Budget Assumes EMAC Assessment Will End in December

Posted by Katie Holahan on Jul 25, 2019 12:01:35 PM

Sometimes the real value of legislation is found in the things left out of a bill.

StateHouse-resized-600Such was the case this week as the Massachusetts Legislature passed a $43.1 billion budget for the fiscal year that began July 1. The spending blueprint included important elements ranging from curbs on the cost of prescription drugs in the state Medicaid program to increased aid for public schools.

But the most significant part of the budget for employers lies in what was left out – an extension of the onerous two-year assessment on Massachusetts businesses to fund a budget shortfall in the MassHealth insurance program for low-income people.

The Legislature passed  an increase to the Employer Medical Assistance Contribution (EMAC) in 2017.  Employers have already paid tens of millions of dollars more than anticipated under the levy, some $519 million by the time the assessment sunsets at the end of this year instead of the $400 million envisioned under the legislation.

AIM in January called for an immediate end to the so-called EMAC assessment. The association also engaged a diverse coalition of organizations ranging from human services providers to home-care aides and trade associations to urge key legislators not to extend the two-year assessment in the Fiscal Year 2020 budget.

Employers are gratified that the Legislature is sticking to the original plan to sunset the tax at the end of 2019.

The assessment falls most heavily upon companies in which employees elect to use MassHealth rather than the employer-sponsored health plan. The assessment has increased EMAC from $51 to $77 per employee, while employers are also required to pay up to $750 for each worker who receives public health benefits.

AIM member employers are proud to lead the nation in providing health care coverage to their employees. Sixty-five percent of Bay State companies offer health insurance coverage to their workers, compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage. 

Employers stand ready to work with policymakers to make long-term structural reforms to both the MassHealth program and the commercial insurance markets to make the financing of health care for all Massachusetts residents sustainable.

Topics: Massachusetts state budget, Health Care, Employer Health Assessment

Governor to Sign Employer Assessment

Posted by Katie Holahan on Aug 2, 2017 7:43:35 AM

Governor Charlie Baker said last night that he intends to sign legislation imposing a $200 million MassHealth assessment on employers. The governor also reaffirmed his commiment to work with lawmakers to make long-term structural reforms to the state’s health-insurance program for low-income people.

“While this is certainly not the outcome we hoped for, we recognize that the governor’s decision is carefully considered and designed to achieve the ultimate, long-term goal of substantive MassHealth reform,” said Rick Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

“We are encouraged by the repeated statements of commitment by both Senate and House leadership that reform of the MassHealth system is as high a priority for them as it is for the employer community.

“In 2006, employers joined with doctors, hospitals, patient advocates, and lawmakers to forge a health-reform law that required everyone to share the responsibility for improving access to health care. Right now, employers are faced with a policy levying a new tax on businesses without any corresponding cost-efficiencies implemented in the public health-care system. We anticipate a continued dialogue as we work to affect meaningful, sustainable, long-term MassHealth reform.

“We are willing – in fact, we must – join together once again with a renewed focus to ensure the commitments of the employer community are not made in vain,” Lord said.

Topics: Massachusetts state budget, Health Care Costs, Employer Health Assessment

AIM Calls for Long-Term Cost Changes to MassHealth

Posted by Rick Lord on Jul 25, 2017 2:19:20 PM

Editor's note - Associated Industries of Massachusetts President Richard C. Lord submitted the following testimony today to the Legislature's Joint Committee on Ways & Means and Joint Committee on Health Care Financing urging lawmakers to approve long-term structural changes to the state Medicaid program. AIM's Katie Holahan (above) delivered the same message in testimony before the committees.

On behalf of Associated Industries of Massachusetts (AIM) and its 4,000 employer-members statewide, thank you for your continued engagement with the employer community on the difficult issues before you today. We are pleased that both committees have so promptly scheduled this hearing and the second hearing scheduled for this afternoon. 

AIM supports the language contained in Governor Baker’s amendment to the Fiscal Year 2018 budget, returned to you within Attachment F.  The amendment contains a complex agreement that was developed after months of intensive negotiations between the Baker Administration and the business community. We believe the comprehensive plan moderates the proposed employer assessment by coupling it with meaningful structural reforms to the public health insurance system and rate relief within the Unemployment Insurance system.   

