At this point, you are no doubt very well aware that there are several ballot proposals slated for the November 2018 ballot that would impact Massachusetts small businesses. These labor- and taxation-focused referendum questions can be potentially devastating for Main Street businesses if they become law in their current form.
$15 Minimum Wage
The proposal calls for:
- $12 per hour in 2019
- $13/hour in 2020
- $14/hour in 2021
- $15/hour in 2022
- Indexed to inflation beyond 2022
- Tipped wage increases to $9 per hour by 2022
This wage increase is even more devastating for small businesses because Massachusetts is one of two states with premium Sunday/holiday time-and-a-half pay for retailers and one of 11 states without a teen/training wage.
Paid Family and Medical Leave
This proposal:
- Applies to all businesses regardless of size
- Would implement 16 weeks of job-protected paid family leave and 26 weeks of job-protected paid medical leave
- Allows for 90 percent of weekly wages to be capped at $1,000 and eventually be indexed to inflation
- Specifies that benefits will be paid for by 0.63 percent of annual employee wages and will be a 50/50 cost split for employers/employees (employers can pay more than 50 percent if they desire)
- Would be the most expensive paid leave program in the nation, estimated to be a $1 billion tax on employers and workers
Income Tax Surcharge
What proponents call the “millionaire’s tax” is a 4 percent income tax surcharge on income over $1 million, meaning a 9.1 percent income tax. But what proponents of the tax choose to omit is that this also impacts pass-through entity small businesses. For example, a retiring business owner who sells their business or a business owner selling part of their property or assets may trigger the surcharge. It means pass-through businesses will be unfairly taxed at a higher rate, prohibiting business growth and job creation.
There have been failed attempts in the past to enact a graduated income tax in Massachusetts, but now proponents claim the money raised will go directly to transportation and education. NFIB State Director Christopher Carlozzi is one of five plaintiffs suing the Attorney General in the Supreme Judicial Court to remove this question on Constitutional grounds. The SJC hearing occurred on February 6, and a ruling is anticipated in early June.
Massachusetts small businesses are already being burdened by the high expense of health insurance, energy, a labor mandate, and the new EMAC assessment, and they do not need any additional cost burdens.
In response, the Retailers Association of Massachusetts is sponsoring a ballot question that would reduce the state sales tax to 5 percent from 6.25 percent and implement a guaranteed sales tax holiday every August. NFIB/MA signed on to this effort.
Since this sales tax reduction is estimated to cost the state $1 billion in revenue, it prompted legislators to host talks between members of the business community and members of the labor community, with the goal of removing all of the ballot questions through a compromise process. This means the business community may have an opportunity to make the $15 minimum wage and paid family and medical leave a little less onerous and not be forced to raise millions of dollars to stage an opposition ballot campaign.
Whether a compromise can be reached is based on Big Labor’s willingness to fairly negotiate, but the window for a legislative solution is closing. NFIB/MA will continue to keep you up-to-date.
