CHANGE DISTRIBUTION FORMULA FOR $2.9 BILLION IN TAX RELIEF (HD 5394)

By Bob Katzen

Rep. Mike Connolly (D-Cambridge) has filed a bill that would change the formula for how $2.9 billion in tax refunds will be distributed to taxpayers based on Chapter 62F, a 1986 law approved by the voters. That law requires that tax revenue above a certain amount collected by the state go back to the taxpayers on a proportional basis equal to the amount of state income tax they paid the state in 2021. Auditor Suzanne Bump has determined that the net state tax revenues of $41,812,654,358 for the fiscal year ended June 30, 2022 is $2,941,499,731 above the allowable state tax revenues of $38,871,154,627.

Connolly’s measure would establish a $6,500 limit on the maximum tax credit an individual taxpayer in Massachusetts can receive under the mandatory refund law.
Gov. Charlie Baker’s office has estimated that individuals’ refunds will total about 13 percent of how much a taxpayer paid to Massachusetts in personal income tax in 2021. MassBudget says that the average millionaire will get a refund check of an estimated $22,000, while the average low-income worker will receive a mere $9.
“In this time of soaring inflation and economic hardship for so many of our constituents, the goal of this bill is to limit Chapter 62F tax credits for those with million-dollar incomes and then redistribute the resulting excess to taxpayers who have incomes under one million dollars,” said Connolly. “Under our proposal, 99.4 percent of Ch. 62F refund recipients would see an additional $200 included in their refund checks next month. That’s why I’ve dubbed the bill ‘Putting More Money In More People’s Pockets.’ The fastest way to get this bill approved would be to include its concepts in the pending economic development bill or the closeout supplemental budget. For my part, I am advocating for a return to formal sessions if necessary because we understand many residents are being crushed by the rising cost of living and these bills could offer some additional relief.”
Co-sponsor Rep. Jamie Belsito (D-Topsfield) said, “When I am at home talking with my mother who lives in senior housing, and she’s telling me that her friends in her housing complex can’t even buy food that they normally could have bought six to 12 months ago because of inflation—we’re not going to cut a $25,000 check for top earners in our state and turn around and say to our seniors, who are barely keeping it together, ‘here’s a $9 check for you.’”
“CLT’s 1986 tax cap law can cynically be termed ‘flawed’ only by an avowed member of the Democratic Socialists of America like state Rep. Mike Connolly,” said Chip Ford, executive director of Citizens for Limited Taxation who called the measure absurd and dubbed it as “Revenge of the Socialists.”

“The law as drafted and adopted was specifically intended as a tax refund of excess revenue in proportion to that which was extracted from each taxpayer. The more you paid into the state treasury the larger in dollars your refund would be … CLT’s tax cap refund was never considered, never mind intended, to be nor become a revenue redistribution scheme. The Merriam-Webster dictionary defines ‘refund’ as: 1: the act of refunding; 2: a sum refunded. Words it lists as synonymous to refund are ‘reimburse’ or ‘repay.’ It is and has always intended to be a proportional refund of excess revenue to those who paid it.”

“The voters in 1986 sent a clear message to Statehouse politicians that when the state collects too much money from its taxpayers, the state is obligated to refund the money collected from each taxpayer in a fair and even amount,” said Paul Craney, a spokesperson for the Massachusetts Fiscal Alliance. “Despite this clear message, our modern-day left-wing politicians want to break with the will of the voters so they can redistribute the money the way they see fit. The same politicians who are promising the 80 percent income tax hike will be spent on transportation and education are attempting to subvert the will of the voters who passed the 1986 rebate law. It’s deceptive and dishonest and the public needs to be weary. The contradiction could not be any clearer. Don’t trust these politicians.”

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