By Bob Katzen
The House 153-3, approved and sent to the Senate a $1.1 billion tax relief package. Provisions include combining the Child Care Expenses Credit with the Dependent Member of Household Credit to create one refundable $600 credit per dependent, while eliminating the current cap; exempt the first $2 million,
instead of the current $1 million.of the value of a person’s estate from the state’s estate/death tax that a person is required to pay following their death before distribution to any beneficiary; double the Senior Circuit Breaker Tax Credit from $1,200 to $2,400; increase the rental deduction cap from $3,000 to $4,000; reduce the short-term capital gains tax rate from 12 percent to 5 percent; raise the Earned Income Tax Credit from 30 percent to 40 percent of the federal credit; and replace the current business tax from the 3-factor apportionment based on location, payroll, and receipts with a single sales factor apportionment based solely on receipts.
Another provision changes the tax refund distribution formula under a current law, known as 62F, that requires that annual tax revenue above a certain amount collected by the state go back to the taxpayers. Under current law, the money is returned to taxpayers based on how much he or she paid in 2021 taxes, while this tax relief package changes the formula and provides a flat rate refund, unrelated to what the individual paid in taxes.
The measure would also change a current law that provides when the state’s Stabilization Fund, also known as the Rainy Day Fund, exceeds 15 percent of budgeted revenues, the excess is transferred to the Tax Reduction Fund which eventually is returned to taxpayers. The Democrats’ tax relief bill would raise that percent to 25.5 percent.
“We have been focused on how we can help the people of the commonwealth with the cost of living and make life a little easier, and we do so in this legislation,” said Revenue Committee House chair Rep. Mark Cusack (D-Braintree). “We have also focused on our economic competitiveness, and where we can lower and remove our outlier status to make Massachusetts a better place to live, work and invest and we do that in this package as well.”
“With increases to the earned income tax credit, the senior circuit breaker and the renters deduction, there’s a lot in this bill that we can all support,” said Rep. Mike Connolly (D-Cambridge). “And yet, other parts of the bill, such as the big cut to the short-term capital gains tax rate, will disproportionately benefit the very wealthy. In this time of unprecedented inequality, housing emergency and MBTA disaster, I believe we need to reconsider the provisions of this bill that are inequitable and will ultimately deprive us of the revenue we need to invest in our future.”
“Despite the Chapter 62F changes, I voted for the underlying legislation because it will provide over $1 billion in tax relief to Massachusetts residents and business owners,” said Rep. Mike Soter (R-Bellingham).
“Over the last three years, our state has seen a net loss of over 100,000people,” said Paul Craney, spokesperson for Massachusetts Fiscal Alliance. “As the full effect of the income surtax amendment begins to be felt, we’re absolutely going to see that trend continue, but this time with a cohort composed of our largest taxpayers. Our economic competitiveness rankings are in free fall. If our state government is to address this issue and head it off before it becomes catastrophic, they need to take bold action. The changes to the estate and capital gains taxes put forth by the House won’t cut it and the speaker’s attempt to gut the voter approved tax cap and rebate law known as 62F is nothing more than provocation to the taxpayers.
(A “Yes” vote is for the $1.1 billion in tax relief. A “No” vote is against it).
Rep. Christine Barber Yes Rep. Mike Connolly No Rep. Erika Uyterhoeven No