Legislature releasing $500 million tax break package
Lawmakers agree with Baker on helping seniors, renters, parents
HOUSE AND SENATE LEADERS will roll out a $500 million package of tax breaks that will address many – though not all – of the tax cuts that Gov. Charlie Baker has sought to implement.
House Speaker Ron Mariano, Senate President Karen Spilka, and Ways and Means chairs Rep. Aaron Michlewitz and Sen. Michael Rodrigues will announce Monday in a joint statement that House and Senate leaders “have agreed to a framework for structural changes to our tax code that will reduce income inequality, make Massachusetts more competitive nationally, and lessen the crippling impact of rising prices, inflation, and economic uncertainty.”
The exact details of the tax packages are not yet available. The House and the Senate each plan to release their own version of the bills, which will then have to be reconciled. The House’s proposal will come into clearer focus when House leaders release their proposed economic development package on Monday. But the fact that the two bodies agree in concept on which taxes will be included gives them a better chance of passing a final version of the bill before formal legislative sessions end on July 31.
According to the joint statement, the tax package will increase the senior circuit breaker tax credit, the earned income tax credit (which helps taxpayers with low or moderate incomes), and the child and dependent tax credit. It will also offer assistance to renters and it “eliminates the most punitive and archaic elements of our estate tax that have made Massachusetts a national outlier.”
It is not yet possible to compare the details of the two proposals, since the statement from the House and Senate did not put numbers on how exactly lawmakers want to change each of those taxes.
The one item that was included in Baker’s tax plan but is left out entirely of the Democratic legislators’ plan is a reduction in the short-term capital gains tax. Baker said he wanted to cut the short-term capital gains tax in order to make Massachusetts a more competitive business environment. But Sen. Adam Hinds, a Democrat who chairs the Senate Revenue Committee, told CommonWealth last week that lawmakers were going to leave that out of their plan because they “really want to focus on tax relief for those who need it most.”
The latest $500 million tax plan adds to a proposal lawmakers announced last week to spend another $500 million sending one-time payments of $250 to more than 2 million low and middle-income Massachusetts residents.The state is facing a surplus that is in the billions of dollars, fueled by higher-than-expected tax collections along with an influx in federal COVID recovery aid. Baker and state Republicans have for months been urging Democratic leaders in the Legislature to return some of that money to taxpayers.
Now, as residents face inflation and high costs for gasoline and daily necessities, the legislative leaders say the tax package will provide “necessary economic relief” to taxpayers. “We look forward to ironing out the final details of the taxpayer relief package, bringing it to our members for discussion and debate, and ultimately adopting this critical legislation,” the legislative leaders said in their statement.