It is vital to maintain all aspects of this package so we will not find ourselves addressing an even larger MassHealth budget deficit in two years than the one we confront today. 

AIM likewise supports language authorizing the Baker Administration to seek a federal waiver allowing Massachusetts to return to policies implemented within the 2006 Health Care Reform law, and to expand the scope of practice for certain health-care providers to facilitate lower-cost care. 

The 2006 reform law made employees who were offered employer-sponsored health insurance ineligible for MassHealth.  The intent was to balance the requirement that employers do their “fair share” in offering health insurance with concerns about the financial burden on the MassHealth system.  The Affordable Care Act (ACA) reversed that policy and allowed income-eligible employees to decline employer coverage and seek insurance through MassHealth.  

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  The ACA made public health insurance an economically rational choice for eligible residents in a state known for its expensive health-care system.   

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years: the high cost of health-care coverage in this state threatens the underpinnings of our economy.  Policymakers who have concentrated almost exclusively on access and coverage now face a renewed imperative to lower the cost of health insurance for everyone in Massachusetts. 

AIM member employers are proud to lead the nation in providing health care coverage to their employees. Sixty-five percent of Bay State companies offer health insurance coverage to their workers, compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage.1 

The 4,000 member employers of AIM provide health insurance to the majority of residents in the commonwealth. 

But providing that coverage has financial consequences. 

According to the most recent data available from the Centers for Medicare and Medicaid Services (CMMS), Massachusetts was the second highest-spending state for health care in 2014, 30 percent more than the national average. Personal health-care spending in Massachusetts, per capita, has increased more than 12 percent in five years – from $9,417 in 2009 to $10,559 in 2014. Cost growth like this is unsustainable and has accelerated in the face of attempts by both employers and the commonwealth to contain it. 

Businesses, in fact, have almost nothing to show in the way of cost savings and efficiencies five years after Massachusetts’ major push toward health care cost containment. 

The commonwealth has exceeded the 3.6 percent health spending growth benchmark in two of the past three measurement periods. Total Health Care Expenditures (THCE) grew by 4.2 percent from 2013 to 2014, and by 4.1 percent from 2014 to 2015. 2 

These cost increases are occurring in an industry in which experts agree that at least a third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.  

Now, the employer assessment means that business is expected to shoulder the escalating costs of the public healthcare system, as well.  More importantly, they are being asked to close the MassHealth deficit absent any of the  long-term structural reforms needed to solve the underlying financial problems with the program. 

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. 

Thank you for considering AIM’s views and please feel free to contact me if you have any questions or need any further information.  

Topics: Massachusetts state budget, Controlling Health Care Costs, Employer Health Assessment

Governor Sends Back Employer Assessment; Seeks MassHealth Reforms

Posted by Katie Holahan on Jul 17, 2017 3:38:18 PM

Governor Charles D. Baker returned to the Legislature today the employer health-care assessment portion of the Fiscal Year 2018 budget, along with provisions changing Unemployment Insurance rates for 2018 and 2019, and urged legislators to include long-term reforms that will put the MassHealth program on a firm financial footing.

Health.Energy.jpgThe governor is also filing separate legislation making reforms to the commercial health-insurance market.

“The governor’s actions provide the Legislature with the opportunity to review and vet the reforms, and to pass a thoughtful, comprehensive package that balances investments made by all stakeholders in the Massachusetts healthcare system,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

The employer 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 hammered out the MassHealth reforms during months of negotiations with AIM and other members of the business community. The proposed reforms include:

  • Restructuring MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Moving 140,000 people with income above 100% of the federal poverty level out of MassHealth and into ConnectorCare;
  • Shifting 230,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into CarePlus, which does not;
  • Requiring the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered employer-sponsored insurance from seeking coverage through MassHealth.

The Baker Administration’s decision to file stand-alone legislation addressing commercial health insurance reforms acknowledges the need for comprehensive reform of our private healthcare systems. As employers are faced with the second most expensive health-care costs in the nation, the need for reform and cost containment is vital to maintain both the quality of care and the level of coverage across our commonwealth.

AIM looks forward to the Legislature’s consideration of these challenging topics and their willingness to engage with a broad coalition of partners across our health-care system to attain an equitable resolution.

