Tax Credits/ State government

Tax tutorial by Sen. Adam Hinds

State flush with cash, but he sees need for millionaire tax

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THE STATE IS FLUSH  with cash right now, but Sen. Adam Hinds of Pittsfield said he doesn’t think that will stop the Legislature this week from passing and sending along to voters a constitutional amendment placing a 4 percent surtax on incomes over $1 million. 

Hinds, a leader on Beacon Hill on tax and revenue issues, said on The Codcast that state tax revenues are surging beyond anyone’s expectation and Massachusetts is sitting on $5.3 billion from the federal government. But he said he intends to vote for the so-called millionaire tax this week and he believes most of his colleagues will as well.

“For most of us, I don’t think this unique moment of the revenue picture is changing how we’re looking at that vote,” said the Democratic lawmaker.

Hinds said the federal money is one-time assistance that should only be used for one-time investments; he said the state needs the millionaire tax to provide sustainable sources of revenue for education and transportation. The senator said polling suggests the public strongly supports the idea of taxing incomes over $1 million. “People see the value of this,” he said. 

As for the $5.3 billion in federal funds, Hinds said he supports efforts by the Legislature to gain greater control over how it is spent. That responsibility initially rested with Gov. Charlie Baker, but lawmakers are moving legislation to take control of the money. Hinds said it made sense to give Baker more authority during the pandemic, but with society slowly returning to normal it makes sense for the Legislature to assert its authority. “At a certain point we need to right the balance,” he said. 

Hinds said he expects the Legislature will take testimony over how the money should be spent and then allocate it in some form of budget-like process. He said his priorities would be using the money to capitalize a public bank, to close the digital divide, and to expand child care.

A public bank would be owned by the state of Massachusetts and prioritize access to the banking system (loans, checking accounts, etc.) and public policy (affordable housing, renewable energy) over profits. North Dakota has had a public bank for more than 100 years, but few other states or municipalities have followed its lead, although the idea has gained steam in recent years.

Hinds also wants to prioritize closing the digital divide, but not for the reasons one might expect from a lawmaker representing rural western Massachusetts.  “I’ve personally always viewed this as a rural versus urban dynamic,” he said. “But we’ve really found that 21 percent of Massachusetts [residents don’t] have a hard line into their home and 93 percent of those are in our downtowns and urban areas. It’s not an infrastructure problem; it’s a poverty issue.”

Hind is also a member of the state’s Tax Expenditure Review Commission, established by the Legislature to periodically review the state’s 200 or so tax breaks and determine whether their cost in terms of foregone tax revenue justifies their cost. He won approval during the Senate’s budget debate of language eliminating three obscure tax credits that have rarely been used. He also supported a more controversial Senate provision paring back the cost of the film tax credit.

The House and Senate budgets take very different approaches to the film tax credit. The House voted unanimously to eliminate the sunset date and make permanent the existing film tax credit, which offers those shooting movies, TV series, and commercials tax credits equal to 25 percent of what they spend in Massachusetts. The Senate extended the sunset date of the film tax credit another four years, required productions to spend more money in Massachusetts, and capped salaries eligible for the tax credit at $1 million. The two approaches must now be reconciled by a small conference committee of House and Senate lawmakers.

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Bruce Mohl

Editor, CommonWealth
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About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Backers of the House position say the Senate proposal would kill the emerging film industry in Massachusetts, while Hinds stakes out middle ground on the issue. While the Tax Expenditure Review Commission said the estimated cost per job of $100,000 was too high, Hinds said that cost estimate from the Department of Revenue is outdated and doesn’t take into account the growth of streaming series that stay in the state longer and spend a lot more money. 

Hinds said he saw the economic benefits firsthand when the series Dexter filmed in his district, but he said it makes sense to promote more spending in Massachusetts while capping spending on big-name film stars and directors. 

“We all agree that what is happening in the Massachusetts film industry is exciting. No one wants to curtail that development,” he said. But he also thinks some of the Senate measures make sense. “I think there are some elements of this that should stick,” he said.

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