Please Come to Massachusetts!!!

Please Come to Massachusetts!!!
 
© David Burton 2008

 Doing Business in massachusetts
 

     The Commonwealth of Massachusetts wishes to encourage new businesses to come to our business-friendly state and would like companies that are already here to expand their operations within the state. We need the jobs you create, the tax revenues you pay into the state’s coffers and the money that flows into the state’s economy. Massachusetts offers businesses several incentives to either locate or expand here.

     Please, come to Massachusetts! We want you and we are business-friendly. We can offer you the following benefits:

  • Massachusetts has the country’s fourth-highest corporate tax rate. Massachusetts has just given approval to a $392 million tax increases for smokers and the state's largest corporations. This is the state's most momentous tax increase since 2002.
  • Massachusetts unemployment insurance is higher than the national average (in 2006, it was more than twice the national average). Unemployment benefits are 76 percent above the national average.
  • Massachusetts requires that the minimum amount of time that individuals be employed before they can qualify for unemployment benefits is 15 weeks. In most other states the minimum employment period is 20 weeks.
  • Massachusetts pays unemployment benefits for up to 30 weeks. Forty-eight states set a limit of 26 weeks on how long individuals can collect unemployment benefits. Massachusetts also leads the nation with a maximum benefit payout of $600 per week.
  • Massachusetts employers will pay triple damages if they lose a wage dispute, even if the employer acted in good faith.
  • Massachusetts has become the first state in the country to have mandated health insurance coverage. In less than one year the plan is projected to cost as much as 3 times originally estimated. Companies with more than 10 employees must provide health care coverage or face penalties from the state.
  • Massachusetts has a cost of living that is considerably higher than the national average. As a consequence, finding qualified labor is a problem. For Boston, salaries (cost of labor) are 115% of the U.S. average, while cost of living is 56% higher than the national average.
  • Massachusetts is in the process of mandating that all businesses provide seven days of sick leave per annum for every employee.
    To many, these business disincentives are the result of a state noted for its liberalism and the near total domination of state government by the Democratic party. Let’s see what steps our elected officials have taken and are taking to make the business environment here attractive.

Unemployment Insurance
     “The Massachusetts unemployment insurance tax will remain the highest in the country, with taxes twice the national average and substantially higher than the unemployment insurance tax rate in bordering states like Connecticut, New York and New Hampshire.” (Ref. 1)

     ”When the state sends out its quarterly unemployment insurance bills next month, Massachusetts businesses will be hit with a substantial rate increase, one that will end up costing employers $153 million in new taxes this year.
     ”Considering that businesses are already paying more than $13.5 billion a year in state and local taxes -- including $175 million to comply with the state’s new health insurance mandate -- this rate increase could not be coming at a worse time.
     ”Massachusetts currently ranks an abysmal 49th in jobs creation, ahead of only Michigan. The state has yet to replace nearly 100,000 jobs lost during the last economic downturn, and all signs seem to indicate we are heading for another recession. Given the state of our economy, and the tenuous position many businesses now find themselves in, the new rate increase is certain to result in even more jobs lost for Massachusetts.
     ”The impact of the scheduled rate increase will be far-reaching, because it will affect not only large chain stores like Wal-Mart and Home Depot, but also thousands of local, family-owned businesses.
     ”Although all states provide unemployment insurance benefits, there are differences in how they administer those benefits. For example, most states require that individuals be employed for a minimum of 20 weeks before they can qualify for benefits, but in Massachusetts the minimum employment period is just 15 weeks. {Emphasis mine}
     ”Forty-eight states set a limit of 26 weeks on how long individuals can collect benefits. Montana allows benefits to be collected for up to 28 weeks, while Massachusetts pays benefits for up to 30 weeks. Massachusetts also leads the nation with a maximum benefit payout of $600 per week. {Emphasis mine}
     ”A new report released last month by the Pioneer Institute indicates the Commonwealth provides unemployment benefits that are 76 percent above the national average {Emphasis mine}. Unemployment insurance taxes, which nearly doubled between 2003 and 2005, now account for the third largest tax burden on Massachusetts businesses, after property and excise taxes.
     ”According to the National Federation of Independent Businesses, Massachusetts employers paid an average of $671 per employee for unemployment insurance in 2006, more than twice the national average of $315 and substantially more than bordering states like Rhode Island ($489), New York ($399) and New Hampshire ($118). We now have the fourth highest unemployment insurance costs in the country, with businesses expected to pay more than $1.5 billion in unemployment taxes this year” {Emphasis mine}. (Ref. 2)

