 |
Post Office Box 1147
▪
Marblehead, Massachusetts 01945
▪ (781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
48 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
|
CLT UPDATE
Sunday, July 10, 2022
Token "Tax Relief" To
Arrive For Some — Pre-Election
Jump directly
to CLT's Commentary on the News
|
Most Relevant News
Excerpts
(Full news reports follow Commentary)
|
|
Massachusetts continues to be swimming in cash.
After dire
warnings early in the pandemic, COVID-19 has proven
to be an economic boon to Massachusetts, primarily
because of federal largesse. Congress’ COVID
recovery packages have funneled billions of dollars
into the state, through government aid and aid to
individuals and businesses, which translates into
higher tax revenue.
On
Wednesday, the business-backed Massachusetts
Taxpayers Foundation provided the latest stunning
figures. The organization estimates that for the
fiscal 2022 year, which ended June 30, Massachusetts
will have a budget surplus of nearly $3.6 billion.
The
initial fiscal 2022 budget was around $34.5 billion,
and collections have come in nearly $6 billion above
that, according to MTF. Some of that extra money was
eaten up by additional spending and required
deposits into the rainy day fund, the MBTA, and the
School Building Authority, leaving an estimated $3.6
billion available.
That is a
huge figure, even in comparison to the prior fiscal
year, where there was a $1.5 billion surplus.
The reason
this is important is as lawmakers finish up the
two-year legislative session this month, they will
have to make some major spending decisions. If
lawmakers do nothing, the entire surplus will be
deposited in the rainy day fund. But with that fund
already at a record high, more likely they will look
to spend a large chunk of the money.
One option
is tax relief....
The
Revenue Committee recently released Baker’s bill and
a slate of others, indicating that they are still
considering changes to the estate tax, the earned
income tax credit, and tax breaks for seniors and
renters. Notably, the committee did not release
Baker’s proposal to lower the tax rate on short-term
capital gains. Senate Revenue Committee chair Adam
Hinds said this is because lawmakers “really want to
focus on tax relief for those who need it most.”
CommonWealth Magazine
Thursday, July 7, 2022
Budget surplus could reach
$3.6 billion
With
inflation pinching family budgets and the state
sitting on historic surpluses, many Massachusetts
taxpayers would qualify for one-time economic relief
rebates from state government under a $500 million
plan top Democrats unveiled Thursday.
Legislative leaders announced they will move to
create a Taxpayer Energy and Economic Relief Fund
that would pay $250 to qualifying Bay Staters who
filed individual tax returns and $500 for married
taxpayers who filed joint returns, a proposal the
Senate's budget chief described as a "first step"
that keeps other tax relief proposals in play as the
two-year session careens toward a close.
"Whether
it is the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has
heard loud and clear that increased costs due to
inflation have cut into family budgets," House
Speaker Ronald Mariano, Senate President Karen
Spilka, House Ways and Means Committee Chair Aaron
Michlewitz and Senate Ways and Means Committee Chair
Michael Rodrigues said in a joint statement. "That
is why we are proud to announce that the
Massachusetts Legislature will act to establish the
Taxpayer Energy and Economic Relief Fund, through
which economic relief rebates for individuals and
families will be issued."
Individual
taxpayers who reported earning between $38,000 and
$100,000 in annual income in 2021 will be eligible.
For married couples, the minimum annual income to
qualify would also be $38,000 and the maximum would
be $150,000.
The
rebates would be issued to qualifying taxpayers by
Sept. 30, lawmakers said....
In an
interview with the News Service, Rodrigues said the
package would cost "about $500 million," all of
which he said would come from a booming fiscal year
2022 budget surplus. He added that legislative
leaders are in "active, regular discussions on
providing other long-term tax relief to the citizens
of the commonwealth."
Asked
which tax relief options remain on the table after
months of public debate, Rodrigues replied,
"Everything."
"This is
the first step," the Westport Democrat said of the
rebate plan. "This is immediate relief so that you
don't have to wait until you actually file your
taxes to see relief."
State
House News Service
Thursday, July 7, 2022
One-Time Rebates Planned
For Economic Relief
House, Senate Leaders Envision Rebates Arriving By
September
“The
Legislature’s ‘Taxpayer Energy and Economic Relief
Fund’ proposal is a good start in reimbursing
taxpayers for the muti-billion-dollar over-taxation
revenue surpluses bonanza of the past two years,”
said Chip Ford, executive director of
Citizens for Limited Taxation. “Anything that
reduces taxpayers’ burden especially in this economy
is welcomed, but this will only reduce the pain for
a few weeks in the fall. Gov. Baker’s tax relief
bill offers broader and long-overdue structural tax
reforms. It also needs consideration and adoption.
Clearly there is sufficient surplus revenue for
both.”
“This is a
poorly thought-out gimmick being done right before
the election simply to score points with voters,
plain and simple,” said Mass Fiscal Alliance
spokesman Paul Craney. “Meaningful relief should be
broad based and focused on lowering taxes on the
people they most effect. Picking winners and losers
through arbitrary brackets, as well as penalizing
married couples more likely to have families
depending on them, is a poor way for our out of
touch Legislature to show solidarity with the
privations their ill-conceived economic policies are
currently forcing Massachusetts families to contend
with.”
Beacon
Hill Roll Call
July 4-8, 2022
$250 or $500 Tax Rebate to Some
Taxpayers
Top
Massachusetts lawmakers on Thursday announced a plan
to send potentially millions of taxpayers a one-time
$250 rebate by October to help offset the rising
cost of gasoline and other consumer products, yet
would exclude many of the state’s poorest residents.
The
proposal has to pass both legislative branches by
July 31 and be signed by Governor Charlie Baker to
take effect. But legislative leaders pitched it as
an initial step and separate from wider tax
legislation they’re still weighing in response to
months-long calls for substantive tax relief.
Dubbed the
Taxpayer Energy and Economic Relief Fund, the
proposal would provide the rebates by Sept. 30, with
$250 going to taxpayers who file an individual
return and $500 for married taxpayers filing
jointly, according to legislators. Those eligible
would have to have reported a minimum of $38,000 in
2021 income, and not more than $100,000 for
individual filers or $150,000 for joint filers....
“These
rebates represent the Legislature’s commitment to
delivering immediate financial relief directly to
residents of the Commonwealth,” the lawmakers said.
The
legislative leaders said they also are weighing
changes to the tax code to deliver “additional
relief,” saying they “recognize the need for
structural change as well.” ...
The state
is awash in cash at the moment. The Massachusetts
Taxpayers Foundation, a business-backed budget
watchdog, projected this week that lawmakers will
have a surplus of nearly $3.6 billion from the
fiscal year that ended last week, an amount it
called “historic.”
That money
also comes on top of $2.3 billion in federal
stimulus money the state has yet to spend....
Lawmakers
have faced increasing pressure to move on taxpayer
relief before their legislative session ends this
month. Baker has pressed them to embrace a $700
million package of tax breaks he filed in January
that includes proposals to double the maximum credit
low-income seniors can claim to offset property
taxes and double a pair of refundable tax credits
people can claim for dependents or child care.
Anisha
Chakrabarti, a Baker spokesperson, emphasized
Baker’s changes would be permanent, not one-time
measures.
“Cutting
these taxes is the only way to deliver a real break
to the seniors, renters, low-income workers, and
parents who more than deserve it,” she said, adding
that Baker would review any tax relief proposal that
reaches his desk.
