Hartford Business Journal

24 Hartford Business Journal • July 22, 2019 • www.HartfordBusiness.com Opinion & Commentary OTHER VOICES Mexico-Canada trade deal key to New England's continued growth By James T. Brett W hile the U.S. economy continues to show steady signs of growth, there is considerable concern in the business community about current trade policies and their potential to stunt that growth. And rightly so — with 95 percent of the world's consumers located outside of the U.S., it is critical that we have policies in place to promote interna- tional trade and expand access to foreign markets for American busi- nesses. Fortunately, our leaders in Congress have the opportunity to take an impor- tant step to bol- ster U.S. exports and drive continued economic growth by approving the new U.S.-Mexico-Canada Agreement (USMCA), which was signed earlier this year. Approval of this agreement is of particular consequence here in New England, where two of our region's top trade partners are our neighbors to the north and south. The USMCA makes critical updates to modernize the previous trade pact between our three nations — the North American Free Trade Agreement (NAFTA). NAFTA, which was approved and has been in place since 1994, was written before many of the digital tech- nologies that drive our 21st century global economy, such as cloud comput- ing and online commerce, even existed. The USMCA includes important provisions to address such topics as cross-border data flow and data local- ization, and takes key steps to protect U.S. intellectual property. The importance of trade with Canada and Mexico to the New England econ- omy cannot be overstated. Canada is a top-three trade partner for all six New England states, and Mexico is in the top 10 for five of the six states in the region. Exports from the six New England states to Canada and Mexico totaled nearly $13 billion in 2018 alone. That in- cludes $2.9 billion in exports from Con- necticut. Some of the top exports from the Nutmeg State include transportation equipment, chemicals and machinery. At the same time, trade with our North American neighbors supported over 600,000 jobs in New England in 2017, including over 145,000 jobs right here in Connecticut. Some members of Congress have expressed reservations about the USMCA, particularly on such issues as labor and environmental protections, patent exclusivity for certain medi- cines, and enforcement mechanisms. While the business community appre- ciates these concerns, walking away from the USMCA because of them would be, simply put, disastrous. Fortunately, Speaker Nancy Pelosi has taken the initiative to establish a work- ing group to negotiate with Ambassador Robert Lighthizer, the U.S. Trade Repre- sentative, to address these concerns. Several New Englanders — House Ways & Means Committee Chairman Richard Neal of Massachusetts, as well as Connecticut Reps. Rosa DeLauro and John Larson — have been named to this nine-member group, so our region's interests are certainly well- represented and we are confident that the working group will reach a satisfactory resolution. In our 21st century global economy, access to foreign markets is vital to the success of American businesses. It is im- perative, therefore, that the U.S. continue to maintain and expand trade relation- ships with key partners around the globe, and in particular, with our immediate neighbors here in North America. The New England Council is hopeful that Congress will consider the impact of trade with Canada and Mexico on our nation's economic well-being, and will take swift action to approve this important trade deal. James T. Brett is the president and CEO of The New England Council, a non-partisan alliance of businesses and organizations dedicated to promoting economic growth and a high quality of life in New England. RULE OF LAW Taxing nonprofits a losing proposition for CT By John Horak N ew York City Mayor Bill DeBlasio attracted attention earlier this year with his quip "that there's plenty of money in New York, it's just in the wrong hands." The mayor's comment was brought to mind by a June 1 Hartford Courant article ("Hartford Councilman Suggests Taxing Large Nonprofits") describing Councilman James Sanchez's com- ments about reviving "the age-old idea of taxing Hartford's nonprofits." Sanchez wants to tax about 15 major nonprofit organizations in the city. At first glance, these remarks appear unrelated. DeBlasio is talking about billionaires at the top of New York's private sector, whereas Sanchez is taking aim at the top of Hartford's non- profit (charitable) sector. However, the common thread connecting the two is that the gov- ernment's power to take money from some hands and put it into others can be wielded against billionaires and nonprofits alike, depending on the circumstances. In this light, Sanchez's remarks tell us what can happen when govern- ment is unable to sustain itself with private-sector taxation: It reaches for dollars in the hands of its charities. According to the Connecticut Non- profit Alliance, over 40 municipali- ties in the state have been attempt- ing to tax their nonprofits despite a law that says they can't do so. The trend line is not favorable. The 2019 legislative session included two bills that did not advance, but which stand to be resurrected in 2020. The first would impose a levy on any nonprofit that maintains "a pen- sion fund, endowment fund or other significant savings fund or account," and the other would get govern- ment's nose under the nonprofit tent by placing public officials on the governing board of designated educational nonprofits. Financial tugs of war between government and nonprofit organiza- tions are not only unseemly, they are zero-sum games in which the public is the loser. It's simple: Nonprofits have no owners or shareholders, and the law requires them to use their funds to benefit the public interest in ways we all recognize (food pantries, social services, health care, educa- tion and more); consequently, taking money out of nonprofit hands is taking money away from the public that benefits from their operations and puts it into the hands of elected officials to pay government expenses and liabilities (unfunded pension obligations are a case in point). Moreover, the history behind San- chez's use of the term "age old" is more "aged" than nonprofit leaders may realize. America was not always as re- ceptive to charity as it has been in our lifetimes. For most of the 1800s many of the new and growing states were hostile to charity because they needed tax revenue and did not want to deal with exemption claims. The antipathy abated by the early 1900s, but the ques- tion for nonprofit leaders is whether government indebtedness could cause a return of 19th-century attitudes? Time will tell how all of this works out, but my hope is that the problem convinces nonprofit and private-sec- tor organizations they have more in common than they realize — start- ing with the need to enhance private- sector growth (to expand the tax base), and insisting that government get its house in order to keep its hands off of nonprofit bank accounts. People interested in this issue would do well to read the June 24th cover story of this newspaper: "Broken System: Hartford's Exorbitant Com- mercial Property Tax Curbs Economic Growth." The article describes the 2016 decision of Hartford's D&D Market (a "south end" cultural icon) to move to Wethersfield where property taxes are 75 percent lower; while also not- ing that 59 percent of Hartford's real estate is owned by nonprofits and is tax exempt. I am not insensitive to Hartford's cash-flow issues — but, for the reasons stated above, picking the pockets of city charities is unseemly, desperate and a Band-Aid at best, and ignores the more fundamental and entrenched problems facing the recently bailed out Capital City and the state. John M. Horak is the director of TANGO Nonprofit Education and Consulting. His opinions are his own. James T. Brett John Horak

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