CLT Testimony (H.4361)
Testimony for the Joint Committee on Revenue on H.4361
To: Members of the Joint Committee on Revenue
February 22, 2022
Gov. Baker’s proposal for tax relief (H.4361) is long overdue. With the
record billions of surplus revenue dollars pouring into the state
treasury over the past two years, the most important question is: If
not now, when?
On announcing his proposal, Gov. Baker noted: "The cost of just about
everything is going up, and these tax breaks would help offset some of
those costs for families." Although inflation – “the cruelest tax of
all,” now historically high and growing by the day – has affected
everyone, there has always been inflation that has reduced the value of
tax policies for taxpayers as time passes. The time has arrived to
revisit and update lagging tax policies.
For example, the renter’s deduction – a feature of our Proposition 2½
since voters adopted it forty-two years ago – was introduced in CLT’s
law to benefit renters in the sharing of property tax limitation for
landlords. Increasing the deduction for rent payments from $3,000 to
$5,000 – especially considering the long, steady and rising cost of
housing – is overdue, and the governor’s proposal is modest. Going
forward, this deduction should be indexed to the Consumer Price Index,
median family income, or some objective standard, to prevent it from
falling behind in the future.
The same can be said for the most onerous estate tax in the nation, long
outdated and much in need of adjustment just to catch up with past value
lost. The senior circuit breaker property tax credit and the governor’s
other targeted tax relief proposals are all in need of adjustment as
well. Going forward, they too should be indexed to the Consumer Price
Index, median family income, or some objective standard.
The Legislature has recognized the advantage of indexing for inflation
and has adopted this mechanism for automatic legislative salary and
stipend adjustments. Indexing has worked for legislators and can work
as well for taxpayers.
CLT and its members hope this committee will endorse the governor’s tax
relief proposals, H.4361, and the Legislature adopts them. There isn’t
a better time for this.
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