The
Boston Globe
Thursday, July 7, 2022
Mass. lawmakers
pledge a no-strings-attached $250 rebate
to taxpayers — but not all of them
Political
leaders say they will issue rebate payments to
taxpayers in September in lieu of suspending the gas
tax, acknowledging that budgets are tight and people
need some relief.
The
Massachusetts Fiscal Alliance quickly slammed the
move as a “poorly thought out gimmick.”
“Picking
winners and losers through arbitrary brackets, as
well as penalizing married couples more likely to
have families depending on them, is a poor way for
our out-of-touch Legislature to show solidarity with
… Massachusetts families,” Paul Diego Craney,
spokesman for the Alliance, said in a release.
House
Speaker Ronald Mariano and Senate President Karen
Spilka said in a joint release that “whether it is
the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has
heard loud and clear that increased costs due to
inflation have cut into family budgets.”
They added
lawmakers will establish the Taxpayer Energy and
Economic Relief Fund that will award the rebates.
According
to the release, payments will be issued based on an
individual’s 2021 income tax return, with an income
cap of $100,000 for individual filers and $150,000
for joint filers. A person must have made at least
$38,000 to be eligible for the rebate.
“One-time
rebates of $250 for a taxpayer who files an
individual return, and $500 for married taxpayers
who file joint returns, will be issued to eligible
Massachusetts residents before September 30, 2022,”
the legislators said in their release.
The
Boston Herald
Thursday, July 7, 2022
No gas tax break in
Massachusetts:
Lawmakers issue rebate checks instead
How do you
spell relief? For the Democratic leaders of Beacon
Hill, it's R-E-B-A-T-E-S.
Nearly
four months after saying they would study ways to
put some money back into the pockets of taxpayers
feeling the pinch of inflation and the pain of high
gas prices, legislative leaders announced this week
that they have agreed to, well, put some money back
into the pockets of some taxpayers.
The
late-session proposal still needs to be written,
debated, approved and signed by a governor who has
watched his own tax relief ideas be slow-walked by
the Legislature, but it would send one-time rebates
of $250 this fall to an estimated two million
taxpayers who made between $38,000 and $100,000 last
year (or $500 for joint filers who made between
$38,000 and $150,000).
It is
exactly the kind of tax relief that Democrats have
said they were interested in as they repeatedly
swatted away other ideas like the state gas tax
suspension that President Joe Biden called for. In
March, for example, Revenue Committee co-chair Rep.
Mark Cusack said his committee was looking to offer
"real relief and real money in the pockets of
everyone across the commonwealth, not just drivers."
So why
now? Well, the size of the surplus from the budget
year that just ended is starting to come into view,
with the Mass. Taxpayers Foundation estimating that
lawmakers will have a "historic" surplus of about
$3.6 billion to spend down once all the accountants
have their say....
If $500
million is all that the Legislature feels it can
"afford" to return to the taxpayers -- additional
tax relief remains under discussion -- it begs the
question of what lawmakers think they need the rest
of the estimated $3.6 billion surplus for and why
they didn't plan for those needs in the first place.
Remember: the surplus is the money that's come in
beyond what lawmakers unanimously agreed last year
was going to be enough to meet the state's needs
while also stashing money in a reserve account
that's already at record levels....
Either the
same lawmakers who are now going [to] decide how to spend
the surplus were way off last year or $3 billion
worth of new problems cropped up in the last
year....
"This is a
poorly thought-out gimmick being done right before
the election simply to score points with voters,
plain and simple," the right-leaning Mass. Fiscal
Alliance's Paul Craney, who has been calling for tax
relief for months, said. "[I]f this is the best plan
they can come up with it should be rejected." ...
Republican
gubernatorial candidate Chris Doughty said he
welcomes relief for taxpayers. But like Craney, he
suggested there might be a political motivation
behind the Democrats' long-awaited proposal.
"After
waiting months, I can't help but wonder why the
checks would be going out in September? With the
mail-in ballot process beginning 45 days before the
election, the September timeframe looks awfully
suspicious," Doughty said.
State
House News Service
Friday, July 8, 2022
Weekly Roundup - Tax Relief
Downpayment
The state
started a new fiscal year without a formal budget,
for the fifth year in a row, as lawmakers continued
to wrangle behind closed doors over a final spending
package.
The fiscal
year began Friday, July 1, but lawmakers haven’t
reached agreement on controversial policy issues and
other sticking points in the nearly $50 billion
plan.
Massachusetts is one of only two states —
Pennsylvania is the other — without an approved
fiscal 2023 budget, according to the National
Conference of State Legislatures. Michigan’s state
lawmakers passed a final budget package on Friday,
sending it to Gov. Gretchen Whitmer for review....
Tardy
spending packages have become common on Beacon Hill
in recent years, with the past six state budgets
coming in after the July 1 deadline.
The Salem
News
Tuesday, July 5, 2022
Mass. among last states to approve
budget, again
Nearly
three quarters (73 percent) of Massachusetts
business leaders think business associates will
leave the state if a constitutional amendment
appearing on the November ballot to hike taxes is
successful, according to a
survey conducted by
Pioneer Institute.
Pioneer
was invited to survey members of the Retailers
Association of Massachusetts and the state chapter
of the National Federation of Independent
Businesses. Local chambers of commerce also
participated in the survey, and a total of 133
individuals responded.
“The
survey suggests that business owners and executives
are beginning to realize the negative impacts on the
economy and tax base of the tax hike amendment,”
said Pioneer Executive Director Jim Stergios.
“Small
business owners are nearing a breaking point
following pandemic-related shutdowns and
restrictions, labor shortages, supply chain
disruptions, and now record high inflation,” added
Christopher Carlozzi, state director of the National
Federation of Independent Business. “Instead of
increasing taxes for job creators, Massachusetts
must create an atmosphere that encourages economic
growth and expansion.”
Pioneer
Institute
Wednesday, July 6, 2022
Survey of Business Sentiment:
MA Income Tax Hike Would Lead to Employer Exodus
If you
spike it, they will leave.
That’s the
gist of a Pioneer Institute survey of Massachusetts
business leaders, which asked if they thought
companies would leave the state if a constitutional
tax hike amendment on the November ballot is
successful. A whopping 73% said we can expect a rush
for the exits.
Pioneer
surveyed members of the Retailers Association of
Massachusetts and the state chapter of the National
Federation of Independent Businesses. Local chambers
of commerce also participated.
These are
the people who understand how businesses work and
the different factors that have an impact on a
company’s success or failure.
They are
swimming against the tide on this one....
Mostly
small “pass-through” businesses such as S
corporations, partnerships and limited liability
corporations pay taxes via individual returns, and
57% of those surveyed report the largest portion of
their income on individual returns and would be
subject to the surtax.
The tax
hike will hit many who’ve poured years into their
businesses: 72% said they plan to retire in the next
decade and 56% said they plan to sell their
businesses within that period. Of those planning to
sell, 58% said they expect the gain from the
business sale would exceed $1 million, making them
subject to the surtax.
So much
for the fruits of your labor.
“Those
numbers should be a wake-up call that our Main
Streets are in danger in coming years, and that our
public policy leaders need to make sure the
commonwealth has tax and employment laws that will
foster a whole new generation of entrepreneurs and
risk takers,” said Retailers Association of
Massachusetts President Jon Hurst.
