Tax break blueprint offered
MTF sees path to easing burden
The Bay State is in an even better place to provide economic relief to residents now than it was last year and should act accordingly, a non-partisan tax policy group says in its latest report.
“After increasing tax collections by more than $11 billion over two years and passing the largest tax increase in two decades, Massachusetts is in the position where tax relief is not just affordable, but important,” the Massachusetts Taxpayers Foundation wrote along with their Tax Policy Next Steps in 2023 report.
Gov. Maura Healey is supposed to file her first budget after taking office by March 1. Along with it, the former attorney general turned chief executive has promised she will release a tax reform plan for the Legislature to consider and which will be aimed at providing the sort of tax relief nearly achieved last session.
The plan, though the governor has been coy about the details, will most likely focus on those communities most hard hit by the pandemic and rising inflation.
“I will be filing, at the same time as my budget on March 1, a tax package. It’s a tax package directed at making life more affordable for folks, and we are busy putting the final touches on that proposal right now,” Healey said last week.
According to the foundation, though, Healey should also consider changes that will encourage higher-income workers to stay in and around Boston’s tech hub.
“Crafting a package that takes on key costs for historically marginalized communities and working families, while reducing incentives for taxpayer relocation is challenging, but doable,” the group asserts.
The foundation proposes the governor consider changes to the short term capital gains tax, the estate tax cliff and threshold, the senior circuit breaker, a rental deduction, the child tax credit and the so-called sting tax on Scorps.
All of that, the foundation says, would cost the state about $1.1 billion per year, more than twice the cost of the economic development bill nearly passed last summer and which would have made some of those changes.
That’s even more than the plan proposed by former Gov. Charlie Baker last January, which would have cost about $700 million per year.
Still, the foundation says, Baker made his proposal when the commonwealth’s future looked good. It looks fantastic right now, they say.
“Important facts have changed. The state’s fiscal situation is stronger, cost pressures on residents are greater, and the surtax makes several historic tax outliers even more problematic. These factors all support a tax package that is larger and goes further than 2022 proposals,” they wrote.