AIMBlog_Logo_Resized

The Top 10 Massachusetts Business Stories of 2017

Posted by Christopher Geehern on Dec 27, 2017 11:13:10 AM

A generational reset of the nation’s tax code, a controversial employer assessment to fund health insurance for poor people, and upheaval surrounding workplace sexual misconduct head the list of the top business stories in Massachusetts for 2017.

Tax.jpgIt was a year in which forces originating outside the borders of the commonwealth heavily influenced the fortunes of employers and political leaders here. Issues ranging from the political maelstrom in Washington, DC, and a strengthening economy to the #metoo movement and Amazon’s search for a second corporate headquarters all filtered into a complex mix that formed the Massachusetts business climate.

The tax law passed by Congress and signed by President Trump just before Christmas reduced the corporate excise tax from 35 to 21 percent and also dropped rates for pass-through businesses that pay at the personal level. Still, Bay State employers worried about adding $1.5 trillion to the federal deficit and new limitations on deductions for state and local taxes that will primarily affect high-cost states like Massachusetts.

Taxes in Massachusetts could be going in the opposite direction next year as advocates spent 2017 pushing a constitutional amendment that would increase the tax from 5 to 9 percent on income more than $1 million. AIM President and Chief Executive Officer Richard C. Lord joined four other prominent business leaders during October in filing a lawsuit challenging the validity of the proposed amendment.

“The proposal would lead to a radical decentralization of fiscal policy away from the Legislature and set the stage for future initiatives from a range of interest groups proposing constitutional amendments segregating funds for their preferred causes, or raising tax rates on some groups and lowering taxes on others," Lord said.

Here are the top 10 Massachusetts business stories for 2017:

  1. President Donald Trump signs a tax bill that reduces levies on corporations and pass-through businesses but increases the federal debt and trims popular deductions.

    In addition to lowering the corporate tax to 21 percent, the law will cut the burden on owners, partners and shareholders of S-corporations, LLCs and partnerships through a 20 percent deduction. On the personal side, it lowers many individual income tax rates, doubles the standard deduction, eliminates personal exemptions, narrows the alternative minimum tax, lowers the cap on mortgage interest deductions and caps deductions for state and local taxes at $10,000.

  2. Massachusetts lawmakers impose a $200 million assessment on employers to close a funding gap in the MassHealth insurance program for low-income people.

    The Baker Administration initially proposed a $2,000-per-worker fee for businesses that did not cover at least 80 percent of their workers and share at least 60 percent of the premium cost. The governor and business community eventually negotiated a compromise that placed the heaviest assessments on companies with workers that use Mass Health insurance while outlining structural changes to the Mass Health program. The Legislature approved the assessment without the structural changes, but included rate relief on unemployment insurance premiums.

  3. Employers grapple with the implications of the #metoo movement highlighting sexual harassment and sexual assault in workplaces ranging from film studios to television networks to restaurants and hotels.

    Employers scrambled to review their policies on sexual harassment – and their enforcement of those policies - as millions of women around the world shared stories of sexual harassment and abuse in the wake of accusations against movie mogul Harvey Weinstein. The tidal wave washed over high-profile figures from news hosts Charlie Rose and Matt Lauer to celebrity chefs like Mario Batali to classical music conductors like former Boston Symphony Orchestra Maestro James Levine. AIM urged employers to take seriously all employee claims of sexual misconduct on the job and to investigate those claims scrupulously.

  4. Twenty-six Massachusetts communities and regions submit bids to host the $5 billion “second headquarters” development of e-commerce behemoth Amazon.

    The project offers the promise of some 50,000 jobs in the information technology space that is a strength of the Massachusetts economy. Boston submitted a 218-page proposal to site the campus at the current Suffolk Downs property, while New Hampshire gratuitously threw shade on the city as a traffic choked, overly expensive nightmare. Worcester upped the ante by offering $500 million worth of incentives. Amazon said it received 238 proposals in all from throughout North America. The company is expected to narrow that field in 2018.

  5. Activists begin the process of placing on the 2018 statewide ballot the three potential questions that would represent an unprecedented public-policy crisis for Massachusetts employers.