Topics: Massachusetts state budget, Controlling Health Care Costs, Employer Health Assessment

Budget Plan Includes T Reforms, Troubling Tax Reversal

Posted by Brad MacDougall on Jul 8, 2015 11:17:00 AM

A proposed $38.1 billion state budget to be debated today on Beacon Hill contains no broad-based tax increases and makes substantive public-transportation reforms sought by the business community.

State_House_and_One_BeaconEmployers are disappointed, however, that the spending blueprint reverses an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. Repeal of the so-called FAS 109 deduction, which had been postponed as the state revenues declined during the recession, could harm capital-intensive national and global companies.

“AIM continues to review the final budget for Fiscal Year 2016, but the budget conference committee has generally maintained the kind of spending discipline that employers support,” said John Regan, Executive Vice President of Government Affairs.

“The proposal lays the groundwork for real changes at the MBTA, changes intended to prevent the widespread service breakdowns we saw this past winter.”

The committee budget increases spending by 3.5 percent, less than the predicted 4.8 percent consensus on revenue growth. Unrestricted local aid would rise by $34 million and local education aid by $111.2 million.

The MBTA reforms provide Governor Charlie Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.

The budget contains other good news for employers as well:

  • Requires state executive offices and agencies to develop measurable, outcome-based performance goals and metrics.
  • Forms a special commission to improve state agency information-sharing capabilities to facilitate new business registration.
  • Authorizes the commissioner or revenue to offer an amnesty program for tax penalties in 2016.
  • Provides $2 million to the Workforce Competitiveness Trust Fund, which will train new workers in manufacturing, hospitality and other high-need industries.

Beacon Hill observers say the FAS 109 deduction is being repealed to pay for an increase in the earned income tax credit for low-income workers. The reversal sends a troubling signal to employers that previous agreements on major tax policy may be changed on a whim.

“It certainly does not help the commonwealth’s reputation for consistency on tax matters,” Regan said.

AIM and other business groups will recommend today that the governor veto the FAS 109 repeal.

The 2008 Combined Reporting tax law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.

Fiscal Year 2016 began on July 1. If the Legislature approves the blueprint today, it goes to Governor Baker for his review. The Governor has 10 days to review the budget and take action - approve or veto the entire budget, veto or reduce specific line items, veto outside sections or submit changes as an amendment to the budget for further consideration by the Legislature.

The Legislature can override the governor’s vetoes with a two-thirds vote in each branch. The House must vote first to override any vetoes before they may be considered by the Senate.  


Topics: Massachusetts state budget, Budget, Taxes, Transportation

Midwest Pension Upheaval May Reverberate in Massachusetts

Posted by Christopher Geehern on Dec 5, 2013 2:15:00 PM

Two seismic developments from the nation’s heartland this week may expand the ability of Massachusetts and its cities and towns to address a looming crisis totaling $83 billion in unfunded pension and retiree health-care obligations.

DetroitFederal Judge Steven Rhodes ruled Tuesday that public employee pensions will not be protected as the financially struggling City of Detroit initiates a Chapter 9 bankruptcy. The ruling raised the prospect that emergency City Manager Kevyn Orr (right) may seek to reduce the pensions of 23,000 retirees in an effort to address an unfunded pension liability of $3.5 billion.

Several hours later, Illinois lawmakers approved an historic overhaul of the state's government-worker pension system that would raise the retirement age for many state workers and scale back the size of - and even skip - some annual cost-of-living increases. In return, the state would put a few hundred dollars into most workers' pockets by slightly reducing the amount of money they have to chip in from their paychecks.

Unions representing public employees plan to challenge both developments in court.

All this matters to Massachusetts because Bay State taxpayers are currently saddled with $37 billion in unfunded pension liabilities and $46 billion in unfunded health-care benefits. A report issued in October by the Massachusetts Taxpayers Foundation concludes that Massachusetts and its cities and towns have set aside just 43 percent of the money they need to pay benefits already promised to current employees and retirees.

“The troubling reality is that unfunded pension liabilities have grown over the past decade despite the  enormous sums that state and municipal governments have contributed to their pension funds,” the report states.

