation is pre-empted by the National Labor Relations Act.  Strikes and lockouts are both federally protected actions.

The federal courts have a long history of pre-empting local and state efforts to shape labor disputes. In 1986, for example, the U.S. Supreme Court pre-empted the Los Angeles City Council’s bid to condition renewal of a taxi license on the resolution of a labor dispute.

The proposal could also violate the United States Constitution because, in targeting National Grid and only National Grid, it constitutes a Bill of Attainder proscribed by Article 1 of the Constitution. 

No one likes labor disputes and AIM joins others in hoping that National Grid and its unions can find common ground soon. That hope should not, however, lead elected officials down the road of political expediency.

Topics: Massachusetts Legislature, Energy, Organized Labor

What is the Biggest Issue Facing Your Business?

Posted by John Regan on Oct 22, 2018 8:00:00 AM

What is the single most important public-policy issue facing your business?

  • The ability to find qualified employees?
  • The accelerating cost and complexity of providing health insurance to your workers?
  • Declining revenue brought about by newly instituted tariffs against China and the European Union?

Small BusinessSounds like an amusing parlor game, but it’s serious business to those of us here at Associated Industries of Massachusetts who develop our policy agendas every two years based upon the needs and concerns of 4,000 member employers.

Hundreds of those employers have already told us about the issues that keep them awake nights by completing the biennial AIM Issues Survey, which will become the basis of the association’s public-policy agenda for 2019-2020. It will also become the basis of an updated version of The Blueprint for the Next Century, our long-term plan for economic growth in Massachusetts.

We expect to hear from hundreds of additional employers more as we move past the November 6 mid-term election and prepare for the new Beacon Hill legislative session that begins in January.

Employer feedback and participation are essential amid an increasingly uncertain political environment both here in Massachusetts and in Washington, DC.  It’s an environment marked by polarization and partisanship, hostility and incivility, and a Twitter-driven, bumper-sticker approach to serious issues.

Employers accustomed to working in a predictable and collaborative political process here in Massachusetts suddenly find themselves demonized by both the left and right in a political food fight in which there are few rules and precious little middle ground. Increasingly radical shifts by the two major parties are eroding long-held centrist ideologies that have framed our nation’s approach to economic growth since the early 20th century.

Moderate, pro-business Democrats in the Massachusetts Legislature face insurgent challenges from progressive activists supporting increased taxes, heavy business regulation and a notion that employers are somehow failing to “pay their fair share.” Now is the time for employers to speak up and articulate their unique role in providing economic opportunity for the people of Massachusetts.

What are employers who have already completed the Issues Survey saying?

“Can we stop making legislative changes at the ballot box?  It is an inefficient way to govern.”

“(The health-care surcharge) tax has placed an incredible financial strain, particularly on smaller to medium-sized businesses, which are already struggling to balance the health care needs of their employees with those that are mandated, but the company may not have the resources available to do.”

“Rising costs to operate in Massachusetts must be addressed.  EMAC, paid family leave, minimum wage - all of these in and of themselves are an issue but piled on it is becoming prohibitive.  We are actively working on efficiency and automation gains that will allow us to reduce the size of our work force, which is not what the commonwealth would like.  We need to recognize that many companies have competitors in other parts of the country where operating costs are not what they are here.” 

 We look forward to hearing from you.

Take the AIM Issues Survey

Topics: Associated Industries of Massachusetts, Issues, massachsetts legislature

Compromise Produces Solid Legislative Scorecard

Posted by John Regan on Oct 3, 2018 1:30:00 PM

A legislative session marked by grand compromises and outside ballot initiatives gave state lawmakers generally solid grades in the 2017-2018 AIM Legislative Scorecard released today.

Scorecard2AIM publishes the Legislative Scorecard at the end of each two-year Beacon Hill session to ensure that employers know legislators’ records on key economic and public-policy issues, and to recognize lawmakers who understand the importance of a vibrant economy for all residents.

The 2017-2018 legislative session was dominated by a wave of ballot initiatives that forced employers and lawmakers to forge a broad compromise establishing paid family and medical leave, increasing the minimum wage to $15 per hour and eliminating overtime pay for Sunday retail work.

AIM helped to negotiate the compromise because the proposed ballot questions on those issues were dangerous to business and almost certainly would have passed in a year of unprecedented electoral activism.

A separate potential ballot question establishing a surtax on incomes of more than $1 million died in the face of a court challenge lodged by AIM President Richard Lord and four other prominent business leaders.

And employers struggling to provide good health insurance to their employees remained frustrated at having to pay a $200 million annual assessment to close a budget gap in the MassHealth program for low-income people with no prospect of reforms.

Virtually every member of the House of Representatives earned grades of 60 percent or higher. Eight representatives topped the list at 100 percent, while 36 ended the session at 80 percent.

The ratings were based on five roll-call votes dealing with issues ranging from economic development to energy.

In the Senate, 29 of 36 members posted scores of 50 percent or better, with three senators leading the way at 75 percent. Six senators ended the session at 38 percent and three were at 25 percent.