    The proposals include the income surtax constitutional amendment, a mandate that employers provide 16 weeks of paid family leave and 26 weeks of paid medical leave for employees, and an increase in the state the state minimum wage from $11 per hour to $15 per hour.

  6. Employers and advocates hammer out compromise legislation to extend employment protection to pregnant workers in Massachusetts.

    The Pregnant Workers Fairness Act requires employers to make reasonable workplace accommodations for pregnant employees — more frequent or longer breaks, temporary transfer to a less strenuous or hazardous position, or seating for those whose jobs require extended standing. AIM opposed early versions of the bill during the 2015-2016 legislative session because of concern that the legislation provided an applicant or employee with unlimited power to reject multiple and reasonable offers of accommodation by an employer. The compromise bill addressed that concern and others.

  7. A strong employment market and long-term demographic shifts exacerbate the challenge of finding skilled employees, but wage growth remains muted.

    The good news is that the Massachusetts economy continued in full-employment mode during 2017 and the jobless rate dropped to 3.6 percent in November. But experts warn that those numbers threaten to derail the ability of employers to find the workers they need to grow at a time when large number of baby boomers prepare to leave the work force. “The concern is that Massachusetts could become a victim of its own success,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors. Still, wage growth is expected to remain slow during 2018 – the AIM Human Resource Practices Survey published in December shows that employers plan to provide average wage increases of 2.66 percent during 2018, down from 2.75 percent this year.

  8. Employer confidence reaches a 17-year high and remains strong throughout 2017.

    Massachusetts employers remained optimistic as the national economy surged and manufacturers, in particular, grew bullish about their own business prospects. The AIM Business Confidence Index began 2017 at a healthy 61.4 and moved in a narrow range before hitting a high of 62.7 in October. The AIM Index 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.

  9. The Baker Administration issues new regulations that set specific limits on sources of greenhouse gasses in a move that could increase already high employer electric rates by as much as 2 percent.

    The new rules aim to reduce the state’s carbon emissions 25 percent below 1990 levels by 2020, as required by state law. AIM was extremely disappointed with the regulations. The electric-rate increases generated by the proposed rules, when combined with other pending cost increases, could raise the electric bills of Massachusetts employers some 10 percent in the next year alone. AIM maintains that the regulations are ultimately unnecessary - the administration could have chosen to work with the legislature to change the Global Warming Solutions Act to allow for alternative ways for the electricity sector to meet these obligations.

  10. AIM member CVS Health proposes to acquire insurance company Aetna for $69 billion.

    The merger of one of the nation’s largest retail pharmacy companies with one of its dominant insurers under the shadow of a potential incursion by Amazon underscores the breathtaking changes sweeping through the American health-care and economic systems. With their merged data about people’s health and vast reach, the two companies assert that they can make real change in a health-care landscape that nearly everyone agrees is too convoluted, inefficient and expensive.

 

Topics: Massachusetts Legislature, Massachusetts economy, Taxes

Paul Ryan Visits New Balance; Says Tax Reform Coming This Year

Posted by Rick Lord on Jul 28, 2017 8:16:29 AM

For a man who carries the weight of the nation’s economy, budget and health-care systems on his back, US House Speaker Paul Ryan projects the approachable air of a neighbor who shows up at your door to lend you his hedge clippers.

Paul Ryan.jpgI joined other business leaders last Thursday afternoon meeting with Speaker Ryan during an event hosted by New Balance in Lawrence. Unfailingly gracious and remarkably relaxed, the speaker toured the only major foot-ware company that manufactures product in the United States to talk about the potential of tax reform to accelerate economic growth.

The rancorous Washington political debate followed the speaker to Massachusetts as labor unions and other protesters accused Ryan of being a “traitor” and of endangering people’s health with his political agenda. But inside the plant, humming with opportunity and economic activity, people of differing political stripes, Republicans and Democrats alike, left behind the public noise and engaged in a thoughtful discussion about how to encourage companies like New Balance to put people to work.

In other words, it was an event that more closely approximated the bipartisan, collaborative tenor of Massachusetts politics than anything that usually happens on the banks of the Potomac. Not everyone agreed on what tax reform should look like (AIM members are themselves far from unanimous about their approach to taxes) but everyone agreed that the system needs an overhaul.

