Welcome to Talking Points for Thursday, May 4. The US House delivered on its promise to pass a bill repealing and replacing Obamacare. We’ll tell you what that means. We also have details of the House defanging Dodd-Frank. Next year, you’ll be able to watch two Celtics teams. Puzzled? We’ll explain. And is it possible to go a day without an airline controversy? Keep reading for the answer and Jon Chesto.
Chesto means business
Taxing situation: The folks at the Pew Charitable Trusts have impeccable timing. Pew sticks Massachusetts in the bottom tier of states for tracking corporate tax breaks, just as Beacon Hill learns aboutanother ugly budget shortfall.
Pew’s report lumps Massachusetts with 22 other states in the decidedly negative “trailing” category, primarily because we don’t adequately evaluate the effectiveness of our corporate tax incentives.
Pew researcher Josh Goodman points to the annual (albeit often delayed)film-industry reports from the Department of Revenue as a model. He says the approach should be expanded to include other breaks. Goodman suggests DOR, the auditor’s office , or the inspector general could handle the task.
How much is at stake? DOR says refundable or transferable tax credits, such as the film credits, easily total more than $100 million a year. The left-leaning Massachusetts Budget and Policy Center, meanwhile, estimates the state spends more than $1 billion annually on special business tax breaks; that number includes some broader tax policies, and not just company-specific tax credits. (But it doesn’t include grants, such as the $125 millionfor GE’s headquarters project.)
Efforts to give these breaks more scrutiny have failed on Beacon Hill amid resistance from business lobbyists. Could that change? The two chairmen of the Legislature’s revenue committee, Michael Brady and Jay Kaufman,wrote a scathing column in the Globe today, timed with the Pew report. They harshly criticized the state’s generosity to businesses, and essentially lambasted their colleagues for being slow to adopt reforms.
Tough words. But they may resonate in the State House if the tax-collection shortfalls continue.
Jon Chesto is a Globe reporter. Reach him at firstname.lastname@example.org and follow him on Twitter @jonchesto.
House passes Obamacare repeal: The House narrowly approved a Republican health care bill that repeals and replaces the Affordable Care Act. The bill passed with 20 Republicans against and no Democratic support.
If it becomes law, the legislation will affect the health coverage of millions of Americans. It would end the ACA's subsidies to help people buy insurance not provided by their employer, and replace it with tax credits tied to age, for instance. People who get insurance through their employers (a common benefit) could lose caps on out-of-pocket costs for catrostrophic illnesses. The Globe's Evan Horowitz breaks down the GOP health care bill in detail here.
Economy in a nutshell: US worker productivity fell while employer costs increased in the first quarter, according to the Labor Department.
Productivity -- goods and service produced per hour -- declined to an annual 0.6 percent rate in the first quarter compared with the final three months of last year. Meantime, labor costs -- wages and benefits -- climbed by a 3 percent annual rate compared with the final three months of last year.
A shrinking labor force could be choking productivity and forcing wages higher. New applications for state jobless benefits fell 19,000 to a seasonally adjusted 238,000 for the week ending April 29. Jobless claims have been below 300,000 for 113 straight weeks, the longest stretch since 1970.
A fine mess: A Boston-based brokerage with a history of being fined by state security regulators has been slapped again.
LPL Financial Holdings has agreed to pay $1 million for allegedly failing to supervise its advisers based at Digital Federal Credit Union.
The Massachusetts Secretary of State's Securities Division alleged LPL agents based at DFCU were working for the brokerage and the credit union. They received bonuses from the brokerage and used the DCU Financial as the name of their operation. But they never made clear to their customers they were being paid by the credit union.
LPL agreed not to use the credit union's name on the premises, pay the fine, and perform and internal review.
Researcher demands credit: A former Harvard researcher is suing the school for allegedly cutting him out of millions of dollars in royalties he believes are owed him for a potentially groundbreaking discovery.
The federal lawsuit by Alexander Arefolov claims he helped invent cancer-fighting compounds Harvard licensed to Merck. He was however excluded from patents that so far have generated nearly $6 million. Harvard called the Merck collaboration one of the most important deals struck by its technology transfer office. Arefolov is asking for $1 million and a pro-rated share of future royalties if the drug is approved. Harvard did not provide a comment.
Fantasy league: The Celtics may not bring home a real title next year, but they’ll get a shot at a virtual one. The Celtics are joining the NBA’s first professional gaming league, NBA/Take Two. In all, 17 of 30 NBA teams have joined.
In this virtual league, five players from one NBA team play the “NBA 2K” video game against another team. The league games start in early 2018. The industry is no fantasy. It usually involves war or fighting games, but has grown to include so-called esports, which could generate up to $700 million a year.
Hot new startup: David Friend, who founded Boston-based Carbonite, plans to take on Amazon at its own game -- cloud computing. His new company, Wasabi, has raised $8.5 million from investors. Wasabi claims while Amazon charges 2.1 to 2.3 cents per gigabyte per month, it can charge just under four-tenths of one cent for the same amount of storage. Customers, Friend says, can access their data six times faster at Wasabi than Amazon.
Living in America: A House panel voted on party lines to gut the Dodd-Frank bank regulations law enacted after the Great Recession. Democrats contend unwinding the regulations could create the same conditions that led to the financial collapse. Republicans argue the strict rules inhibit economic growth. “I can’t do a good James Brown, but I feel good,” said Representative Jeb Hensarling, the Republican chairman of the committee.
Delta kicks family off flight over toddler seating:
Parents angry they had already paid for child's seat -- Los Angeles Times
Gov’t says majority of Americans only have cell phones:
First time US homes without landlines breaks 50% -- Associated Press
Dunkin’ Donuts reports flat Q1 sales:
Fewer customers donut and Baskin-Robbins customers -- Boston Herald
Cable TV lost more than half-million to cord-cutting:
Netflix, Amazon, Hulu other services provide options -- Recode
Polaris launches $435m tech investment fund:
Invests in tech, biotech, and healthcare companies at all stages -- Boston Business Journal
Google to pay Italy $334m in back taxes:
Comes as Trump considers US tax holiday -- New York Times
New interest in old housing: When the Mary Ellen McCormack housing complex opened in 1938, it was one of America’s first public housing projects and it was called Old Harbor Village.
As the Globe reported today, the old McCormack project is in for a total makeover -- “This Old House” on steroids. Five developers have submitted bids to the Boston Housing Authority for the right to redevelop the 27-acre Mary Ellen McCormack complex. The winner must replace the 79-year-old housing project’s 1,016 low-income housing units, but also gains the right to build market rate housing and perhaps commercial space on the site.
The McCormack redevelopment is part of a larger citywide strategy to enlist private developers to shoulder most of the cost of rebuilding the Boston’s massive public housing stock. Another effort in Charlestown’s Bunker Hill complex attracted bids including a $1 billion plan for about 2,100 market-rate housing units among 1,100 low-income apartments.
As with all real estate, location is key. McCormack is near two T stops and Southie’s beaches. A similar project in Jamaica Plain, far from public transit, drew just a single bid.
Correction: An earlier version of this story misstated the amount Wasabi has raised from investors.