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POLICY INSIGHT
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Proposed Sales Tax Cut Bad for Business, Massachusetts Business Group Says

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Many people equate a strong state “business climate” with lower taxes.  So it’s especially noteworthy that a major business group in Massachusetts has come out against a ballot measure to lower the state’s sales tax. Associated Industries of Massachusetts (AIM), which represents over 6,500 employers in the state, recently issued a strongly worded statement against a proposal to cut the state sales tax rate by more than half, to 3 percent from the current 6.25 percent.  It said in part:

Why isn’t the business community supporting a measure that would lower taxes on the products it buys and sells?  The answer is simple — Question 3 is an extreme measure that would irreparably harm the Massachusetts economy by doubling the projected state budget deficit and threatening services such as education and public safety upon which employers rely to run their businesses.

“No organization has worked harder than AIM to create rational tax policy that supports job creation and economic growth,” AIM continued.  “But no one knows better than employers the dangers that scattershot, across-the-board budget reductions pose to the operational viability of an organization.” AIM estimates that cutting Massachusetts’ sales tax to 3 percent would force the state to lay off large numbers of teachers, police, firefighters, and other municipal employees, as well as to raise tuition and reduce course offerings for the 270,000 students at the state’s public colleges and universities — “the same students who will fuel the Massachusetts economy for the next generation.” For more on the Massachusetts sales tax, check out this primer from the Massachusetts Budget and Policy Center.