The final contours of the Republican tax proposal are still being hammered out among the House, Senate and White House negotiators. But most observers expect the plan to reduce taxes on corporations and small businesses from 35 percent to somewhere between 20 and 25 percent, consolidate tax brackets, reduce deductions and simplify the tax-filing process.

Ryan said that Republicans remain far more united on tax reform than on repealing health-care reform.

“We’re going to get this done in 2017,” he told reporters.

“Obviously, we’ve seen in the Senate there are a difference of opinions on how to do health care reform. We are so much more unified on tax reform, on what it looks like, and how to do it, and the need to do it.”

New Balance, a longtime AIM member, employs more than 1,700 Massachusetts residents who use intelligence, lean manufacturing and efficiency to make running shoes in a state where manufacturing  is always a challenge. The company also developed the $500 million Boston Landing project in Brighton, a 1.45 million-square-foot campus that includes a new company headquarters, state-of-the-art athletic complex, hotel, restaurants, retail space and parking.

My comments to Speaker Ryan noted that New Balance and other manufacturing companies struggle to grow and provide jobs because the cost of doing business remains higher in the United States than in many countries abroad. Those costs are particularly onerous here in Massachusetts, where employers pay more for energy, health care and other necessities than anywhere else in the country.

I told the speaker that AIM is working with Governor Charlie Baker and the Legislature to address the health-care and energy cost issues, but that both are complex, structural problems that demand long-term solutions. Federal tax reform, on the other hand, offers a unique opportunity to improve the business climate in a relatively rapid time frame.

It will also be important to help small businesses during the tax-reform process. Both President Trump and the US House appear ready to lower taxes on subchapter S corporations and other pass-through entities, just as those companies face the prospect of seeing their state tax burden increased under an ill-conceived “millionaires tax” on next year’s ballot.

We all understand the potential challenges of tax reductions on a federal deficit that reached $523.1 billion during the first nine months of the current budget year. We all understand the need to debate spending priorities, especially in a state like Massachusetts where economically important industries such as health care, defense and higher education depend upon federal funding.

But the fact remains that employers like New Balance pay federal taxes that are almost a third higher than competitors in other countries.

“Today, places like this, this is more the exception than the rule,” Speaker Ryan told the media at New Balance.

“That’s our problem. Companies are not flocking to the United States, companies are fleeing this country and taking their good jobs with them. They’re not storing up their profits and their capital here, they’re keeping them offshore.”

Topics: U.S. House of Representatives, Taxes

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

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.

Share.jpg

 

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

The Constitutional Amendment Tax Trap - Myths and Facts, Part 1

Posted by John Regan on Jun 8, 2017 1:26:49 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 next Wednesday.

Myth: Massachusetts has a revenue crisis and cannot support the cost of essential state government services without new taxes.

Fact: Massachusetts is one of the highest spending states in the nation on a per capita basis. Revenue collection and state spending in the commonwealth have increased significantly during the past 15 years. In that time period the state budget has doubled to more than $40 billion dollars, a growth rate that far outpaces inflation.

State Budget by Year 2017.jpg

Massachusetts has a spending problem, not a revenue crisis. Fiscal Year 2016 state revenues were $4.7 billion more than they were just five years earlier. In just the past five years, Massachusetts has increased the sales tax rate by 25 percent, raised the gas tax by 14 percent and adopted major policy changes, including casino gaming, designed to raise billions of dollars in new revenue each year. 

Revenue Trends-1.jpg

Myth: Massachusetts under-invests in its K-12 public educational system.

Fact: Massachusetts taxpayers support the seventh highest level of per-pupil spending in the country with an average expenditure of $15,000 per student each year. Massachusetts students perform better than their peers across the country, evidenced by the National Assessment of Education Progress (NAEP) eighth-grade student performance in Science (1st), Reading (tie 1st) and Math (tie 4th). (Source: MATTERS.mhtc.org; NCES)

Myth: Massachusetts under-invests in its transportation infrastructure.