Employers concerned about the financial stability of the communities in which they operate have become increasingly alarmed at the largely hidden problem building underneath public retirement systems. The fear is that escalating pension funding requirements will eventually impede the ability of cities and towns to provide the key services – education, public safety, roads and bridges – needed to maintain economic growth.

Analysts believe the Detroit decision and Illinois vote are unlikely to touch off a rush of bankruptcy filings by municipalities, but will undoubtedly give cities and states newfound leverage in negotiating pension benefits outside of court proceedings. At the very least, it’s a rare opportunity to address an issue that few people want to talk about in a commonwealth where nearly one-third of all state, municipal and other retirement boards are less than 60 percent funded.

City Manager Orr in Detroit provides a sobering warning about the alternative: “There’s not enough money to address the situation no matter what we do.”

Topics: Massachusetts state budget, Municipal Reform

AIM: Move Ahead with Plan to Eliminate Fair Share Assessment

Posted by Kristen Lepore on Jul 3, 2013 12:52:00 PM

Associated Industries of Massachusetts today urged Governor Deval Patrick to approve a carefully crafted health insurance compromise contained in the proposed state budget, even though the Obama administration yesterday postponed a key element of federal health care reform.

Health Care ReformIncluded in the budget for Fiscal Year 2014 now on the governor’s desk is a provision eliminating the $295 per employee Fair Share assessment that Massachusetts employers have been paying under state health reform since 2006. The budget would also drop the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replace the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measures, intended to make way for the federal Affordable Care Act and reduce the administrative burden on employers who provide health insurance, are a product of extensive negotiations among AIM, state lawmakers and groups representing the health care industry and consumers.

The proposed changes became more complicated yesterday when the U.S. Department of the Treasury announced that it will postpone until 2015 the federal health reform mandate that larger employers provide health insurance for their workers or face penalties. Those penalties - $2,000 per each full-time employee after the first 30 for companies that do not provide insurance or $3,000 per full-time employee for employers who offer health insurance that is either not affordable or of minimum value– were expected to replace the Fair Share assessment.

The postponement raised the possibility that Massachusetts employers who do not provide affordable health insurance for their workers may face no financial penalty for the next 18 months.

John Regan, Executive Vice President of Government Affairs at AIM, said the new implementation date for federal penalties does not diminish the value to employers and consumers of eliminating Fair Share and the Medical Security Trust Fund.

“The temporary presence or absence of health reform penalties does not drive benefit decisions for the vast majority of Massachusetts employers,” Regan said.

“Those employers offer health insurance to ensure they attract and retain key talent in a competitive market.”

Regan stressed that the requirement under the federal Affordable Care Act that individuals purchase health insurance by January 1, 2014, remains in effect.

Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, said in a blog post that the administration decided to postpone imposition of employer penalties after hearing concerns from business about the complexity of the requirements and the need for more time to implement them effectively.

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law.  Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur wrote. 

The administration says it will provide formal guidance within a week.

AIM believes the action by the Treasury Department confirms that the administration has the authority to grant a request to be made by Governor Patrick for a waiver from certain elements of the ACA that could drive up premiums for an estimated 60 percent of employers.

Elimination of the Fair Share assessment has been a priority for the AIM Health Policy Committee and was proposed by Governor Patrick in January.


Topics: Massachusetts state budget, Health Care Reform, Health Care Costs, Issues

Legislature, Governor Lurch Toward Budget, Tax Resolution

Posted by John Regan on Jul 3, 2013 8:19:00 AM

The Massachusetts Legislature and Governor Deval Patrick lurched toward final approval yesterday of a $34 billion state budget for the fiscal year that began Monday and a $500 tax package required to fund that budget.

Massahcusetts State BudgetThe Fiscal Year 2014 spending blueprint includes several measures affecting the cost of health insurance – it eliminates the Fair-Share Assessment created under the 2006 state health reform, drops the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replaces the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measure also appropriates $2 million for the Massachusetts Manufacturing Extension Partnership.

Governor Deval Patrick has 10 days to consider the budget, which passed Monday after largely party-line votes in the House of Representatives and Senate.

The governor yesterday rejected and sent back to the Legislature the $500 million transportation finance bill because he believes it does not include enough revenue to fix the commonwealth’s roads, bridges and public transit systems. The governor proposed that the finance package, which increases the state gasoline and cigarette taxes and imposes a levy on software services, also boost the gas tax at least three additional cents beginning in 2017 when the tolls on the western portion of the Massachusetts Turnpike are set to come down.