Health Care Insurance
    ”Although most legislators and public policymakers recognize that high costs pose a serious threat to the success of the recent Massachusetts health insurance reform law, the Committee on Financial Services and the Committee on Mental Health and Substance Abuse reported new healthcare mandate legislation that would significantly increase the cost of every insurance policy sold under state regulation in Massachusetts.” “Additional health insurance premiums would disproportionately impact small businesses since state mandate regulations do not cover interstate businesses and larger businesses that are self-insured. In addition, the legislature appears intent on avoiding the review process that would determine the true cost of these bills to employers and their employees who pay for health insurance.” {Emphais mine} (Ref. 1)

     “Massachusetts costs will increase by approximately $400 million primarily because the state underestimated the number of new enrollees in state-subsidized insurance plans. . ." (Ref. 3)

     “. . . the AP reported that soaring costs are buffeting the pioneering insurance mandate program in Massachusetts. . . . the New York Times described a Massachusetts primary care system now swamped with new enrollees seeking treatment. . . . the deepening recession is hitting state budgets hard, producing a financial crisis almost certain to halt the expansion of state-based universal health care coverage.
         - - -
     ”Despite the early success in reducing the pool of the uninsured, Massachusetts is already experiencing spiraling costs for the program. The $1 billion experiment as initially designed was supposed to be paid for largely from the state's existing fund for emergency medical care for the uninsured.” The “program's costs [are] now expected to hit $1.4 billion . . .
         - - -
     ”Businesses . . . with 11 or more full time employees who refuse to offer insurance face $295 annual penalties per employee. Already, 748 employers have failed to meet that threshold and have paid $6.6 million to the state.
         - - -
     The “president of the Associated Industries of Massachusetts, said the state must be ‘very mindful of placing burdens on businesses that don't exist in other states.’
         - - -
     ”The biggest challenge is rising costs.
         - - -
     ”In 2006, a legislative committee estimated the law would cost about $725 million in the fiscal year starting in July. In his budget, [Massachusetts Governor] Patrick set aside $869 million, but those overseeing the law have already acknowledged costs will rise even higher.” (Ref. 5)

Triple Damages
     ”The [Massachusetts] House and Senate . . . passed legislation that would entitle employees aggrieved by a violation of the wage laws to sue for triple damages from employers [even if] the violation was [not] willful, intentional or in bad faith.” {Emphasis mine} (Ref. 1)

     The governor of Massachusetts allowed the bill to become law by not signing it and not vetoing it, saying “I remain concerned that mandatory treble damages in all cases, without exception for employers who act in good faith is unfairly punitive. {Emphasis mine}”

     The Associated Industries of Massachusetts said that the new law is “one more disincentive to conduct business here in the Commonwealth.” (Ref. 12)

High Cost of Living
     ”With the possible exception of rent control in New York City, auto insurance in Massachusetts is a textbook example of how NOT to regulate a market. It is a superb illustration of what happens to a market when liberal reformers by successive adjustments eventually restrain market forces until a market becomes fully dysfunctional.
         - - -
     ”From an economic perspective there are 2 fundamental facts concerning the present sorry condition of Massachusetts auto insurance:

1. Insurance rates are set by state government, and the rate structure in place effectively subsidizes auto insurance for urban car owners. Suburban and rural car owners pay these subsidies through above-market insurance rates. The Globe’s own editorial board estimated the value of these subsidies at $400 per year per urban car.