Fact: Year after year, Massachusetts spends significantly more per mile on highways than nearly every other state in the country. Currently, Massachusetts spends more annually to build and maintain each mile of highway than 47 other states and four times the national average. Yet the condition of our roads and bridges is among the worst in the country.

The state Department of Transportation and MBTA acknowledge they are unable to effectively spend the capital funds already available to them.

According to Transportation Secretary Stephanie Pollack “for years the T [has been] leaving hundreds of millions on the table, failing to spend it on desperately needed maintenance and repair projects. The T is like a bathtub full of holes. Turning the spigot to let more water in is not going to fill up the bathtub. We need to fix the holes.”

Before any additional funds are expended, the state transportation system needs to adopt significant additional structural and management reforms and improvements.

State Highway Spending.jpg

(Sources: MATTERS.mhtc.org; the Reason Foundation; Boston Globe, 9.2.15)  

 

Topics: Taxes, Income Surtax

Why the 'Millionaire Tax' Will Hurt Jobs

Posted by John Regan on Jan 19, 2016 7:30:00 AM

Editor's note - John R. Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts (AIM), will deliver the following comments today to the Joint Committee on Revenue in opposition to H.3933, An Initiative Petition for An Amendment to the Constitution of the Commonwealth to Provide Resources for Education and Transportation through an additional tax on Incomes in excess of One Million Dollars (Ballot Initiative 15-17)

ManufacturingWorkerSmall.jpgIt is no accident that we call ourselves a “commonwealth.” 

The preamble of the Massachusetts Constitution says, “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 is affirmed in the language of Article XLIV of the Constitution, which states that taxes “shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property.”

Now comes this petition for an amendment changing the language of Article XLIV in a manner that would increase by 78 percent taxes paid by those with incomes in excess of $1 million, adjusted annually to reflect any increases in the cost of living by the same method used for federal income tax brackets.

As a mathematical proposition, those earning $1 million of income per year currently pay 95 percent more tax than those making $50,000 annually. Income of $50,000 generates a tax obligation of $2550, while the $1 million dollar income generates $51,000 of income tax (all things being equal).  According to the ballot question language, every dollar of income above a million will be subjected to a surtax of 4 points over the current 5.1%

Since the procedural options for the committee are limited, AIM will leave to the wisdom of the voters the equity and advisability of a 78 percent increase of the tax obligation for fewer than 1 percent of our fellow citizens 

Some facts are important 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 could generate $1.6 billion to $2.2 billion, with $1.9 billion identified as the median.
  • The $1.9 billion tax increase would 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 would be married couples filing jointly, and 11 percent would be individual filers with earnings of more than $1 million.

Many advocates for this ballot question focus on the revenue derived therefrom as opposed to the uneven method of its generation.  Setting aside the fairness, or lack thereof, I would like to turn to the issue of how the new revenue is to be used.

The language of the question states that the revenues raised by the new tax 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.”

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…”

So for the question to be constitutionally valid, the legislature would retain the ability to use the new revenue derived from the 78 percent tax increase for any public purpose the legislature deems appropriate. 

Any representation about how the money is used is wishful thinking that the constitution itself prohibits.

Last week, the commonwealth was successful in landing the eight largest corporation in the world to Boston.  This company is leaving its current home state in part because of concerns about unfair taxation.  We should look long and hard at this question that raises so much from so few and ask, does this imbalance make the commonwealth a better, or a worse place?

AIM would suggest that it makes Massachusetts an unfair place.

Topics: Massachusetts economy, Taxes, Jobs

State Unveils New Tax Filing System This Morning

Posted by Dana Ackerman on Nov 30, 2015 7:30:00 AM

Editor’s note – Dana Ackerman is Taxpayer Advocate for the Massachusetts Department of Revenue.

As the Taxpayer Advocate for the Massachusetts Department of Revenue (DOR), I am pleased to announce that DOR is today rolling out a new online tax system called MassTaxConnect. Starting this morning, the new system replaces DOR’s existing e-filing system, WebFile for Business.

Finance.pen.smallMassTaxConnect will be available to individual income taxpayers by 2017.

