CLT
UPDATE
Friday, June 10, 2005
Gov. Romney, CLT support capital gains tax
fairness
Several CLT members responded to
our request
yesterday for effected taxpayers on the retroactive capital gains tax
issue. Governor Romney initially needed an example to stand with him at
a press conference when he filed his bill to remedy the situation. In
the end, because of his tight schedule, he did a news release instead of
a news conference.
The Governor’s office chose as his example Col. Gaylord MacCartney,
featured in the Governor’s news release (below).
CLT chose Joseph Svelnis, a retired baker, for ours. Others who offered to help but whose
situations were not quite as typical were Duane Batista, Suzanne & David
Bloore, Barrie & Claire Brozenski, Bill Connolly, Thomas Murphy, and Liz
Wrobleski. Thank you all, and prepare to call or write your state
representatives and senators in support of the Governor’s bill.
We’ll let you know when it gets assigned a number and hearing date.
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Barbara Anderson |
The Commonwealth of Massachusetts
Executive Department
State House Boston, MA 02133
(617) 725-4000
June 10, 2005
Contact: Julie Teer
Felix Browne
(617) 725-4025
Romney files legislation to "fix" capital gains error:
Citizens will get refunds, not retroactive tax bills
Governor Mitt Romney today filed legislation to protect Massachusetts
taxpayers from the unfairness of retroactive taxation.
The bill was made necessary by the April 26 decision of the Supreme
Judicial Court, which found that a capital gains tax increase that was
part of the 2002 tax bill passed by the Legislature violated the
Massachusetts Constitution. The Court said because the increase took
effect May 1, 2002, it failed to observe the requirement that taxes be
uniform throughout the entire year.
The SJC determined the effective date of the capital gains tax increase
to be January 1, 2002, meaning thousands of taxpayers who filed their
2002 returns on time and paid their taxes in good faith will be assessed
additional taxes that were not owed under the law as it existed at the
time.
However, the Court offered advice on how to avoid the burden of
retroactive taxation: "It is, of course, within the Legislature's power
to amend the Act yet again, if it wishes, to set the effective date at
January 1, 2003."
Romney said the bill he is filing is consistent with the SJC's guidance
in this case.
"It is fundamentally unfair to tax people retroactively. If we are to
keep faith with the taxpayers of Massachusetts, we need to correct the
constitutional error that occurred here," said Romney.
According to the Department of Revenue, if the January 1, 2002 effective
date is allowed to stand, the state would have to collect an additional
$150 million to $200 million from as many as 120,000 taxpayers. By
changing the date to January 1, 2003, the state would send out refunds
to up to 145,000 taxpayers at a cost of between $225 million and $275
million.
Romney said there are sufficient surplus revenues to cover the cost of
the refunds without affecting current state services.
Gaylord MacCartney, of Westford, is among those affected by the capital
gains mix-up. MacCartney sold real estate in the first half of 2002 to
help pay for his retirement, netting a gain of $150,000. Without a
change in the law, he would be hit with a retroactive tax bill of
approximately $8,000.
"I'm a middle class person. I merely invested in some real estate and
after I sold it, all of a sudden the rules changed," said MacCartney, a
retired air force colonel.
House Minority Leader Bradley H. Jones Jr., who worked closely with the
Governor's Office in drafting the legislation, said, "It is wrong for us
to surprise taxpayers with an unexpected demand for more money. Fairness
and equality are the underpinnings of any good tax code. If the
Governor's bill does not pass, our capital gains tax law will not
reflect these basic principles."
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