2. The high degree of regulation in the Massachusetts insurance market has led major national insurance firms . . . to leave the state. Auto insurance is provided by smaller state-based firms whose business (and political influence) is concentrated here in Massachusetts, and who will therefore fight to their last lobbying dollar to preserve the present regulatory climate that keeps national competitors out of 'their' market.”
         - - -
     ”Massachusetts is the only state that requires the insurance commissioner to set auto rates.”
         - - -
     “COST of auto insurance in Massachusetts paid by consumers, . . . is 39% above the national average.” (Ref. 6)

     Many businesses have difficulty in finding qualified labor in Massachusetts because the cost of living in the state is considerably higher than the national average. “For Boston, Massachusetts, salaries (cost of labor) are 115% of the U.S. average, while cost of living is 156% of the U.S.average.” (Ref. 7)

     Massachusetts is the first state in the country to mandate health care coverage for all its residents. As a result, the cost of doing business in the state has increased and, for many state residents, the mandated health care costs have proven to be expensive or unaffordable.”The Massachusetts plan requires all residents to purchase health insurance, with state subsidies for lower income residents.
         - - -
     ”But rather than creating a utopia of high-quality affordable health care, the result has been the exact opposite — skyrocketing costs, worsened access, and lower quality health care.
         - - -
     ”Massachusetts' system of government-mandated health forces individuals to choose from a limited set of plans approved by the government bureaucrats.
         - - -
     ”Because the state-mandated health insurance is so expensive, the government must . . . subsidize the costs for lower income residents, which merely shifts those costs onto the taxpayers. The state has also created a huge new bureaucracy called "The Connector" to enforce these insurance requirements on individuals and businesses.
         - - -
     ”Overall, the plan is projected to cost as much as three times as originally estimated." (Ref. 8)

Corporate Income Taxes
     ”Massachusetts business tax laws are a hodgepodge of poorly conceived measures that violate the most fundamental principles of tax equity and efficiency. . .
         - - -
     ”Massachusetts currently levies the fourth highest statutory state corporate income tax rate -- 9.5 percent -- in the United States. (Ref. 9)

     Massachusetts”House lawmakers . . . gave approval to $392 million in tax increases for smokers and the state's largest corporations.
         - - -
     ”The legislators' 131-23 vote capped a long crusade by [Governor] Patrick and his allies in the Legislature, who convinced [the] house speaker . . . to back away from a more business-friendly plan and approve the state's most momentous tax increase since 2002.
         - - -
     The tax increase on businesses “would tighten corporate tax laws and prohibit several practices the governor called "loopholes," bringing in $217 million next year.”
         - - -
     ”Massachusetts has the country’s fourth-highest corporate tax rate, which business leaders argue has damaged the state’s reputation and discouraged companies from locating here." (Ref. 10)

     The governor of Massachusetts has begun a drive to attract businesses in the life sciences field, which includes the pharmaceutical industry. However, the legislature has seen fit to pass a new law that some say effectively prohibits all interactions between biological and pharmaceutical companies and physicians. But, restricting “the ability of biopharma companies to interact with physicians . . . will send the message loud and clear to biopharma CEO’s considering expansion or new investment [in Massachusetts]; Go elsewhere.” (Ref. 11)

Mandates
     ”Under a Senate bill approved last week a physician . . . will face a $5,000 civil fine” for accepting any {emphasis mine} gift from a drug company, even if it is merely a pen or a pad of paper. “Also under the legislation, pharmaceutical sales representatives” and medical device salespeople “will now have to be registered and licensed by the state. That comes with a fee, of course.” Yet, politicians can continue to “accept political contributions from lobbyists and other special interests.” “. . . in addition to campaign contributions up to $500, . . . politicians can . . . accept outright gifts, as long as the value is less than $50.” (Ref. 13)

     ”. . . Beacon Hill continues adding to the burden of the Massachusetts businesses that on a day-to-day basis make this state’s economy hum.
         - - -
     A bill making its way through the Massachusetts state senate “would mandate {Emphasis mine} that businesses provide employees with seven days of paid sick leave per year.
         - - -
     ”This bill comes as lawmakers are mulling an enormous tax hike on businesses, and a cut in the corporate tax rate that is smaller than originally expected. Bay State businesses continue to pay the highest unemployment insurance rates in the nation {Emphasis mine}, and businesses are confronting the same increases in energy and food prices as the rest of us - paying more to provide health insurance for their workers, too.” (Ref. 14). Isn’t it amazing how benefits voluntarily provided by companies that could afford them as a means of encouraging people to come to work for the company and to remain with the company are suddenly mandated by a liberal state government on all companies, irrespective of the companies’ ability to pay the costs. Our liberal Democratic politicians love mandates because, while these mandates are in fact tax increases, the politicians can continue their charade of claiming that they have not raised their constituents’ taxes. In truth, we all end up paying for these mandates.