MassTaxConnect represents a significant investment in information technology that will benefit DOR, taxpayers and the business community. DOR employees will benefit from a centralized system allowing for enhanced and speedier customer service to business taxpayers across the commonwealth. Taxpayers will benefit from a system that will enhance voluntary compliance and allow for efficiencies that our current system cannot host.

And perhaps most importantly, the business community will benefit from a modernized system that will make filing and paying taxes in Massachusetts simpler, quicker, and more efficient than ever before.

MassTaxConnect retains a number of important functionalities currently available in WebFile for Business. For example, MassTaxConnect will continue to allow taxpayers and practitioners to schedule payments, to choose to file early, and to benefit from automatic calculations and error alerts. Filing taxes with DOR will continue to be free with MassTaxConnect.

The new system offers a range of new benefits to business taxpayers and practitioners, including the ability to send secure messages, a simplified process for amended returns, assigning third-party access electronically and access to most business taxes in one spot for filing and payment. Existing WebFile for Business users will be able to log in to MassTaxConnect today with their existing WebFile for Business username and password. We’ve also created this webpage that has everything you need to know about registration and enrollment, MassTaxConnect FAQs, and other important materials.

Associated Industries of Massachusetts has played a significant role in supporting the development of MassTaxConnect. Paul O’Connor, Director of Taxes at EMD Millipore and Chairman of the AIM Taxation Committee, led a group of AIM-member tax professionals that met with DOR over three years to ensure that the new system met the needs of business taxpayers of all types of sizes.

Modernization isn’t merely technological. MassTaxConnect is not only an upgrade to our information technology infrastructure, it’s also a deliberate effort and conscious investment on our part to rethink tax administration in Massachusetts. As you can see in this sneak peek at MassTaxConnect, it  is adaptive, holistic and the result of years of work, sound policy, and planning.

The business community is essential to a healthy and prosperous commonwealth. MassTaxConnect takes us another step closer toward making Massachusetts a great place to do business, and I hope that you will find it a welcome upgrade when you visit the site this morning.

Topics: Massachusetts economy, Massachusetts employers, Taxes

Attorney General Certifies Graduated Tax Amendment

Posted by Brad MacDougall on Sep 2, 2015 12:53:56 PM

Massachusetts employers are profoundly disappointed that Attorney General Maura Healey today certified an ill-considered proposed amendment to the state constitution that would impose a surtax on incomes of more than $1 million.

statehousedomeAssociated Industries of Massachusetts (AIM) believes the proposal would cripple a state economy that relies heavily on tens of thousands of subchapter S corporations and other entities that pay taxes at individual rates. The association also argued before the attorney general that the proposal violates the state constitution’s prohibition against ballot questions creating specific appropriations.

An Initiative Petition for an Amendment to the Constitution of the Commonwealth to Provide Resources for Education and Transportation through an additional tax on incomes in excess of One Million Dollars represents an appropriation, according to AIM, because it requires the legislature to use revenues from the surtax exclusively for transportation and education. The proposal could appear on the statewide election ballot in 2018.

Healey certified one other constitutional amendment and 20 referendum questions this morning. The referendum proposals, which could appear on the 2016 ballot, include ones calling for the expansion of dysfunctional renewable-energy targets and financial penalties for retail stores or fast-food restaurants that change an employee’s schedule within 14 days of a shift.

The attorney general did not certify several versions of a proposed constitutional amendment specifying that corporations are not people and asserting the right of the courts to limit political contributions.

Proponents of the $1 million earnings surtax will have to collect 64,750 signatures from registered voters to move the process forward. Then one-quarter of the state Legislature must vote to advance the proposal, in two consecutive legislative sessions, before it can go to the voters in November 2018.

The initiative would scrap Massachusetts’ current flat income tax under which everyone pays at a rate of 5.15 percent — and create a two-tiered system, with all income above $1 million taxed at four percentage points more. The result would be an 80 percent tax increase on that income.

Massachusetts voters have repeatedly rejected efforts to impose a graduated income tax. The last effort, in 1994, lost by a two-to-one margin.

“We believe that ballot questions are a clumsy and inefficient way to make public policy,” said John Regan, Executive Vice President of Government Affairs at the association.

