Biz Groups Have Guard Up Ahead of Tax Debate

By Colin A. Young, State House News Service, August 26, 2019

Business organizations that have resisted new or higher taxes to funnel more money into public transportation are hitting back at the advocacy group Raise Up Massachusetts and its call for an “economically progressive” revenue package, delivering a one-two punch as this week began.

The left-hand jab came from the Massachusetts High Technology Council, which took aim Sunday afternoon at Raise Up’s “increasingly aggressive stance” in favor of raising taxes on businesses, and the Associated Industries of Massachusetts followed up Monday morning with a right cross in the form of an open letter from President and CEO John Regan.

“Thousands of hard-working Massachusetts employers, from software startups to corner grocery stores, spend every day paying their fair share to the commonwealth by providing economic opportunity and prosperity from Boston to the Berkshires,” Regan wrote. “These employers understand the need to address intractable issues such as transportation and education, but they also understand that the recent examples provided by Connecticut and New Jersey prove that you cannot solve these problems by punitively taxing certain businesses or individuals.”

The business groups’ latest volley came in response to Raise Up’s own open letter to lawmakers last week in which the organization that has been behind the proposed 4 percent surtax on income over $1 million called on businesses to contribute more towards public transit and education. Meanwhile, state lawmakers are gearing up to debate a broad transportation financing package this fall, the details of which have not been released.

“Large, profitable corporations benefit greatly from a well-educated workforce and a reliable transportation system, and it’s time for them to contribute themselves to fund those investments, not just ask the rest of us to pay more,” Raise Up Massachusetts wrote in its letter. “The Massachusetts corporate community needs to explain just how businesses plan to do their part to fund our transportation and public education systems.”

Business groups have increasingly decried the Boston area’s public transportation woes as a hindrance to economic growth. Traffic and congestion on the roads make for long and frustrating commutes by car, and the unpredictable nature of public transportation frequently makes workers late to their jobs.

In a public policy update newsletter to supporters on Sunday, the High Tech Council dismissed Raise Up’s letter and its latest lobbying efforts by reiterating its long-held position that Massachusetts does not have a revenue problem.

“With tax collections rising at three times the rate of inflation over the past 10 years, it is abundantly clear that Massachusetts does not have a revenue problem despite repeated claims by some that billions in new taxes must be imposed to support state spending,” the council wrote.

Raise Up said Monday that while it has some major differences of opinion with many business groups, most have acknowledged that the state’s transportation system needs more money.

“It is alarming to see the High Tech Council continue to deny the need for revenue when the employees of high tech businesses in Massachusetts are sitting for hours on broken-down trains, they’re stuck on [Interstate] 93 for hours waiting to get to work,” Andrew Farnitano, spokesman for the Raise Up coalition, said. “Our high tech economy cannot work unless we fix our transportation system and clearly these incredibly profitable large corporations in the high tech industry have a role to play.”

The differences in opinion come into play when discussing where that additional money should come from, Farnitano said. He said many business groups agree that more revenue is needed, but argue it should come in the form of higher user fees paid on each ride with a service like Lyft or Uber. Raise Up is “concerned about the impact of user fees on working people,” Farnitano said.

Ahead of this fall’s debate, Raise Up is not yet at the point of being ready to propose a specific option to raise the revenue it says the state needs, but Farnitano told the News Service the organization “want[s] to have a conversation about” higher corporate excise taxes.

“It’s a shared responsibility. We think there’s a role for businesses to play, this can’t just be on the backs of working people and commuters,” he said. “The business community needs to offer a solution of how they intend to pay. We’re asking large corporations to propose how they can contribute.”

In his open letter to Raise Up, AIM President and CEO John Regan said that Raise Up’s recent letter to lawmakers “does not comport with facts” and he detailed the ways in which the business community contributes to the state.

“Massachusetts employers provide 3.2 million private-sector jobs at a mean annual wage of $63,910 to the citizens of Massachusetts … Massachusetts employers pay more than $3.3 billion annually in corporate excise and other state taxes, Massachusetts employers pay $4.9 billion annually in local property taxes to support schools, public safety and municipal services, Massachusetts employers pay $22.8 billion per year to provide health insurance to their employees,” Regan wrote.

If the High Tech Council was playing bad cop with its pointed language, AIM played the part of good cop Monday. Regan said he believes Raise Up’s letter last week was “a serious statement of position and concern, rather than a political stunt” because he got to know the organization well during the time AIM and Raise Up worked together to reach a compromise on a paid family and medical leave program.

“We spent too many hours sitting across the bargaining table from one another for me to question the fact that you believe that businesses do not pay their fair share,” Regan wrote. He later added, “I am delighted to engage in serious conversations with Raise Up and any other groups seeking to ensure the economic future of Massachusetts.”

Raise Up disagrees with AIM on a lot of things, but the two organizations have worked together successfully in the past and will endeavor to do the same on this issue, Farnitano said.

“We think this is an area where there are strong differences but we can talk about those differences and we can work out solutions that involve the business community and workers coming to the table and identifying the solutions for the problems our commonwealth faces,” he said.

The High Tech Council, in its email over the weekend, took note of Raise Up’s “increasingly aggressive stance” and said the advocacy group’s latest lobbying is “a clear indication that they are concerned that thoughtful policymakers will realize that the Fair Share Amendment is a revenue-centric ‘solution’ to a revenue shortage that simply does not exist.”

In June, the Legislature voted 147-48 in favor of a Constitutional amendment (H 86) that would impose a 4 percent surtax on annual household income greater than $1 million, well more than the 101 votes needed to advance to the next vote.

The so-called “millionaires tax” will need to be passed again at a Constitutional Convention in the 2021-2022 legislative session in order to go before voters on the November 2022 ballot. The amendment is required because the state’s constitution currently mandates that a tax on income be applied evenly to all residents.