House Speaker Robert DeLeo and Senate President Therese Murray immediately declared the governor’s proposal dead on arrival. The Legislature is expected to vote on the bill with the changes proposed by Patrick after the July 4 holiday.

Associated Industries of Massachusetts has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as the one on computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.

“Last week, the Legislature passed a carefully calibrated revenue proposal that solves long-standing financial problems within the transportation system," Murray and DeLeo said in a statement.

"The administration’s proposal tying the question of tolls in Western Massachusetts - a plan not even mentioned in its original bill - to a 4 cents gas tax increase places too high a burden on the taxpayers of our state. This threatens working families and businesses still fighting to overcome the financial downturn. Therefore, we will ask our respective chambers to reject the administration’s proposal.”

Elimination of the Fair Share Assessment and the HIRD form were priorities of the AIM Health Policy Committee.

“We’re delighted that the Legislature included these items that will have an immediate benefit for employers struggling with the high cost of providing good health insurance coverage to their employees,” said William Grant, Chair of the Health Policy Committee and Chief Financial Officer at Cummings Properties in Woburn,

House Ways and Means Committee Chairman Rep. Brian Dempsey said lawmakers have been prudent about rebuilding the state’s reserves after the recession.

Dempsey said the spending plan would leave Massachusetts with more than $1.5 billion in its stabilization account at the end of fiscal 2013, making it one of just four states with more than $1 billion in its rainy day fund. He said the Legislature also approved the first increase in unrestricted local aid for cities and towns in five years, and made investments in early education and elder care to reduce waiting lists for pre-school and home care services.

Topics: Massachusetts state budget, Issues, Taxes, Transportation

Senate Budget Omits Dangerous Contingent Contract Provision

Posted by Brad MacDougall on May 24, 2013 4:23:00 PM

Sometimes a budget is significant more for what it omits than what it includes.

Senate budgetThat’s the case with the $34 billion spending blueprint approved Thursday by the Massachusetts Senate, which wisely chose to pass its budget without a proposal to allow the Department of Revenue to hire outside tax auditors and pay them a portion of what they recover.

The budget proposal also replaces two existing health care assessments with a new Employer Responsibility levy and does way with the Health Insurance Responsibility Disclosure (HIRD) form as Massachusetts prepares to replace its 2006 health care reform with the federal Affordable Care Act.

A conference committee will now hammer out differences between Senate and House versions of the budget for the Fiscal Year that begins July 1.

Senators adopted an amendment from Senator Michael Rodrigues, D-Westport, that struck the so-called “contingent contracts” provision that had been added to the budget in an outside section. Rodrigues noted on the Senate floor that the National Conference of State Legislators, the Securities and Exchange Commission and and the American Institute of Certified Public Accountants all reject the use of contingent contracts.  

The AIM Taxation Committee had urged the Senate to reject the provision.  

“The proposal was bad public policy,” said John Regan, Executive Vice President of Government Affairs at AIM.

“An auditor should have no financial stake in the outcome of an audit. The conflict of interest is readily apparent and should trouble policy makers concerned about tax fairness and Massachusetts reputation for its tax climate.”

The Senate budget represents a 4.2 percent spending increase over the current fiscal year. The document anticipates using between $500 million and $800 million in new taxes for transportation currently pending before a separate Beacon Hill conference Committee.

AIM has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as those proposed for computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.

The Senate budget includes a $50 per employee medical assistance assessment on employers that was filed by Governor Patrick and included in the House budget.  The new fee replaces the $67.20 Medical Security Trust Fund assessment.  The Senate did not support an AIM amendment to require legislative approval for any increases to the assessment and gives the authority to increase the fee up to 5 percent per year to a rate review board.

As part of the package for this new assessment, the Senate budget eliminates the fair-share contribution and the requirement that employee Health Insurance Responsibility Disclosure forms be collected and retained by employers. 

Senators followed suit with the House in voting to postpone implementation of the so-called FAS 109 deduction instead of eliminating it as the administration proposed. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences. The deduction was adopted as part of the 2008 debate over adoption of combined tax reporting in Massachusetts.