“Employers remain particularly concerned about a constitutional amendment that would limit the ability of employers to create jobs by draining investment capital out of the private sector and into bureaucratic government programs.”

Proponents argue that the tax will target people whose paychecks top $1 million annually. But the change will also effect capital gains, interest, wages, business and other types of taxes on individual company owners. Among the companies affected would be partnerships, limited liability corporations, sole proprietorships and subchapter S corporations.

The amendment would make Massachusetts’ top rate one of the highest in the country, according to figures compiled by the Tax Foundation, a non-partisan think tank based in Washington.

Promoters of the initiative include some of the most powerful unions in the state: SEIU, the Massachusetts Teachers Association, the American Federation of Teachers-Massachusetts, and the Massachusetts AFL-CIO.

AIM members interested in learning more about the proposed amendment may contact AIM Government Affairs at 617.262.1180.

 

Topics: Massachusetts employers, Taxes, Ballot Questions

Compromise Reached on Controversial Tax Change

Posted by Brad MacDougall on Jul 17, 2015 12:22:00 PM

Governor Charlie Baker, legislative leaders and the business community have reached a compromise on the controversial corporate tax change that was inserted into the state budget to pay for an extension of the Earned Income Tax Credit for low-income workers.

StateHouse-resized-600The agreement means the so-called FAS 109 deduction will be delayed for five years instead of repealed, as recommended a week ago by the legislative conference committee hammering out a budget for the fiscal year that began July 1. The time period over which a company may claim its overall deduction will be increased from seven to 30 years.

The deal follows several days of intense negotiations among employers, business associations, the Baker administration, House Speaker Robert DeLeo and Senate President Stanley Rosenberg. Associated Industries of Massachusetts supported the expansion of the earned income tax credit (EITC), but opposed the repeal of the FAS109 provision.

“We all agree that expanding the Earned Income Tax Credit is a critical tool to provide tax relief to over 400,000 low income individuals and working families and my administration believes in providing a stable, competitive business climate to encourage economic development across the Commonwealth,” Baker said.

“In that effort, we have reached a joint compromise to extend the delay of the FAS-109 deduction implementation for five years and extend the length of the deduction’s life from seven to 30 years, minimizing the annual revenue impact on the state budget.  I am pleased the legislature is ready to act on these new parameters for the FAS-109 deduction by the end of July.”

Verizon and other companies that stood to be affected by the repeal, expressed support for the compromise.

"Governor Baker, Senate President Rosenberg and Speaker DeLeo continue to find ways to work together to address some of the tough problems facing our Commonwealth. Increasing the Earned Income Tax Credit helps low income workers when they need it the most,” said Donna C. Cupelo, Region President – New England for Verizon.

“Embracing a new approach to the FAS 109 provision recognizes that we have capital-intensive companies that steadily invest in the infrastructure that forms the platform for our economy.  When we match fair policies with the right investments in people and infrastructure, we make Massachusetts a stronger global competitor. "

Employer groups, including AIM, also applauded the agreement.

“As representatives of the state’s business community, we applaud you for finding a solution that both preserves the 2008 agreement on the FAS 109 deduction and extends tax relief to the state’s hard working residents by raising the state’s Earned Income Tax Credit,” said a letter sent within the hour to Baker, DeLeo and Rosenberg from Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, the Massachusetts Business Roundtable and the Greater Boston Chamber of Commerce.

“This agreement provides certainty for the state’s businesses regarding the FAS 109 deduction for several years, and such predictability is critical for economic growth and business development. We are grateful for your recognizing this, for the collaborative manner you brought to these discussions, and for the hard work of your dedicated staff.”

Proposed repeal of the deduction of the FAS 109 deduction would have reversed an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. The repeal would have caused significant financial harm to capital-intensive national and global companies.

The combined reporting 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.

The governor signed most of the remaining $38.1 billion Fiscal Year 2016 budget, which includes no broad-based tax increases and makes substantive public-transportation reforms.

The MBTA reforms included in the budget provide 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 governor also made $162 million in line-item and outside sections vetoes, including $38 million in earmarks. 

Topics: Taxes, Charlie Baker, massachsetts legislature

Subscribe to our blog

Posts by popularity

Browse by Tag