Unfortunately, the progressive emphasis isn’t on
innovating, creating and earning, it’s on ramped up
taxing and spending. That’s not how you “Make it in
Massachusetts.”
A Boston
Herald editorial
Thursday, July 7, 2022
‘Fair Share’ tax means
farewell to many businesses
Massachusetts voters in November will consider a
constitutional amendment that would impose an annual
4 percent surcharge on incomes over $1 million. The
debate over the surcharge and the merits of the two
common types of income taxation—graduated and
flat—will likely focus on the “fairness” of tax
rates and the “ability to pay.” A related debate
will also flare: whether the amendment will drive
higher-income taxpayers out of the Commonwealth and
into the arms of low-or-no-income-tax states....
Amendment
Article 44 of the Massachusetts Constitution,
adopted in 1915, provides: “Full power and authority
are hereby given and granted to the general court to
impose and levy a tax on income, in the manner
hereinafter provided. Such tax may be at different
rates upon income derived from different classes of
property, but shall be levied at a uniform rate
throughout the Commonwealth upon incomes derived
from the same class of property. The general court
may tax income not derived from property at a lower
rate than income derived from property, and may
grant reasonable exemptions and abatements.”
This
amendment authorized, among other things, the first
statewide income tax, while barring graduated rates.
It responded in part to the intrastate migration of
wealthy Massachusetts personal property taxpayers in
the mid-to-late late 1800s and early 1900s....
Tax
collectors in the small suburbs and resorts like
Nahant were only too happy to provide havens for the
rich commuters and summer residents, assessing them
at face value for what they were permitted to see
with their own eyes, leaving the hidden intangibles
to the owner and his conscience.”
Harvard
economist Charles J. Bullock, in his 1916 history of
Massachusetts taxation, likewise noted that
“personal property [in the post-Civil War era] was
rapidly migrating from Boston, and between 1869 and
1873 not less than $13,900,000 of taxable personal
estate was removed from Boston to eight suburban
towns and Newport, Rhode Island.” ...
In the
coming debate this fall, an income tax surcharge—not
a personal property tax on financial instruments—is
at issue. But, as voters weigh predictions about a
possible “flight of capital” from Massachusetts,
they might recall that taxpayer flight was itself a
catalyst for the existing “flat” income tax rate
required by Article 44. The history of Article 44
shows that 19th-century Massachusetts taxpayers
often voted with their feet.
CommonWealth Magazine
Sunday, July 3, 2022
Look at the history: Taxes do
make the wealthy migrate
By Thomas A. Barnico
The
state’s highest court is moving with
uncharacteristic swiftness to weigh a recent
challenge by the Massachusetts Republican Party that
argues a new law that makes universal mail-in voting
permanent is not constitutional.
At stake
is the VOTES Act, a sweeping election law that makes
no-excuse mail-in voting permanent, expands early
voting options, and implements post-election audits,
among other reforms. The law offers millions of
Massachusetts voters the ability to vote before
primary and general election days from the comfort
of their homes with no reason needed.
With two
months until this year’s Sept. 6 primary, time is of
the essence. Oral arguments are set for Wednesday
morning, less than two weeks after the Republican
Party filed its lawsuit, which claimed mail ballots
introduce the potential for fraud in elections.
Meanwhile,
Secretary of State William F. Galvin is readying to
send ballot applications to more than 4.7 million
voters by July 23, he said. Millions of dollars in
postage have already been purchased, and the proofs
for ballot design and signage have been approved. He
said, for now, his office is waiting on the court’s
green light....
But with
the COVID-19 emergency no longer in effect, the
Republican Party argues that the method should not
be made permanent, claiming that mail-in voting is
“vulnerable to fraud” and that, ultimately, the
Legislature does not have the power to make laws
“contrary to this constitution.”
The
chairman of the Massachusetts Republican Party, GOP
candidates for state and federal office, a member of
the Massachusetts Republican State Committee, and a
member of a ballot question committee challenged the
law the day after Baker signed the bill, and sought
an emergency temporary restraining order to enjoin
Galvin from implementing the VOTES Act for the
primary and general state elections. Last Tuesday,
Galvin’s office filed a motion to dismiss the
complaint and an opposition to the motion for a
temporary restraining order....
Attorney
General Maura Healey filed an 87-page brief Tuesday
defending the new law on behalf of Galvin’s office,
arguing that the VOTES Act makes it easier for
qualified voters to cast their ballots, and that the
new law “reflects the most recent, reasoned judgment
of the Legislature on how best to regulate the
manner of elections in the Commonwealth.”
She called
the Republican Party’s argument against the law
“threadbare,” arguing that their brief “fails to
articulate a single plausible claim that anything in
the VOTES Act poses a threat to secure voting.” She
also characterized the Republican Party’s arguments
as “scaremongering,” asserting that the new law is
in line with the state constitution.
GOP Party
Chair Jim Lyons declined to comment ahead of the
arguments, but said in a statement last week that
the state Legislature “violated the Constitution
when it made emergency pandemic-era mail-in voting
laws permanent.”
“When we
take something special like Election Day and expand
it into Election Month . . . we are harming people’s
time-tested faith in our elections, and that trust
is something we can never get back once it’s gone,”
he said....
Geoff
Foster, of Common Cause Massachusetts, said he is
confident the court will rule in the state’s favor,
and that lawmakers will feel emboldened to further
expand voting access, such as passing laws to allow
same-day voter registration or to lower the voting
age to 16 for local elections.
“The hope
here is that this could make the green light even
brighter for the Legislature to take further action
to make access to voting even stronger,“ said
Foster, who filed an amicus brief in the case. “It
will be important to have the precedent.”
The
Boston Globe
Tuesday, July 5, 2022
State’s high court to hear
GOP challenge to Mass. mail-in voting law
The
Supreme Judicial Court is poised to decide whether
to overturn the new law allowing Massachusetts
residents to vote by mail for any reason....
The brief
argues that early voting by mail is different from
absentee voting, and the Constitution “says nothing
whatsoever about early voting, a different species
of balloting statutorily created by the
Legislature.” ...
Assistant
Attorney General Adam Hornstine argued in court that
the Legislature has “broad power to act absent any
specific circumscription of that authority by the
Constitution.”
“Early
voting by mail wasn’t on the minds of the framers
during the 1917 constitutional convention,”
Hornstine said. “Though there may be practical
similarities between absentee voting and early
voting by mail, the two have a different origin, the
two have a different genesis.” Hornstine said the
Constitution set a floor for absentee voting but
“didn’t say the Legislature couldn’t go beyond that
to allow more people to participate in a free, fair,
and orderly election in the commonwealth.”
[Justice
Scott] Kafker questioned that interpretation,
noting, “It doesn’t say it sets a minimum, that’s
your gloss.”
The court
will also consider whether early and mail-in voting
should be allowed for primaries, the rules for which
are not laid out in the Constitution. Kafker sounded
skeptical that any argument can be made for not
allowing early and mail-in voting for primaries,
telling Walsh bluntly, “Your brief doesn’t make any
sense on this point.”
CommonWealth Magazine
Wednesday, July 6, 2022
SJC hears arguments
on whether to allow permanent voting by mail
Republicans challenged new law as unconstitutional
For
self-evident reasons, in-person voting inherently
protects against wide-scale fraud as an individual
must face an election officer as they check in to
vote. No election system is perfect, but in-person
voting has grounded the commonwealth’s elections
throughout its history and built public confidence
in our democratic system.
