Within the halls of Beacon Hill, calling for affordability and competitiveness appears to be all the trend, however is the coverage matching the rhetoric? Throughout the State of the Commonwealth handle, Governor Maura Healey invoked her so-called “Affordability Agenda,” a associated working group, small enterprise homeowners, and “actual cash that makes an actual distinction.”
However regardless of the difficulty – taxes, healthcare, vitality prices – the fact is, as all the time in Massachusetts, extra of the identical. No actual aid from excessive taxes, no severe discount of burdensome laws, no enhancements for beleaguered housing, vitality, and medical health insurance markets, simply rearranging deck chairs on the Titanic. A subsidy right here, a regulatory modification there, however no substantive change on the finish of the day.
To “observe the cash” is the surest method to see lawmakers’ sport, and with Beacon Hill pols it’s all the time tax and spend. Our state’s current “down cost” on tax reform? Properly, that now seems to be the entire cost. These newly enacted federal tax saving measures? Massachusetts taxpayers don’t want these immediately, strive us once more in 2027. And as for brand new state taxes? We’ll let the municipalities hike the Commonwealth’s levies. Simple.
Sure, “The Municipal Empowerment Act” is again. Following final yr’s State of the Commonwealth handle, Gov. Healey informed reporters she had no plans to boost taxes as a result of slowing income collections. The next day she introduced to municipal leaders that she was submitting a invoice to permit cities and cities to not solely increase meals and lodging taxes but additionally create a brand new tax on automobiles. Luckily, final yr small companies, eating places, and the lodging business reacted rapidly to forestall such a misguided and unbalanced proposal, and lawmakers bought chilly toes.
However they haven’t given up, and legislators have to be educated but once more on the hazards of native tax hikes. A current instance, relatively than straight calling for cities and cities to rein in municipal spending, some policymakers as an alternative tried to “empower” Mayor Michelle Wu to permit Boston to additional shift extra of town’s tax burden onto business properties. Equally troubling is a invoice filed to allow town of Salem to enact a neighborhood choice 5% gross sales tax on high of the state’s 6.25% price. And if one city will get the go-ahead for a neighborhood gross sales tax, different municipalities would observe, leading to an 11.5% gross sales tax benefiting tax-free Salem, New Hampshire as shoppers store throughout state traces.
It’s laborious to overstate how troubling this proposal is for Major Avenue companies. Massachusetts’ eating places struggled to outlive through the pandemic, the shutdowns, and the hovering inflation, labor price hikes, and employee shortages that adopted. Enabling the native meals tax to be elevated by a 3rd can be stinging for restaurant homeowners and prospects. Equally, state tourism was additionally battered, and permitting additional hikes within the native choice resort and lodging taxes to 7%, and to 7.5% in Boston, is plainly absurd.
Most troubling within the proposal is permitting municipalities to create a brand new 5% annual tax on the worth of automobiles. Along with the present excise tax of $25 per $1,000 of your car’s value, motorists would pay an additional 5% tax to generate income for cities and cities. Whether or not a restaurant delivering a pizza, a plumber driving to a house to repair pipes, a truck transporting heating oil, or a pick-up carrying tools to mow lawns, small companies require automobiles to conduct enterprise. And employees throughout the state want automobiles to journey to their jobs and earn a residing. This tax can be a steep burden throughout the Major Avenue economic system.
Massachusetts small companies are nonetheless coping with one other Beacon Hill tax disaster: the Commonwealth’s damaged Unemployment Insurance coverage (UI) Belief Fund. Massachusetts is constantly ranked among the many worst within the nation, now forty seventh, for the UI taxes that replenish the belief fund. Worse nonetheless, small companies are repaying $2.7 billion in a UI COVID evaluation as a result of our legislators solely supplied $500 million in federal aid cash to shore up the fund, which is now projected to be bancrupt and on the highest UI tax price schedule by subsequent yr. This horrible state of affairs was compounded by a severe state accounting error that brought about employers to now need to pay again a further $2.1 billion in UI debt to the federal authorities over the subsequent decade.
Massachusetts may have used much more of its federal COVID aid funds to pay again the federal mortgage and replenish our UI belief fund, simply because the aid cash was meant and most states did. New York helped clear UI debt by offering over $7 billion. However that might have left much less cash for the politicians to spend and waste, simply as with the brand new federal tax financial savings legislators are eager to delay for taxpayers.
With all this affordability double-speak on Beacon Hill, it’s little surprise taxpayers try to put common sense tax aid measures on the poll this fall. Predictably, particular pursuits are already preventing like hell to disclaim voters the chance for tax aid. Simply final Sunday, Gov. Healey warned the tax discount can be “catastrophic” and decimate funding for schooling. With such scaremongering, it’s clear why the poll field appears to be the one recourse for significant reforms, when our lawmakers refuse to steer and enact sincere, good coverage.
On this yr’s WalletHub “Greatest & Worst States to Begin a Enterprise” research, Massachusetts ranked forty fourth of the 50 states for enterprise prices. On the taxpayer entrance, in keeping with the U.S. Census Bureau late final month, “33,000 extra individuals moved out of state than arrived to Massachusetts in 2025.” And on Jan. 29, Cape Cod Potato Chips introduced that the favored eponymous snack will now not be made within the Commonwealth. The Campbell’s Firm is shuttering its Hyannis manufacturing unit and transferring manufacturing to crops in Wisconsin, North Carolina, and Pennsylvania.
Apparently, these states should have higher affordability agendas and smarter coverage working teams. In any case, small enterprise homeowners not often have these choices. When it turns into too costly to function, they’re compelled to get rid of jobs, scale back providers, and, lastly, shut doorways.
Christopher Carlozzi is the Massachusetts State Director of the Nationwide Federation of Impartial Enterprise (NFIB), the nation’s main small enterprise affiliation.
