For Mass. Businesses, Tax Fairness Worth The Fight
Pop quiz: Which New England state is second to New Hampshire in “tax friendliness” to business?
We're in it. Shocked? Judging by a couple of recent events and statements, it may not be all that surprising. (For the record, Massachusetts placed 25th nationwide in The Tax Foundation's latest annual ranking; New Hampshire is 8th.) But at the same time, the interests of business are becoming a more integral part of the political dialogue on Beacon Hill, and it's clearly having an impact on tax policy.
Business interests were at their most vocal in the recent successful battle to repeal the extension of the state's 6.25-percent sales tax to computer services. The process also served to put lawmakers on notice that stuffing such a levy inside a larger piece of legislation, with little time left for debate, will incur the wrath of those who would suffer from its impact.
Having that repeal come while candidates for next year's statewide election were jockeying for early support was fortuitous, because business interests caught the attention of political leaders and their rivals. The new landscape gives business groups ample time to shape a good part of the debate for the 2014 races, allowing them plenty of time to size up candidates and determine which are truly business and economic growth friendly.
House Speaker Robert DeLeo appears to have gotten that message. Last month, DeLeo said he's weighing reforms to unemployment insurance paid by businesses in exchange for a hike in the state's minimum hourly wage of $8. In the five criteria The Tax Foundation used to arrive at its state rankings, the Bay State ranked 49th — next to last — in unemployment insurance tax, ahead of only Rhode Island.
"What I'm looking at ... is the possibility of working on a minimum wage in addition to taking a look at unemployment insurance," he told the State House News Service. "In addition to the minimum wage, I think maybe we have to change some of the burdens that businesses presently face in Massachusetts."
Those are welcome words in a state that has long had a reputation — sometimes deserved and often exaggerated — of being hostile to business. Striking a balance between a minimum wage increase and lowering the unemployment insurance tax burden for businesses is a positive sign that improving the public good includes an awareness and sensitivity to business interests.
In addition, the deal the Patrick administration struck with online retailer Amazon, which will subject purchases from Massachusetts to the 6.25-percent sales tax, should be a help to the state's retailers, who have long fought for tax equity with web-based competitors.
Tax policy is just one part of the economic picture, yet it's one of the most visible measures of how a state treats its business base. Yet we hope elected officials across the state have come to realize that they can't talk about growing our economy and spurring job growth while promoting public policy that alienates employers. If so, that could be a trend that can last longer than the current campaign season.
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