Massachusetts Issues

Author: Bill Vernon Date: July 19, 2010

Here’s a look at some issues NFIB/Massachusetts will be facing in upcoming legislative sessions:

Budget: The state’s long-term budget deficit caused in part by generous pension and other benefits given to state and local government workers must be addressed.  The alternative to moderating benefits for public employees that are currently more generous than those available in the private sector is higher taxes on the employer community. We will continue to protect small businesses from harmful tax proposals, such as graduated income taxes, sales tax expansion, and gas tax increases, which inhibit job creation and long-term growth. Real pension reform could eventually save $500 million annually and municipal government rights to design health care plans could save $100 million annually.   

Paid Leave: In the wake of a state Supreme Court decision limiting maternity leave in 2010, several legislative proposals to guarantee six to ten days’ sick leave, expand family leave, and/or enhance maternity leave are on the agenda. When the likelihood of new taxes declines, the danger of social engineering legislation and regulation that has similar impact of increasing costs on small businesses grows.  While being sold as fair and equitable in a modern workplace, paid leave proposals do not recognize the reality in today’s workplace, that small business owners currently work with their workers as these issues arise.  “One size fits all” government rules take away the flexibility of owners to offer other benefits which workers may want and impact productivity in small shops where the absence of one worker may mean the absence of 20% or more of the workforce.  The cost of paid leave rules will vary among businesses but will most certainly increase as the leave entitlement, once enacted, expands.

Unemployment Insurance (UI): Mass. continues to have some of the highest state unemployment insurance taxes in the nation (top three). The Mass. rate, along with other payroll taxes, is a job growth inhibitor. Generous benefits and easy qualification for benefits put Mass. outside the mainstream and should be modified to bring costs into line with our competitor states. Lowering the average weekly benefit in Mass. from #3 to #25 among the states would save Mass. employers $200 per employee per year.  The “freeze” on UI rates enacted in early 2011 will actually cause rates to increase an average $60 per employee per year, but prevented an increase of $240 per employee per year.  Of course, individual employers will incur varying rates based principally on experience rating and layoff history.  The debate on the freeze is a precursor to a debate on legislation to address the underlying causes of the chronically high UI rates in Mass. later this year.       

The unique Mass. program within UI to fund health insurance benefits for unemployed workers resulted in a doubling of the payroll tax in 2010 and a tripling to $50.40 per employee per year in 2011.  The program and the costs associated with it must be shifted to the state’s health insurance agency as soon as possible.  Elimination of the payroll tax to fund this program that no other state has would save employers $50.40 per employee per year.

Healthcare: The Mass. healthcare reform did not address costs of health insurance and health care. Small business owners continue to endure double digit percentage annual increases. Caps on premiums in 2011 provided some short term relief.  But there is now no doubt that the Mass. Reform increased premiums beyond what they would have been and that small businesses have borne the brunt of the cost increases.  Now the “solution” is global payments in which providers’ fees are based on the patient’s care not on individual services provided.  But tough choices remain to address the underlying costs on both the insurer and provider sides and make sure savings get back to the consumers and small business owners that are paying the premiums.  Small business owners have plenty of consumer driven solutions, including group buying, flexible products, health savings accounts, transparent information about costs and performance, changes to stop lawsuit abuse, and more, but need elected officials to decide the problem needs to be solved. Ending double digit percentage annual increases means hundreds of dollars for employers and workers.   

Mandates and other regulations that make health insurance less affordable are constantly under consideration by the legislature and by state administrative offices like the Connector. NFIB opposes all change that make health insurance less affordable and supports a moratorium on new mandates which typically cost employers and workers 1-2% of premium and in total are responsible for 15-20% of premium.    

Taxes: The threat of higher taxes is always higher in the first year of the legislative session—2011. Taxes on business or on a segment of businesses are the easiest to pass. Proposals in 2011 to increase the income tax or broaden the sales tax are sure to surface. Small businesses must stop tax increases that further depress job creation and economic growth and insist on tax fairness and equity.
Fortunately, the expanded sales tax on independently owned package stores—a double tax on top of the excise tax already imposed – was repealed.  This is a  big victory for our package store members.  The issue is a good example of singling out a segment of businesses for a tax increase.            

Independent Contractor: The unique Mass. independent contractor law that makes it almost impossible to have anything except an employer-employee relationship must be changed. Too many people are losing jobs to independent contractors in other states or are being forced into employment situations they do not want or like.  It is time to end this Mass.-only practice. Employers would save the cost of Social Security taxes, health insurance benefits, and assorted payroll taxes if workers are classified the way they are by the I.R.S. and in other states. 

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