Absentee
voting was only first allowed in 1917 when the state
constitutional convention of that year specifically
added an amendment providing for absentee balloting
when a voter was going to be out of town. As a
lawmaker said at the time, the Legislature wanted to
let “the soldiers, the traveling men, and the
laboring man who may be kept away, or the railroad
man” vote. Further allowances for absentee voting
for “disability” and religion-based conflict with
election day were later added.
When COVID
swept across Massachusetts in 2020-2021, the
progressives on Beacon Hill saw an opportunity to
work around the constitutional structure and throw
out over 300 years of voting integrity.... Remember,
under COVID, everybody was “disabled” and,
therefore, every single voter could vote by mail
under the constitution. At least that was the
talking point by the powers on high.
The people
of Massachusetts, and America generally, are not
stupid. They are a reasonably thoughtful people who
only want fairness and transparency in their
elections. Democracy has thrived in America because
of faith in our elections. But when mail-in voting
swept across America and the commonwealth under
“COVID emergency powers” in the last presidential
and state election people lost faith....
“There’s
been a long-term traditional view that opportunities
to vote by mail in Massachusetts are constrained by
the Constitution, which specifies particular
conditions under which you can do this,” said Evan
Horowitz, executive director of the Center for State
Policy Analysis at Tufts University in Commonwealth
Magazine in 2021. In fact, the state legislature
conceded the constitutional restrictions on mail in
voting when it took up the issue in the 2013
legislative session. Indeed, Secretary of State
William Galvin acknowledged these concerns back in
2013.
But
apparently Galvin has memory loss. He helped guide
the Legislature in passing a universal mail-in
voting law which Governor Charlie Baker signed into
law on June 22. Along with myriad questionable
provisions (including the ability to vote
electronically when overseas), this law will mail a
ballot to every registered voter which they can mail
back. No identification required. No proof of who
actually voted. All the dead people on the voter
rolls now get a second chance to live. No
constitutionally limited requirement for disability,
religious conflict or located out of town on
election day.
The
MassGOP and others immediately filed a lawsuit
asking the Supreme Judicial Court to rule the law
unconstitutional. Galvin retorted that the lawsuit
was “baseless,” “without merit,” and “really
outrageous.” Calling 2013 Bill Galvin. Please come
back to us.
The
Boston Herald
Wednesday, July 6, 2022
Universal mail-in voting in
Massachusetts unconstitutional
By James P. Ehrhard |
Chip Ford's CLT
Commentary |
|
CommonWealth Magazine
reported on Thursday ("Budget surplus could reach
$3.6 billion"):
Massachusetts continues to be swimming in cash.
After dire
warnings early in the pandemic, COVID-19 has proven
to be an economic boon to Massachusetts ...
On
Wednesday, the business-backed Massachusetts
Taxpayers Foundation provided the latest stunning
figures. The organization estimates that for the
fiscal 2022 year, which ended June 30, Massachusetts
will have a budget surplus of nearly $3.6 billion.
The
initial fiscal 2022 budget was around $34.5 billion,
and collections have come in nearly $6 billion above
that, according to MTF. Some of that extra money was
eaten up by additional spending and required
deposits into the rainy day fund, the MBTA, and the
School Building Authority, leaving an estimated $3.6
billion available.
That is a
huge figure, even in comparison to the prior fiscal
year, where there was a $1.5 billion surplus.
The reason
this is important is as lawmakers finish up the
two-year legislative session this month, they will
have to make some major spending decisions. If
lawmakers do nothing, the entire surplus will be
deposited in the rainy day fund. But with that fund
already at a record high, more likely they will look
to spend a large chunk of the money.
One option
is tax relief....
The
Revenue Committee recently released Baker’s bill and
a slate of others, indicating that they are still
considering changes to the estate tax, the earned
income tax credit, and tax breaks for seniors and
renters. Notably, the committee did not release
Baker’s proposal to lower the tax rate on short-term
capital gains. Senate Revenue Committee chair Adam
Hinds said this is because lawmakers “really want to
focus on tax relief for those who need it most.”
Choking on
another such publicly recognized massive annual
over-taxation revenue surplus
— and with an election looming just a short
few months away — the
Legislature had to do something to assuage
the public that it "feels your pain," that it
recognizes that taxpayers deserve tax relief, a
refund of some sort.
Later on Thursday, the State
House News Service reported ("One-Time Rebates Planned
For Economic Relief —
House, Senate Leaders Envision Rebates Arriving By
September"):
With
inflation pinching family budgets and the state
sitting on historic surpluses, many Massachusetts
taxpayers would qualify for one-time economic relief
rebates from state government under a $500 million
plan top Democrats unveiled Thursday.
Legislative leaders announced they will move to
create a Taxpayer Energy and Economic Relief Fund
that would pay $250 to qualifying Bay Staters who
filed individual tax returns and $500 for married
taxpayers who filed joint returns, a proposal the
Senate's budget chief described as a "first step"
that keeps other tax relief proposals in play as the
two-year session careens toward a close.
"Whether
it is the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has
heard loud and clear that increased costs due to
inflation have cut into family budgets," House
Speaker Ronald Mariano, Senate President Karen
Spilka, House Ways and Means Committee Chair Aaron
Michlewitz and Senate Ways and Means Committee Chair
Michael Rodrigues said in a joint statement. "That
is why we are proud to announce that the
Massachusetts Legislature will act to establish the
Taxpayer Energy and Economic Relief Fund, through
which economic relief rebates for individuals and
families will be issued."
Individual
taxpayers who reported earning between $38,000 and
$100,000 in annual income in 2021 will be eligible.
For married couples, the minimum annual income to
qualify would also be $38,000 and the maximum would
be $150,000.
The
rebates would be issued to qualifying taxpayers by
Sept. 30, lawmakers said....
In an
interview with the News Service, Rodrigues said the
package would cost "about $500 million," all of
which he said would come from a booming fiscal year
2022 budget surplus. He added that legislative
leaders are in "active, regular discussions on
providing other long-term tax relief to the citizens
of the commonwealth."
Asked
which tax relief options remain on the table after
months of public debate, Rodrigues replied,
"Everything."
"This is
the first step," the Westport Democrat said of the
rebate plan. "This is immediate relief so that you
don't have to wait until you actually file your
taxes to see relief."
This
surprise tax refund proposal from Democrat leaders
in the House and Senate appeared so abruptly that The
Boston Globe noted ("Mass. lawmakers
pledge a no-strings-attached $250 rebate
to taxpayers — but not all of them"):
. . . The rebate
plan, while welcome news for many families, surprised some.
Representative Bradley Jones, the House’s top Republican, said
he first learned of it after reading it in the media, and said
he hopes lawmakers can still pass “permanent and meaningful tax
relief.”
I too was
one of the surprised. I first learned of it
when contacted by Beacon Hill Roll Call for my
response immediately after the news broke.
Whichever legislator came up with this scheme
is either a committee chair with its $15,000 bonus
"stipend" — or soon will
be! In
its weekly report, Beacon
Hill Roll Call noted some of the reactions ("$250 or $500 Tax Rebate to Some
Taxpayers") on Friday:
“The
Legislature’s ‘Taxpayer Energy and Economic Relief
Fund’ proposal is a good start in reimbursing
taxpayers for the muti-billion-dollar over-taxation
revenue surpluses bonanza of the past two years,”
said Chip Ford, executive director of Citizens for Limited Taxation. “Anything that
reduces taxpayers’ burden especially in this economy
is welcomed, but this will only reduce the pain for
a few weeks in the fall. Gov. Baker’s tax relief
bill offers broader and long-overdue structural tax
reforms. It also needs consideration and adoption.