The Senate scores were based upon many of the same issues debated by the House, as well as additional votes on so-called wage theft.

The Legislative Scorecard selects votes that reflect the objectives of The Blueprint for the Next Century, AIM’s long-term plan for economic prosperity in Massachusetts. The plan maintains that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.

The Blueprint contains four specific recommendations against which AIM measures public policy issues:

  1. Develop the best system in the world for educating and training workers with the skills
    needed to allow Massachusetts companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic
    structure across all industries, geographic regions and populations, rather than picking
    winners and losers. That structure must include a reliable and efficient transportation system.
  3. Establish a world-class state regulatory system that ensures the health and welfare
    of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on
    business growth.

Should the Legislature resume formal sessions before January, AIM may issue an updated Scorecard.

Topics: Massachusetts Legislature, Massachusetts senate, Massachusetts House of Representatives, Charlie Baker

Baker Signs Energy, Non-Compete Bills; Vetoes Patent Trolling

Posted by John Regan on Aug 13, 2018 8:00:00 AM

Governor Charlie Baker last week signed a clean-energy bill and new rules governing the use of non-compete agreements, but vetoed a “patent-trolling” provision that could have prevented companies from protecting their intellectual property.

Baker.2017The energy bill was among 53 pieces of legislation passed in the waning hours of the formal legislative session that Baker signed on Thursday. His actions on non-competes and patent-trolling, both of which were part of a $1.2 billion economic development bill, came on Friday.

AIM supported the energy measure and the compromise bill on non-competes but opposed the patent-trolling language.

“We are grateful to Governor Baker for thoughtful decisions that will benefit both the business community and the larger community,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

AIM had urged Baker to strike the problematic patent-trolling language from the economic development bill.

“The patent-trolling language contained in the bill pending before you is materially different from the compromise language approved by the Joint Committee on Consumer Protection and Professional Licensure committee (S.2432),” Lord wrote to Baker early last week.

“The changed language appeared within the final days of the legislative session and has raised significant concerns from employers who believe it may limit the ability of companies to protect intellectual property.”

AIM supported other portions of the economic-development bill ranging from an apprenticeship tax credit to changes to the Economic Development Incentive Program.

The non-compete language signed by Baker mirrors an agreement that AIM and other business groups reached two years ago with House Speaker Robert DeLeo. The measure limits non-competes to one year and gives employees the opportunity to consult a lawyer when signing a non-compete but does not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

The new energy bill authorizes an additional procurement of offshore wind power, increases the renewable portfolio standard that governs the amount of clean energy utilities must purchase, and establishes an energy storage target. The renewable portfolio standard will increase by one percent until the end of 2019, then by two percent each year until the end of 2029. It would then set the state on a track of one-percent increases each year thereafter.

Topics: Non-Compete Agreements, Energy, Charlie Baker, Patent Trolling

Beacon Hill Passes Energy, Non-Compete Bills; No Agreement on Health Measure

Posted by John Regan on Aug 1, 2018 8:16:11 AM

The Massachusetts Legislature ended its 2017-2018 formal session last night by mandating increased use of clean energy, establishing limits on the use of non-compete agreements and curbing the practice of “patent trolling.”

statehousedome1Lawmakers meanwhile were unable to reach agreement on a massive health-care bill that had generated concern among employers because it leveled assessments on medical providers and insurers that would eventually be passed on to consumers. The bill also contained no reform of the MassHealth program even as employers contribute $200 million per year to close a budget gap in the health-insurance program for low-income people.

Beacon Hill lawmakers crossed the finish line early this morning after a frenetic day that saw passage of bills covering everything from economic development to opioid care.

Governor Charlie Baker now has 10 days to review all the legislation. AIM will consult with member employers on the issues before recommending that the governor sign or veto each measure.

The new energy law authorizes an additional procurement of offshore wind power, increases the renewable portfolio standard that governs the amount of clean energy utilities must purchase, and establishes an energy storage target.

The compromise calls for the renewable portfolio standard to increase by one percent until the end of 2019, then by two percent each year until the end of 2029. It would then set the state on a track of one-percent increases each year thereafter.

Associated Industries of Massachusetts had supported a measured approach that would neither harm ratepayers nor elbow out other zero-carbon generation such as hydro-electric power. AIM supports the final bill.

“H.4857 An Act to Advance Clean Energy constructively builds upon the success of last year’s omnibus energy legislation,” said Robert Rio, Senior Vice President of Government Affairs at AIM.

“By following this measured approach, Massachusetts avoids disrupting the energy sector by making significant changes to programs that are themselves in the middle of being finalized. AIM feared that course would have delayed our effectiveness in meeting our greenhouse gas reduction goals.

“The measure will continue our aggressive transition from fossil fuels to a zero-carbon future while at the same time recognizing the importance of cost on Massachusetts ratepayers.”

(Contact Rio at rrio@aimnet.org or 617.262.1180 to learn more.)

