Raimondo’s new shot against business

Raimondo’s new shot against business

In her January 2019 budget, Gov. Gina Raimondo proposed a new tax on larger Rhode Island businesses that employ workers enrolled in Medicaid. Raimondo got the idea from a similar law in Massachusetts that passed two years ago, and she argues it was effective in the state to the north. However, nothing could be further from the truth.

The Medicaid Tax in Massachusetts wreaked havoc on businesses and job creation. Employers were shocked to discover large quarterly assessments, due almost immediately, and some of those bills totaled tens of thousands of dollars.

Many of those companies had even offered employees private health coverage, so they had no idea some workers opted to go onto Medicaid instead because the state-sponsored health plan was cheaper. Business owners cannot mandate that their workers accept the company’s health coverage under current law. So, when the huge tax bill arrived, the employers were stunned.

Massachusetts faces the second highest small business health costs in the nation, and now employers are being penalized for something they cannot control. It’s been the most devastating for Massachusetts high turnover companies, small businesses, and non-profits. Hardest hit by the new tax were restaurant chains, larger grocery stores, and temporary employment agencies. The Massachusetts legislature was forced to create a hardship waiver which passed the Senate with unanimous bipartisan support. That provided some relief to businesses that risked closing over the new Medicaid Tax. Presently there are efforts to repeal the tax altogether.

Rhode Island’s plan is worse in some ways. The maximum fines in Raimondo’s proposal are $1,500 per employee, double the $750 Massachusetts fine. Her plan doesn’t expire like the one in Massachusetts, where the tax is only to be collected for two years. While Raimondo’s policy does focus more on larger businesses, 300 employees or more, those are the very businesses that were nearly bankrupted under the similar Massachusetts plan. Put on your seatbelt, because if it passes, Raimondo’s Medicaid Tax is bound to wreak the same havoc on business growth and economic expansion.

In Massachusetts, businesses were cautious about the employment of seasonal, summer, or holiday help, fearing it will trigger the tax. And, multiple businesses were subjected to the tax by the same worker. It’s been a nightmare in that state, and it will be just as bad in Rhode Island, which will continue to be seen as an anti-business state.

Lawmakers must reject Raimondo’s new tax on job creators for the good of the Ocean State’s fragile economy.

Christopher R. Carlozzi


Carlozzi is state director of NFIB, the National Federation of Independent Business.