January 3, 2018

On Beacon Hill: Looking ahead to a taxing 2018

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With the calendar turning to 2018, Massachusetts workers won’t experience the wage and tax relief that they have in previous years, and businesses will be hit with a new healthcare assessment, higher unemployment insurance premiums, and a new federal tax on medical devices.

As everyone tries to decipher the impacts of the new federal tax law, the state minimum wage will stay at $11 in the new year and the state income tax rate will remain at 5.1 percent. The three, $1-per-hour statutory increases in the minimum wage were completed Jan. 1, 2017, and state tax collections did not grow enough, despite the addition of tens of thousands of jobs, to trigger a small income tax cut.

The federal medical device tax, a 2.3 percent levy on devices like X-ray and MRI machines, surgical instruments and pacemakers, is scheduled to return in the new year after a two-year suspension, affecting a major Massachusetts industry. Congress has another opportunity to delay, repeal or otherwise address the controversial tax in the spending package they plan to take up later in January.

Taxes and wages loom as major election year issues in 2018, when state voters could rule on proposals to raise the minimum wage to $15 per hour by 2022, cut the 6.25 percent sales tax to 5 percent, and impose a 4 percent surtax on household incomes above $1 million per year.

JANUARY PREVIEW

Gov. Charlie Baker heads into 2018 showing a growing level of frustration with the Legislature, where many of his priorities have languished.

It’s up to Baker to convince or prod the Legislature to come around on his priorities. Democratic legislative leaders could make life easier or more difficult for Baker on the campaign trail, depending on how they carry out their own agenda in the coming months. Baker in January plans to file his fourth annual budget, by Jan. 24, and will also deliver his annual State of the Commonwealth address.

A Massachusetts Municipal Association meeting on Jan. 19-20 usually serves as a forum to preview the governor’s local aid proposal. The level of increased aid will be dictated in part by an agreement on available tax revenues that’s due by Jan. 15.

A request for proposals for clean energy projects called for under a 2016 law set a Jan. 25 deadline for the Department of Energy Resources and distribution companies to select projects for negotiation from among the 46 bids submitted.

Some of the approximately 18 people who applied to be the state’s next elementary and secondary commissioner will be interviewed in private by a screening committee on Jan. 8 and Jan. 10, with public interviews of finalists slated for Jan. 22and a decision on a candidate possible by Friday, Jan. 26.

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