The law governing use of non-competes, included in an economic development bill, mirrors a compromise that AIM and other business groups reached two years ago with House Speaker Robert DeLeo. The measure limits non-competes to one year and gives employees the opportunity to consult a lawyer when signing a non-compete but does not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

“AIM has fought relentlessly for more than 11 years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-competes to protect intellectual property. The new bill accomplishes that goal and reflects the productive compromise brokered two years ago by the speaker,” said Brad MacDougall, Vice President of Government Affairs.

The economic development bill also contains a provision to limit the practice of patent trolling, in which third parties demand financial settlements for alleged infringement on patents they do not even own. AIM maintains concerns about the language of the provision because some employers may be unable to engage in legitimate protection of their intellectual property amid an avalanche of state litigation.

“The language of the bill is materially different from the compromise language previously approved by the Joint Committee on Consumer Protection and Professional Licensure,” MacDougall said.

“This is an important and legally complex issue, one that should be addressed by federal law.  However, given Congress’ failure to act, if Massachusetts is to establish a policy, we need to get right for our AIM members who are victims of patent trolls and patent holders.”

(Sign up for future updates here on non-compete and patent legislation, or contact MacDougall at bmacdougall@aimnet.org or 617-262-1180 to learn more.)

The demise of the health-care bill turned on differing approaches by the House and Senate to capitalizing community hospitals. 

House Majority Leader Ronald Mariano told the State House News Service early this morning, "We were just too far apart philosophically to a come to a resolution that fit our agenda."

The Quincy Democrat said the House was focused on trying to find a way to financially stabilize community hospitals in the short-term with assessments on insurers and large hospitals, while he said the Senate "wanted a market driven approach." "We just thought we couldn't wait," Mariano said.

Katie Holahan, Vice President of Government Affairs at AIM, said, the lack of agreement on health care reflects the enormous complexity of the issue. She said AIM and its employer-members will continue to work with the Legislature to find ways to moderate the cost that companies face in providing health coverage for employees.

“While final action was not taken on major health-care legislation, we remain gravely concerned that – without long-term reform to MassHealth and the commercial market – Massachusetts’ health-care costs will continue to increase unchecked. Until reform is achieved, no relief is in sight for employers and their workers seeking to access care at a reasonable cost,Holahan said.

The conclusion of formal sessions on July 31 of even-numbered years generally means the end of the line for controversial bills. Lawmakers will meet for the remainder of 2018 in informal sessions, when a single lawmaker may stop any measure with an objection.

(Contact Holahan at kholahan@aimnet.org or 617.262.1180 for more information.)

Topics: Massachusetts Legislature, Non-Compete Agreements, Energy, Health Care

Health Care, Energy, Non-Competes on Table in Final Days for Legislature

Posted by John Regan on Jul 30, 2018 9:12:20 AM

Beacon Hill lawmakers will complete their version of final-exam week Tuesday at midnight as the Legislature races to complete bills before the end of formal meetings for 2017-2018 Beacon Hill session.

State House 2015The conclusion of formal sessions on July 31 of even-numbered years generally means the end of the line for controversial bills. Lawmakers will meet for the remainder of 2018 in informal sessions, when a single lawmaker may stop any measure with an objection.

The most important issues to employers have already been resolved in advance of this year’s end-of-session rush. The Massachusetts Supreme Judicial Court last month invalidated a potential income-tax surcharge constitutional amendment, while negotiations over three other ballot questions produced agreement on a compromise paid family and medical leave law, as well as a minimum-wage increase.

Three key employer issues remain on the table during the waning hours of debate:

  • Health care reform – The House and Senate passed different versions of health reform and a conference committee is working to hammer out a consensus bill. AIM remains concerned about both bills because they include expensive assessment. Neither bill reforms the MassHealth program for low income residents, where employers are paying a $200 million assessment to close a funding gap.
  • Energy – Measures passed by both the House and Senate could significantly increase the percentage of clean-source electricity used by Massachusetts consumers. AIM believes the bills could have the perverse effect of squeezing out clean hydro power and interrupting the successful roll-out of the 2016 energy law.
  • Non-compete agreements – The Senate, as part of an economic development bill, largely adopted the same modest restrictions on non-competes that AIM and other business groups supported two years ago as part of a compromise with House Speaker Robert DeLeo. But deep-pocketed venture capitalists continue to press for an outright ban and prospects for passage remain uncertain.

Employers also received some good news last week when Governor Charlie Baker signed the budget for the fiscal year that began July 1. The budget authorizes the administration to develop a hardship waiver for employers liable for the MassHealth surtax. Details remain to be developed.

The budget also provided full funding for the Massachusetts Manufacturing Extension Partnership.

Please contact me at 617.262.1180, or jregan@aimnet.org if you need more information on any of these issues. 

Topics: Massachusetts Legislature, Controlling Health Care Costs, Non-Compete Agreements, Energy

The Unintended Consequences of Energy Legislation

Posted by John Regan on Jul 16, 2018 11:53:29 AM

Listen as AIM Senior Vice President Robert Rio talks to the CommonWealth Codcast about  why focusing only on renewable power makes it harder for Massachusetts to reach its clean energy goals. 

Topics: Massachusetts Legislature, Energy

Subscribe to our blog

Posts by popularity

Browse by Tag