Baker has reservations on Senate tax plan

A DAY AFTER THE STATE SENATE took a major step towards accomplishing one of his tax policy priorities, Gov. Charlie Baker on Wednesday expressed disappointment that they didn’t match his own earned income tax credit expansion.

Baker also reiterated his plan to phase out the film tax credit as a way to pay for his version of the earned income tax credit expansion – the Senate on Tuesday approved an amendment creating a commission to examine the film tax credit.

“I was disappointed that they didn’t go as far as we did,” Baker said.

Senate lawmakers on Tuesday approved a plan that increases personal tax exemptions for individuals and married couples, while increasing the earned income tax credit to 22.5 percent of the federal credit. Under their proposal, the plan would be paid for by freezing the income tax rate at the current 5.15 percent rate rather than allowing it to fall to 5 percent under an existing statutory schedule.

Baker noted that his version of the proposal increases the earned income tax credit to 30 percent of the federal credit.

“I think our way of financing it, which is through a phase-out of the film tax credit, is a better way to go about doing it,” Baker told reporters. “We’ll see what happens through the rest of the process, legislatively.”

Asked about freezing the income tax rate, which was approved as lawmakers debated the fiscal 2016 state budget, Baker said, “I just don’t think it’s a good idea to raise taxes on one group of people at the same time you’re reducing taxes on another.”

Baker noted that voters in 2000 approved a measure rolling the income tax to 5 percent. “And the Legislature made a commitment, put a process in place that would get them there through a formula and that formula has been working for the better part of 15 years,” he said.

Baker added, “But as I said, I like the fact that they talked about the earned income tax credit, I like the fact that they clearly seem interested in doing something about it. It would help 400,000 low income working families here in the Commonwealth.”

Cutting the income tax to 5 percent was not a major theme for Baker during his 2014 run for governor, but it was a key priority for Baker when he ran unsuccessfully against Gov. Deval Patrick in 2010.

In April 2010, Baker said he would try to restore the state’s sales and income tax rates to 5 percent and reduce the state workforce by 5,000 within four years of taking office. “My goal would be to do it in my first term,” Baker said at the time. “That’s obviously a function of a lot of moving parts.”

Michael Norton contributed reporting.