Topics: Massachusetts state budget, Budget, Massachusetts senate, Issues, Taxes

What is in the Governor's Tax Plan?

Posted by John Regan on Feb 11, 2013 7:56:00 AM

Governor Deval Patrick last month proposed historic changes to the Massachusetts tax system in an effort to raise some $1.9 billion per year for transportation and education.

Massachusetts State BudgetThe complex proposal would redefine the tax landscape for everyone from parents with children in day care, to workers accustomed to a deduction for health savings accounts, to employers who purchase computer software. The plan also calls for automatic increases in the gasoline tax, highway tolls and MBTA fares.

Here is a summary of the administration tax plan. Most of the summary was prepared by the Massachusetts Taxpayers Foundation, with additions from the AIM Government Affairs team.

What is your opinion of the proposal and how might it affect your business? The AIM Board of Directors is currently developing a position on the plan and would like to hear from as many employers as possible.

Please leave your opinions in the comments section below, or email Brad MacDougall, Vice President of Government Affairs,

  Annualized Revenue Gain/Loss (Millions) % of Proposed New Revenues

Changes in Tax Rates



Raise the personal income tax rate from 5.25% to

6.25% and double the personal exemption



Reduce the sales tax rate from 6.25% to 4.5%



Total Tax Rate Changes



Expanded Individual Taxes    
Eliminate 44 personal income tax exemptions and deductions (estimate based on 6.25% rate)  $1,080  
Expand sales tax to cover candy and soda
(estimate based on 4.5% rate)
 Increase cigarette/smokeless tobacco taxes  $166  
 Total Individual Taxes  $1,299  68%
Additional Corporate Taxes    
Apply the sales tax to customized computer software and computer and data processing services.  $265  
Reclassify security and utility corporations as corporations or financial institutions  $35  
Eliminate the FAS 109 deduction   $76  
Change sourcing rule for services in calculating
sales factor in apportionment formula
Limit film tax credits to $40 million per year  $40  
Total, Corporate Taxes  $499   26%
Total New Revenues  $1,908  100%


Here are some of the 44 personal exemptions and deductions the plan would eliminate:

  Value at 6.25% Rate (millions) Filers Affected
Deduction for Employee Contributions to Social Security and Public Pension Plans  $357 3.585m
Exemption of Capital Gains on Home Sale  $285 55,000
Deductions for Dependent(s) under 12  $162 510,000
Deduction for Business-Related Child Care Expenses  $18 54,000
Exemption of Dependent Care Expenses  $11 NA
Exemption of Certain Foster Care Payments  $4 NA
Deductions for Adoption Fees and Employer-Provided Adoption Assistance  $0.6 1,000+
Tuition Tax Deduction  $43 65,000
Exemption of Scholarships and Fellowships  $23 255,000
Personal Exemption for Students Aged 19 or Over  $10 NA 
Employer-Provided Education Assistance  $10 NA
Exclusion from Gross Income of Parking, T-Pass and Vanpool Fringe Benefits  $46 NA
Commuter Deduction  $8 225,000
Exemption for Premiums on Accident and Accidental Death Insurance  $28 1.97m
Deduction for Health Savings Accounts  $15 10,000
Septic System Repair Credit  $15 11,000
Exemption of Premiums on Group-Term Life Insurance  $14 NA 
Exemption of Workers' Compensation Benefits  $10 NA
Exemption of Meals and Lodging Provided at Work  $9 NA
Exemption of Interest on Savings in Massachusetts Banks  $6 505,000 
Credit for Removal of Lead Paint $3  1,850
Renewable Energy Source Credit $1.5  2,000 


Here are proposed increases in taxes and user fees pertaining to transportation:

Index the Gasoline Tax $13 million in FY 14. Increases gas tax revenue $118 million by FY 21.
MBTA Fares 5% biennial fare increase beginning in FY 15. Increases fare revenue 27 percent by FY 23.
Registry of Motor Vehicles Fees 10% fee increase every five years beginning in FY 16. Increases fee revenue 20 percent by FY 23.
Tolls 5% biennial increase beginning in FY 15. Increases toll revenue 27 percent by FY 23.


Topics: Massachusetts state budget, Issues, Taxes

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