Clearly there is sufficient surplus revenue for
both.”
“This is a
poorly thought-out gimmick being done right before
the election simply to score points with voters,
plain and simple,” said Mass Fiscal Alliance
spokesman Paul Craney. “Meaningful relief should be
broad based and focused on lowering taxes on the
people they most effect. Picking winners and losers
through arbitrary brackets, as well as penalizing
married couples more likely to have families
depending on them, is a poor way for our out of
touch Legislature to show solidarity with the
privations their ill-conceived economic policies are
currently forcing Massachusetts families to contend
with.”
Beacon Hill Roll Call noted: "A $250 rebate would go, by September 30, to individual
taxpayers and a $500 rebate to married taxpayers.
Eligibility will be determined by annual income reported in
2021, with the minimum income required to be $38,000, and
the maximum $100,000 for individual filers and $150,000 for
joint filers."
I question why there is a
cutoff at incomes of $100,000 for individual tax filers, $150,000
for joint filers — who paid the
preponderance if not most of the obscene revenue surplus bonanza.
I question how much financial relief a one-time shot of $250 per
individual, $500 per couple (in inflated dollars) will provide in an
8.6% and climbing Bidenflation climate with his accompanying $5 per
gallon gas costs and the Fed's rising interest rates, and for how
long. I question why only a relatively piddling $500 million
refund is provided from a $3.6 billion revenue surplus created by
over-taxation. I do not wonder about the immediacy and
apparent rush to get the checks out to taxpayers by September
— so they'll arrive in voters' hands
right before the November election.
Alas, I'm not the only one
with questions.
In its "Weekly Roundup - Tax Relief
Downpayment" the State
House News Service pondered out loud:
If $500
million is all that the Legislature feels it can
"afford" to return to the taxpayers -- additional
tax relief remains under discussion -- it begs the
question of what lawmakers think they need the rest
of the estimated $3.6 billion surplus for and why
they didn't plan for those needs in the first place.
Remember: the surplus is the money that's come in
beyond what lawmakers unanimously agreed last year
was going to be enough to meet the state's needs
while also stashing money in a reserve account
that's already at record levels....
Either the same lawmakers
who are now going [to] decide how to spend the
surplus were way off last year or $3 billion
worth of new problems cropped up in the last
year.
On that topic of
"additional tax relief" contained within the governor's proposal
which "remains under discussion," The Boston Globe
reported:
[Sen. Michael] Rodrigues, the
Senate’s budget chief, said lawmakers intend to tuck the rebate
proposal into a wider economic development bill that, too, has
yet to emerge. The Westport Democrat said he could also not
provide a timeline for a wider tax relief bill.
“There will
still be other relief long-term,” he said.
The Legislature apparently
feels it has dodged the tax relief bullet with this token
"tax relief" stunt. I'd
advise to not hold your breath waiting for any further relief or
refund from that $3.6 Billion revenue surplus, though the period to
do so is short. The Legislature
has only three weeks to go before they disappear from the State
House for the remainder of the year ("The Best Legislature Money Can
Buy's" next taxpayer-funded vacation), and it still has a mountain of
other overdue major legislation to rush through by the July
31 deadline.
CLICK ON ABOVE GRAPHIC FOR
THE FULL REPORT
The Pioneer
Institute on Wednesday released its latest report on
the likely effects to the Bay State's economy if the
sixth proposed graduated income tax (aka, the
"Fair Share Amendment" or "Millionaire's Tax")
constitutional amendment is approved by voters in
November. Its "Survey of Business Sentiment:
MA Income Tax Hike Would Lead to Employer Exodus"
study found:
Nearly
three quarters (73 percent) of Massachusetts
business leaders think business associates will
leave the state if a constitutional amendment
appearing on the November ballot to hike taxes is
successful, according to a survey conducted by
Pioneer Institute.
Pioneer
was invited to survey members of the Retailers
Association of Massachusetts and the state chapter
of the National Federation of Independent
Businesses. Local chambers of commerce also
participated in the survey, and a total of 133
individuals responded.
“The
survey suggests that business owners and executives
are beginning to realize the negative impacts on the
economy and tax base of the tax hike amendment,”
said Pioneer Executive Director Jim Stergios.
“Small
business owners are nearing a breaking point
following pandemic-related shutdowns and
restrictions, labor shortages, supply chain
disruptions, and now record high inflation,” added
Christopher Carlozzi, state director of the National
Federation of Independent Business. “Instead of
increasing taxes for job creators, Massachusetts
must create an atmosphere that encourages economic
growth and expansion.”
A Boston
Herald editorial on Thursday ("‘Fair Share’ tax means
farewell to many businesses") opined:
If you
spike it, they will leave.
That’s the
gist of a Pioneer Institute survey of Massachusetts
business leaders, which asked if they thought
companies would leave the state if a constitutional
tax hike amendment on the November ballot is
successful. A whopping 73% said we can expect a rush
for the exits.
Pioneer
surveyed members of the Retailers Association of
Massachusetts and the state chapter of the National
Federation of Independent Businesses. Local chambers
of commerce also participated.
These are
the people who understand how businesses work and
the different factors that have an impact on a
company’s success or failure.
They are
swimming against the tide on this one....
Mostly
small “pass-through” businesses such as S
corporations, partnerships and limited liability
corporations pay taxes via individual returns, and
57% of those surveyed report the largest portion of
their income on individual returns and would be
subject to the surtax.
The tax
hike will hit many who’ve poured years into their
businesses: 72% said they plan to retire in the next
decade and 56% said they plan to sell their
businesses within that period. Of those planning to
sell, 58% said they expect the gain from the
business sale would exceed $1 million, making them
subject to the surtax.
So much
for the fruits of your labor.
“Those
numbers should be a wake-up call that our Main
Streets are in danger in coming years, and that our
public policy leaders need to make sure the
commonwealth has tax and employment laws that will
foster a whole new generation of entrepreneurs and
risk takers,” said Retailers Association of
Massachusetts President Jon Hurst.
Unfortunately, the progressive emphasis isn’t on
innovating, creating and earning, it’s on ramped up
taxing and spending. That’s not how you “Make it in
Massachusetts.”
Last Sunday
CommonWealth Magazine presented an intriguing
historical insight into Massachusetts' previous
experience with taxation and wealth migration in "Look at the history: Taxes do
make the wealthy migrate" by Thomas A. Barnico:
Massachusetts voters in November will consider a
constitutional amendment that would impose an annual
4 percent surcharge on incomes over $1 million. The
debate over the surcharge and the merits of the two
common types of income taxation—graduated and
flat—will likely focus on the “fairness” of tax
rates and the “ability to pay.” A related debate
will also flare: whether the amendment will drive
higher-income taxpayers out of the Commonwealth and
into the arms of low-or-no-income-tax states....
Amendment
Article 44 of the Massachusetts Constitution,
adopted in 1915, provides: “Full power and authority
are hereby given and granted to the general court to
impose and levy a tax on income, in the manner
hereinafter provided. Such tax may be at different
rates upon income derived from different classes of
property, but shall be levied at a uniform rate
throughout the Commonwealth upon incomes derived
from the same class of property. The general court
may tax income not derived from property at a lower
rate than income derived from property, and may
grant reasonable exemptions and abatements.”