Power of Organized Labor
     The treble-damages law is one of numerous examples of the power of labor and labor unions in Massachusetts. State and local governments in Massachusetts kowtow to the demands and wishes of labor. Because of the overwhelmingly Democratic one-party rule in Massachusetts, state and local government has demonstrated time and time again that, in keeping with their liberal bent, they will take little or no action that is opposed by organized labor. Business comes out a poor second in the state government’s dealings with business and labor in the Commonwealth.

In Summary
     Here in the Bay State, the home of those Democratic and most liberal stalwarts, Kennedy and Kerry, we are aware that Massachusetts needs to attract more business into the state in order to create more jobs and to fund its liberal policies. As you can also see from what I have written, Massachusetts is doing everything in its power to create a welcoming business environment for those entrepreneurs looking for a place to establish and grow their businesses.

    So, to all of you business people out there, Please come to Massachusetts!!! As former Massachusetts governor and unsuccesful Democratic presidential candidate, Michael Dukakis, once said: Together, we can “make it in Massachusetts.”
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 References
  1. Beacon Hill Report -- Feb. 18, 2008, NFIB, http://www.nfib.com/object/IO_36311.html, February 18, 2008.
  2. Unemployment insurance increase will harm businesses, economy, Massachusetts State Senator Richard Tisei, Wicked Local Wakefield, http://www.wickedlocal.com/wakefield/homepage/x142943941, February 5, 2008.
  3. Cost of Massachusetts Health Insurance Mandate to Rise 85% -- $400 Mil -- in '09, Foundation for Taxpayer and Consumer Rights, http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=ind_focus.story&STORY=/www/story/01-24-2008/0004742730&EDATE=THU+Jan+24+2008,+05:45+PM, January 24, 2008.
  4. Triple Whammy for State Health Insurance Mandates, Perspectives, http://www.perrspectives.com/blog/archives/001019.htm , April 13, 2008.
  5. Two years after the state's landmark health law was signed, the cracks are starting to show, Steve LeBlanc, Associated Press Writer, Yahoo News, http://news.yahoo.com/s/ap/20080412/ap_on_re_us/mass_health_care_law, April 12, 2008.
  6. Squaring The Boston Globe, http://squaringtheglobe.blogspot.com/2007/07/missing-it-in-massachusetts-our.html, July 03, 2007.
  7. Geographic Differences: Focus on Pay - not Cost of Living - Levels, Ann Bares, http://compforce.typepad.com/compensation_force/2008/04/geographic-diff.html, April 2008.
  8. Mandating health care coverage is a costly mistake, Paul Hsieh, MD, Denverpost.com, http://www. /headlines/ci_8854133, April 8, 2008.
  9. Suffolk University, http://www.suffolk.edu/28227.html, April 8, 2008.
  10. Mass. House OK’s big tax hikes, The Boston Globe, Boston.com, http://www.boston.com/news/local/articles/2008/04/11/mass_house_oks_big_tax_hikes/, April 11, 2008.
  11. Senate’s gift ban goes much too far, Editorial, Boston herald, Page 20, April 15, 2008.
  12. Gov allows wage-dispute bill’s triple damages, Jay Fitzgerald, Boston Herald, Page 22, April 15, 2008.
  13. There’s no value in Senate gift ban, Editorial, Boston Herald, Page 22, April 22, 2008.
  14. Pushing business to breaking point, Jay Fitzgerald, Boston Herald, Page 23, April 15, 2008.

  		 
  23 April 2008 {Article 40; Undecided_10}    
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