RAISE MINIMUM WAGE, FAMILY AND MEDICAL LEAVE AND SALES TAX HOLIDAY SIGNED INTO LAW

By Bob Katzen

Gov. Charlie Baker signed into law a bill that would hike the minimum wage from $11 to $15 over five years; increase the wage for tipped workers from $3.75 to $6.75 over five years; phase out over five years extra pay for employees who work on Sundays and holidays; institute a permanent sales tax holiday on a weekend every August; and establish a $1 billion family and medical leave program funded by a payroll tax paid for by both employers and employees.

Dubbed the “Grand Bargain Bill” by some supporters and “Grand Theft Bill” by some opponents, the compromise is in response to the likely successful effort by the Raise Up Massachusetts coalition to get the minimum wage and paid leave questions on the November ballot; and the likely success of the Retailers Association of Massachusetts (RAM) to get a question on the ballot to reduce the sales tax from 6.25 percent to 5 percent.

Raise Up Massachusetts has agreed not to bring its family and medical question or minimum wage question to the ballot while RAM has agreed to drop its effort to reduce the sales tax to 5 percent.

RAM President Jon Hurst had mixed feelings about the compromise but ultimately embraced it. “The compromise legislation passed today contains very costly initiatives that will negatively impact the thousands of small business owners and their employees that RAM represents,” said Hurst. “The retail marketplace has never been more competitive, and the margins have never been smaller. The new payroll mandates passed today will significantly increase costs, resulting in businesses being less competitive, forcing some doors to close and good jobs to be lost. This is not rhetoric, but reality. At the same time, the results would be far worse had these measures gone to the ballot, and the Legislature deserves credit for bringing the parties together to bring a balanced resolution.”

Meanwhile, critics of the compromise say that RAM was able to extract compromises from Raise Up by using the sales tax cut as a bargaining chip. The Supreme Judicial Court had just ruled that a proposed ballot question imposing an additional 4 percent income tax on taxpayers’ earnings of more than $1 million cannot go on the November 2018 ballot. Supporters of that measure saw millions of tax dollars lost as a result of the decision and said that reducing the sales tax would cause a fiscal crisis and require cutbacks of many programs.

“I am thankful that all parties came together, compromised and found common ground to produce a better set of policies than what the ballot questions represented,” said Gov. Charlie Baker. “The Massachusetts workforce continues to grow with more and more people finding jobs and our administration is committed to maintaining the Commonwealth’s competitive economic environment.”

“I fundamentally disagree with the premise that we have to give up some workers’ rights in order to gain new workers’ rights,” said Sen. Kathleen O’Connor-Ives (D-Newburyport).

“Regardless of what happens in Washington D.C., this law demonstrates that in Massachusetts we can come together to create policies which benefit working families, employers, and the commonwealth as a whole,” said Rep. Paul Brodeur (D-Melrose). “While this process took months, I am proud that this law strikes the right balance in delivering improved wages and expanded benefits for millions of hard working residents while providing key protections for small businesses.”

“Gov. Baker can try to spin this so-called ‘grand bargain’ any way he wishes, but a new $800 million payroll tax is a huge new tax,” said Chip Ford, executive director of Citizens for Limited Taxation. “Unfortunately for taxpayers, Charlie Baker is the best Democrat we can hope to elect from the field running for governor. He’s not as conservative as Democrat Ed King was, but he’s head and shoulders above Mike Dukakis.”

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