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Archived: The Top 10 Massachusetts Business Stories of 2017

Posted on December 27, 2017

A generational reset of the nation’s tax code, a controversial employer assessment to fund health insurance for poor people, and upheaval surrounding workplace sexual misconduct head the list of the top business stories in Massachusetts for 2017.

Tax.jpgIt was a year in which forces originating outside the borders of the commonwealth heavily influenced the fortunes of employers and political leaders here. Issues ranging from the political maelstrom in Washington, DC, and a strengthening economy to the #metoo movement and Amazon’s search for a second corporate headquarters all filtered into a complex mix that formed the Massachusetts business climate.

The tax law passed by Congress and signed by President Trump just before Christmas reduced the corporate excise tax from 35 to 21 percent and also dropped rates for pass-through businesses that pay at the personal level. Still, Bay State employers worried about adding $1.5 trillion to the federal deficit and new limitations on deductions for state and local taxes that will primarily affect high-cost states like Massachusetts.

Taxes in Massachusetts could be going in the opposite direction next year as advocates spent 2017 pushing a constitutional amendment that would increase the tax from 5 to 9 percent on income more than $1 million. AIM President and Chief Executive Officer Richard C. Lord joined four other prominent business leaders during October in filing a lawsuit challenging the validity of the proposed amendment.

“The proposal would lead to a radical decentralization of fiscal policy away from the Legislature and set the stage for future initiatives from a range of interest groups proposing constitutional amendments segregating funds for their preferred causes, or raising tax rates on some groups and lowering taxes on others,” Lord said.

Here are the top 10 Massachusetts business stories for 2017:

  1. President Donald Trump signs a tax bill that reduces levies on corporations and pass-through businesses but increases the federal debt and trims popular deductions.

    In addition to lowering the corporate tax to 21 percent, the law will cut the burden on owners, partners and shareholders of S-corporations, LLCs and partnerships through a 20 percent deduction. On the personal side, it lowers many individual income tax rates, doubles the standard deduction, eliminates personal exemptions, narrows the alternative minimum tax, lowers the cap on mortgage interest deductions and caps deductions for state and local taxes at $10,000.

  2. Massachusetts lawmakers impose a $200 million assessment on employers to close a funding gap in the MassHealth insurance program for low-income people.

    The Baker Administration initially proposed a $2,000-per-worker fee for businesses that did not cover at least 80 percent of their workers and share at least 60 percent of the premium cost. The governor and business community eventually negotiated a compromise that placed the heaviest assessments on companies with workers that use Mass Health insurance while outlining structural changes to the Mass Health program. The Legislature approved the assessment without the structural changes, but included rate relief on unemployment insurance premiums.

  3. Employers grapple with the implications of the #metoo movement highlighting sexual harassment and sexual assault in workplaces ranging from film studios to television networks to restaurants and hotels.

    Employers scrambled to review their policies on sexual harassment ” and their enforcement of those policies – as millions of women around the world shared stories of sexual harassment and abuse in the wake of accusations against movie mogul Harvey Weinstein. The tidal wave washed over high-profile figures from news hosts Charlie Rose and Matt Lauer to celebrity chefs like Mario Batali to classical music conductors like former Boston Symphony Orchestra Maestro James Levine. AIM urged employers to take seriously all employee claims of sexual misconduct on the job and to investigate those claims scrupulously.

  4. Twenty-six Massachusetts communities and regions submit bids to host the $5 billion “second headquarters” development of e-commerce behemoth Amazon.

    The project offers the promise of some 50,000 jobs in the information technology space that is a strength of the Massachusetts economy. Boston submitted a 218-page proposal to site the campus at the current Suffolk Downs property, while New Hampshire gratuitously threw shade on the city as a traffic choked, overly expensive nightmare. Worcester upped the ante by offering $500 million worth of incentives. Amazon said it received 238 proposals in all from throughout North America. The company is expected to narrow that field in 2018.

  5. Activists begin the process of placing on the 2018 statewide ballot the three potential questions that would represent an unprecedented public-policy crisis for Massachusetts employers.

    The proposals include the income surtax constitutional amendment, a mandate that employers provide 16 weeks of paid family leave and 26 weeks of paid medical leave for employees, and an increase in the state the state minimum wage from $11 per hour to $15 per hour.

  6. Employers and advocates hammer out compromise legislation to extend employment protection to pregnant workers in Massachusetts.

    The Pregnant Workers Fairness Act requires employers to make reasonable workplace accommodations for pregnant employees ” more frequent or longer breaks, temporary transfer to a less strenuous or hazardous position, or seating for those whose jobs require extended standing. AIM opposed early versions of the bill during the 2015-2016 legislative session because of concern that the legislation provided an applicant or employee with unlimited power to reject multiple and reasonable offers of accommodation by an employer. The compromise bill addressed that concern and others.

  7. A strong employment market and long-term demographic shifts exacerbate the challenge of finding skilled employees, but wage growth remains muted.

    The good news is that the Massachusetts economy continued in full-employment mode during 2017 and the jobless rate dropped to 3.6 percent in November. But experts warn that those numbers threaten to derail the ability of employers to find the workers they need to grow at a time when large number of baby boomers prepare to leave the work force. “The concern is that Massachusetts could become a victim of its own success,” said Raymond G. Torto, Chair of AIM’s Board of Economic Advisors. Still, wage growth is expected to remain slow during 2018 ” the AIM Human Resource Practices Survey published in December shows that employers plan to provide average wage increases of 2.66 percent during 2018, down from 2.75 percent this year.

  8. Employer confidence reaches a 17-year high and remains strong throughout 2017.

    Massachusetts employers remained optimistic as the national economy surged and manufacturers, in particular, grew bullish about their own business prospects. The AIM Business Confidence Index began 2017 at a healthy 61.4 and moved in a narrow range before hitting a high of 62.7 in October. The AIM Index is calculated on a 100-point scale, with 50 as neutral – a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The Index has remained above 50 since October 2013.

  9. The Baker Administration issues new regulations that set specific limits on sources of greenhouse gasses in a move that could increase already high employer electric rates by as much as 2 percent.

    The new rules aim to reduce the state’s carbon emissions 25 percent below 1990 levels by 2020, as required by state law. AIM was extremely disappointed with the regulations. The electric-rate increases generated by the proposed rules, when combined with other pending cost increases, could raise the electric bills of Massachusetts employers some 10 percent in the next year alone. AIM maintains that the regulations are ultimately unnecessary – the administration could have chosen to work with the legislature to change the Global Warming Solutions Act to allow for alternative ways for the electricity sector to meet these obligations.

  10. AIM member CVS Health proposes to acquire insurance company Aetna for $69 billion.

    The merger of one of the nation’s largest retail pharmacy companies with one of its dominant insurers under the shadow of a potential incursion by Amazon underscores the breathtaking changes sweeping through the American health-care and economic systems. With their merged data about people’s health and vast reach, the two companies assert that they can make real change in a health-care landscape that nearly everyone agrees is too convoluted, inefficient and expensive.