This
amendment authorized, among other things, the first
statewide income tax, while barring graduated rates.
It responded in part to the intrastate migration of
wealthy Massachusetts personal property taxpayers in
the mid-to-late late 1800s and early 1900s....
Tax
collectors in the small suburbs and resorts like
Nahant were only too happy to provide havens for the
rich commuters and summer residents, assessing them
at face value for what they were permitted to see
with their own eyes, leaving the hidden intangibles
to the owner and his conscience.”
Harvard
economist Charles J. Bullock, in his 1916 history of
Massachusetts taxation, likewise noted that
“personal property [in the post-Civil War era] was
rapidly migrating from Boston, and between 1869 and
1873 not less than $13,900,000 of taxable personal
estate was removed from Boston to eight suburban
towns and Newport, Rhode Island.” ...
In the
coming debate this fall, an income tax surcharge—not
a personal property tax on financial instruments—is
at issue. But, as voters weigh predictions about a
possible “flight of capital” from Massachusetts,
they might recall that taxpayer flight was itself a
catalyst for the existing “flat” income tax rate
required by Article 44. The history of Article 44
shows that 19th-century Massachusetts taxpayers
often voted with their feet.
"Those
who fail to learn from history are doomed to repeat
it."
|
 |
 |
|
Chip Ford
Executive Director |
|
|
|
CommonWealth
Magazine
Thursday, July 7, 2022
Budget surplus could reach $3.6 billion
By Shira Schoenberg
Massachusetts continues to be swimming in cash.
After dire warnings early in the pandemic, COVID-19 has
proven to be an economic boon to Massachusetts, primarily
because of federal largesse. Congress’ COVID recovery
packages have funneled billions of dollars into the state,
through government aid and aid to individuals and
businesses, which translates into higher tax revenue.
On Wednesday, the business-backed Massachusetts Taxpayers
Foundation provided the latest stunning figures. The
organization estimates that for the fiscal 2022 year, which
ended June 30, Massachusetts will have a budget surplus of
nearly $3.6 billion.
The initial fiscal 2022 budget was around $34.5 billion, and
collections have come in nearly $6 billion above that,
according to MTF. Some of that extra money was eaten up by
additional spending and required deposits into the rainy day
fund, the MBTA, and the School Building Authority, leaving
an estimated $3.6 billion available.
That is a huge figure, even in comparison to the prior
fiscal year, where there was a $1.5 billion surplus.
The reason this is important is as lawmakers finish up the
two-year legislative session this month, they will have to
make some major spending decisions. If lawmakers do nothing,
the entire surplus will be deposited in the rainy day fund.
But with that fund already at a record high, more likely
they will look to spend a large chunk of the money.
One option is tax relief. Gov. Charlie Baker has proposed a
$700 million tax break package, and lawmakers are
considering but have not yet released their own tax relief
package. The Revenue Committee recently released Baker’s
bill and a slate of others, indicating that they are still
considering changes to the estate tax, the earned income tax
credit, and tax breaks for seniors and renters. Notably, the
committee did not release Baker’s proposal to lower the tax
rate on short-term capital gains. Senate Revenue Committee
chair Adam Hinds said this is because lawmakers “really want
to focus on tax relief for those who need it most.”
Baker in May filed a $1.7 billion supplemental budget for
fiscal 2022 that included money for a wide range of
transportation, housing, environmental, education, and
economic development initiatives. It included funding for
offshore wind port development, Cape Cod water and sewer
projects, housing construction, financial assistance to
businesses, and public college building projects. The
Legislature has not yet acted on this bill, but if they do,
lawmakers are likely to replace many of Baker’s priorities
with their own.
Baker also filed the FORWARD Act, a $3.5 billion economic
development bill that relied on federal American Rescue Plan
Act money in addition to state surplus to invest in a range
of building projects, including money for climate
resiliency, clean energy, state parks, downtown
reinvestment, housing production, and workforce training. A
House committee reported out a slimmer, $1.2 billion bill
that did not rely on the ARPA money, according to the State
House News Service. That bill is still pending.
“My sense is you’ll see the Legislature take up some pretty
big spending bills using some FY22 resources,” predicted
Doug Howgate, executive vice president at the Massachusetts
Taxpayers Foundation.
While formal sessions end July 31, lawmakers have in recent
years delayed passing a closeout budget for the prior fiscal
year until sometime in the fall – often upsetting the state
comptroller who can’t close the year’s books until that
happens. So some decisions could be delayed. But if
lawmakers are not in formal sessions, the opposition of a
single lawmaker can derail a bill, and they cannot override
Baker’s vetoes.
“The more complicated or policy intensive a big spending
bill is, the more benefits there are to get it done before
July 31,” Howgate said.
State House News
Service
Thursday, July 7, 2022
One-Time Rebates Planned For Economic Relief
House, Senate Leaders Envision Rebates Arriving By September
By Chris Lisinski
With inflation pinching family budgets and the state sitting
on historic surpluses, many Massachusetts taxpayers would
qualify for one-time economic relief rebates from state
government under a $500 million plan top Democrats unveiled
Thursday.
Legislative leaders announced they will move to create a
Taxpayer Energy and Economic Relief Fund that would pay $250
to qualifying Bay Staters who filed individual tax returns
and $500 for married taxpayers who filed joint returns, a
proposal the Senate's budget chief described as a "first
step" that keeps other tax relief proposals in play as the
two-year session careens toward a close.
"Whether it is the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has heard
loud and clear that increased costs due to inflation have
cut into family budgets," House Speaker Ronald Mariano,
Senate President Karen Spilka, House Ways and Means
Committee Chair Aaron Michlewitz and Senate Ways and Means
Committee Chair Michael Rodrigues said in a joint statement.
"That is why we are proud to announce that the Massachusetts
Legislature will act to establish the Taxpayer Energy and
Economic Relief Fund, through which economic relief rebates
for individuals and families will be issued."
Individual taxpayers who reported earning between $38,000
and $100,000 in annual income in 2021 will be eligible. For
married couples, the minimum annual income to qualify would
also be $38,000 and the maximum would be $150,000.
The rebates would be issued to qualifying taxpayers by Sept.
30, lawmakers said.
In an interview with the News Service, Rodrigues said the
package would cost "about $500 million," all of which he
said would come from a booming fiscal year 2022 budget
surplus. He added that legislative leaders are in "active,
regular discussions on providing other long-term tax relief
to the citizens of the commonwealth."
Asked which tax relief options remain on the table after
months of public debate, Rodrigues replied, "Everything."
"This is the first step," the Westport Democrat said of the
rebate plan. "This is immediate relief so that you don't
have to wait until you actually file your taxes to see
relief."
It was not immediately clear Thursday how many Massachusetts
residents would qualify for the one-time payments. Those on
the lowest rung of the income ladder would be ineligible
because the plan as outlined requires an individual to have
reported a minimum of $38,000 in annual income last year.
Rodrigues noted that the Legislature last year approved a
$460 million program offering checks of $500 for
lower-income Bay Staters. Through two rounds of payments,
roughly 830,000 workers have received checks.
"It's all a numbers game as far as fitting this income,
these income limits in what we could afford to invest back
to the taxpayers immediately, which is $500 million,"
Rodrigues said.
The Senate Ways and Means chair said he expects the fiscal
year 2022 surplus will come in "a little over $3 billion."
The Department of Revenue still has not yet reported its
monthly tax haul for June, a figure that Rodrigues said will
be "not insignificant."
Last week, the Massachusetts Taxpayers Foundation projected
the Legislature will have a $3.6 billion surplus on hand
once final accounting of FY22, which ended June 30, wraps
up.
Legislative leaders did not lay out a specific timeline for
debating a bill creating the program, and Rodrigues said
only that it would take place "before July 31."
The proposed payments come as Bay Staters grapple with
soaring inflation that has driven up the price of basic
household goods and several continuous months of record gas
prices. Legislative leaders previously shot down pushes to
lift the state's 24-cents-per-gallon gas tax, and while they
have kept other tax relief options in play, they have moved
slowly and have not yet embraced a specific plan.
Transportation Committee Co-chair Rep. William Straus linked
the rebate plan to votes rejecting suspension of the state's
gas tax.
"Today's proposal for direct rebate checks by this September
to eligible taxpayers of $250 per person will bring relief
where it is deserved," Straus, a Mattapoisett Democrat, said
in a statement. "A direct system of energy rebate checks to
our eligible taxpayers is the more thoughtful and beneficial
way to provide the relief we know our constituents want and
deserve. This approach will not depend on the 'good will' of
the energy companies to pass along the tax cuts that earlier
Republican proposals would have provided to them."
Gov. Charlie Baker, who would need to sign off on any
legislation creating a tax rebate program, in January
proposed a $700 million package that would offer tax breaks
for renters, seniors, parents and low-income workers and
make changes to the estate and capital gains taxes in
Massachusetts.
The Revenue Committee advanced a $600 million version of
that bill last week that scrapped Baker's proposal to
decrease the short-term capital gains tax rate while keeping
most of the rest of the bill intact, but the bill is
expected to evolve before it emerges for a vote.
A Baker spokesperson did not immediately respond to
questions Thursday about the plan legislative leaders rolled
out.
Beacon Hill Roll
Call
Volume 47 - Report No. 27
July 4-8, 2022
$250 or $500 Tax Rebate to Some Taxpayers
By Bob Katzen
$250 OR $500 TAX REBATE TO SOME TAXPAYERS – The House and
Senate leadership unveiled legislation that would use some
of the state’s estimated $3.6 billion surplus to give
one-time tax rebates to an estimated 2 million eligible
people. The package is estimated to cost $500 million.
A $250 rebate would go, by September 30, to individual
taxpayers and a $500 rebate to married taxpayers.
Eligibility will be determined by annual income reported in
2021, with the minimum income required to be $38,000, and
the maximum $100,000 for individual filers and $150,000 for
joint filers.
“Whether it is the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has heard
loud and clear that increased costs due to inflation have
cut into family budgets,” said speaker of the House Ron
Mariano, Senate President Karen Spilka, House Ways and Means
Chair Aaron Michlewitz and Senate Ways and Means Chair Mike
Rodrigues, in a joint statement.
The statement continued, “These rebates represent the
Legislature’s commitment to delivering immediate financial
relief directly to residents of the commonwealth, rather
than to large oil companies that continue to profit off
economic uncertainty and international conflict and follow
our efforts to provide $500 in premium pay for lower income
front-line workers during the pandemic. As we recognize the
need for structural change as well, we continue to work on
potential changes to the tax code with the goal of providing
additional relief to residents.”
“The Legislature’s ‘Taxpayer Energy and Economic Relief
Fund’ proposal is a good start in reimbursing taxpayers for
the muti-billion-dollar over-taxation revenue surpluses
bonanza of the past two years,” said Chip Ford,
executive director of Citizens for Limited Taxation.
“Anything that reduces taxpayers’ burden especially in this
economy is welcomed, but this will only reduce the pain for
a few weeks in the fall. Gov. Baker’s tax relief bill offers
broader and long-overdue structural tax reforms. It also
needs consideration and adoption. Clearly there is
sufficient surplus revenue for both.”
“This is a poorly thought-out gimmick being done right
before the election simply to score points with voters,
plain and simple,” said Mass Fiscal Alliance spokesman Paul
Craney. “Meaningful relief should be broad based and focused
on lowering taxes on the people they most effect. Picking
winners and losers through arbitrary brackets, as well as
penalizing married couples more likely to have families
depending on them, is a poor way for our out of touch
Legislature to show solidarity with the privations their
ill-conceived economic policies are currently forcing
Massachusetts families to contend with.”
Critics also took a swipe at the measure because it doesn’t
provide a rebate for lower-income taxpayers earning less
than $38,000. Marie-Frances Rivera, president of the
Massachusetts Budget and Policy Center, said that rebates
that exclude people earning less than $38,000 is not
targeted tax relief to people who need it the most and are
struggling to pay rent every month.
Mariano responded at a press conference and pointed out that
the Legislature several months ago had already spent $490
million on low-income folks who were adversely affected by
the COVID loss of jobs. “So we felt we had addressed a lot
of the needs there,” said Mariano. “The next step was to
move up and take care of the folks who are in that middle
income area that so often is neglected.”
Some opponents said it is also unfair to exclude people
earning over $100,000 from the rebate. They noted that if
you have three children and earn $100,000 you are not
exactly rich.
The Boston
Globe
Thursday, July 7, 2022
Mass. lawmakers pledge a no-strings-attached $250 rebate
to taxpayers — but not all of them
By Matt Stout
Top Massachusetts lawmakers on Thursday announced a plan to
send potentially millions of taxpayers a one-time $250
rebate by October to help offset the rising cost of gasoline
and other consumer products, yet would exclude many of the
state’s poorest residents.
The proposal has to pass both legislative branches by July
31 and be signed by Governor Charlie Baker to take effect.
But legislative leaders pitched it as an initial step and
separate from wider tax legislation they’re still weighing
in response to months-long calls for substantive tax relief.
Dubbed the Taxpayer Energy and Economic Relief Fund, the
proposal would provide the rebates by Sept. 30, with $250
going to taxpayers who file an individual return and $500
for married taxpayers filing jointly, according to
legislators. Those eligible would have to have reported a
minimum of $38,000 in 2021 income, and not more than
$100,000 for individual filers or $150,000 for joint filers.
A Senate official estimated the package would cost between
$500 million and $510 million, and could be financed by an
expected multibillion-dollar budget surplus from the fiscal
year that ended June 30. Representative Mark J. Cusack, the
House chairman of the revenue committee, said more than 2
million taxpayers could receive a rebate.
“Whether it is the rising price of gas, groceries, or summer
clothes for kids, the Massachusetts Legislature has heard
loud and clear that increased costs due to inflation have
cut into family budgets,” Senate President Karen E. Spilka
and House Speaker Ronald Mariano said in a joint statement
with the Legislature’s two budget chiefs, Representative
Aaron Michlewitz and Senator Michael J. Rodrigues.
“These rebates represent the Legislature’s commitment to
delivering immediate financial relief directly to residents
of the Commonwealth,” the lawmakers said.
The legislative leaders said they also are weighing changes
to the tax code to deliver “additional relief,” saying they
“recognize the need for structural change as well.”
The rebate plan, while welcome news for many families,
surprised some. Representative Bradley Jones, the House’s
top Republican, said he first learned of it after reading it
in the media, and said he hopes lawmakers can still pass
“permanent and meaningful tax relief.”
Several budget watchers also questioned the decision to
exclude those making less than $38,000 from the program.
Speaking to reporters Thursday, Mariano said the state had
sent $500 checks to more than 800,0000 low-income residents
as part of a sweeping COVID-19 recovery package. That $460
million initiative limited payments to those who made at
least $12,750 in income from a job and whose total income
did not exceed 300 percent of the federal poverty level.
Under 2021 guidelines, that would be nearly $39,000 for an
individual.
“We felt we had addressed a lot of the needs there,” said
Mariano, a Quincy Democrat. “The next step was to move up
and take care of folks who are in that middle-income area
that is so often neglected.”
Alan Clayton-Matthews, an economist and Northeastern
University professor emeritus, said he understands the
legislators’ reasoning, but argued that some of the
lowest-income workers would still benefit from the rebate
despite getting a check from the state in the spring.
“So some people get $750 or $1,000 in total. Those would be
the poorest filers anyway,” he said. ”That was then, and
people do need this now.”
The state is awash in cash at the moment. The Massachusetts
Taxpayers Foundation, a business-backed budget watchdog,
projected this week that lawmakers will have a surplus of
nearly $3.6 billion from the fiscal year that ended last
week, an amount it called “historic.”
That money also comes on top of $2.3 billion in federal
stimulus money the state has yet to spend.
Lawmakers have faced increasing pressure to move on taxpayer
relief before their legislative session ends this month.
Baker has pressed them to embrace a $700 million package of
tax breaks he filed in January that includes proposals to
double the maximum credit low-income seniors can claim to
offset property taxes and double a pair of refundable tax
credits people can claim for dependents or child care.
Anisha Chakrabarti, a Baker spokesperson, emphasized Baker’s
changes would be permanent, not one-time measures.
“Cutting these taxes is the only way to deliver a real break
to the seniors, renters, low-income workers, and parents who
more than deserve it,” she said, adding that Baker would
review any tax relief proposal that reaches his desk.
Democratic lawmakers have repeatedly rejected calls,
including from President Biden, to suspend the state’s gas
tax, arguing there’s no guarantee oil companies would pass
the savings on to drivers at the pump. Representative
William M. Straus, the House chairman of the transportation
committee, said Thursday that the rebates would provide
“real and significant relief” for those hit by rising energy
prices.
“This approach will not depend on the ‘good will’ of the
energy companies to pass along the tax cuts that earlier
Republican proposals would have provided to them,” the
Mattapoisett Democrat said in a statement.
But others wondered how far the rebates would actually go.
Marie-Frances Rivera, president of the left-leaning
Massachusetts Budget and Policy Center, said other avenues,
such as through the state’s earned income tax credit, could
provide “more substantive tax relief” for residents,
including for poor workers excluded from the rebate plan.
Rebates that exclude those making less than $38,000 is “not
targeted tax relief to folks who need it the most at this
time,” Rivera said. A check for “$250 or $500 can be
helpful, but folks are struggling to pay rent. And rent is
due every month and is far more than $250 or $500.”
The Massachusetts Fiscal Alliance, a conservative group
that’s pressed lawmakers to embrace a tax relief package,
criticized the rebates as a “poorly thought-out gimmick”
timed for an election year.
“Picking winners and losers through arbitrary brackets, as
well as penalizing married couples more likely to have
families depending on them, is a poor way” to show
solidarity with struggling residents, said Paul Craney, a
group spokesman.
The rebate plan emerged as lawmakers remain locked in
negotiations over the now late $50 billion state budget.
Massachusetts began the month as one of just three states
that had yet to finalize a spending plan for the fiscal year
that, in Massachusetts, began July 1, and it’s unclear when
an agreement could ultimately surface.
Rodrigues, the Senate’s budget chief, said lawmakers intend
to tuck the rebate proposal into a wider economic
development bill that, too, has yet to emerge. The Westport
Democrat said he could also not provide a timeline for a
wider tax relief bill.
“There will still be other relief long-term,” he said.
The Boston
Herald
Thursday, July 7, 2022
No gas tax break in Massachusetts:
Lawmakers issue rebate checks instead
By Matthew Medsger
Political leaders say they will issue rebate payments to
taxpayers in September in lieu of suspending the gas tax,
acknowledging that budgets are tight and people need some
relief.
The Massachusetts Fiscal Alliance quickly slammed the move
as a “poorly thought out gimmick.”
“Picking winners and losers through arbitrary brackets, as
well as penalizing married couples more likely to have
families depending on them, is a poor way for our
out-of-touch Legislature to show solidarity with …
Massachusetts families,” Paul Diego Craney, spokesman for
the Alliance, said in a release.
House Speaker Ronald Mariano and Senate President Karen
Spilka said in a joint release that “whether it is the
rising price of gas, groceries, or summer clothes for kids,
the Massachusetts Legislature has heard loud and clear that
increased costs due to inflation have cut into family
budgets.”
They added lawmakers will establish the Taxpayer Energy and
Economic Relief Fund that will award the rebates.
According to the release, payments will be issued based on
an individual’s 2021 income tax return, with an income cap
of $100,000 for individual filers and $150,000 for joint
filers. A person must have made at least $38,000 to be
eligible for the rebate.
“One-time rebates of $250 for a taxpayer who files an
individual return, and $500 for married taxpayers who file
joint returns, will be issued to eligible Massachusetts
residents before September 30, 2022,” the legislators said
in their release.
The legislators say the rebate is being issued in lieu of a
suspension of the gas tax, which they have repeatedly said
would only benefit oil companies and would not actually
lower the price at the pump.
“These rebates represent the Legislature’s commitment to
delivering immediate financial relief directly to residents
of the Commonwealth, rather than to large oil companies that
continue to profit off economic uncertainty and
international conflict, and follow our efforts to provide
$500 in premium pay for lower-income front-line workers
during the pandemic,” they said.
Spilka has said many times the Legislature lacks the ability
to force fuel sellers to pass any savings from a gas tax
suspension onto consumers. Mariano has pointed to
Connecticut, where the tax has been suspended, which has gas
just a few cents cheaper than Massachusetts.
The Legislature will also continue to work on other forms of
tax relief, they said.
A January proposal by Gov. Charlie Baker to provide about
$700 million in tax relief for renters, seniors, low income
residents, and to reduce the capital gains and estate taxes,
left a House committee last week closer to $600 million and
absent the governor’s plan to change the capital gains tax.
State House News
Service
Friday, July 8, 2022
Weekly Roundup - Tax Relief Downpayment
Recap and analysis of the week in state government
By Colin A. Young
How do you spell relief? For the Democratic leaders of
Beacon Hill, it's R-E-B-A-T-E-S.
Nearly four months after saying they would study ways to put
some money back into the pockets of taxpayers feeling the
pinch of inflation and the pain of high gas prices,
legislative leaders announced this week that they have
agreed to, well, put some money back into the pockets of
some taxpayers.
The late-session proposal still needs to be written,
debated, approved and signed by a governor who has watched
his own tax relief ideas be slow-walked by the Legislature,
but it would send one-time rebates of $250 this fall to an
estimated two million taxpayers who made between $38,000 and
$100,000 last year (or $500 for joint filers who made
between $38,000 and $150,000).
It is exactly the kind of tax relief that Democrats have
said they were interested in as they repeatedly swatted away
other ideas like the state gas tax suspension that President
Joe Biden called for. In March, for example, Revenue
Committee co-chair Rep. Mark Cusack said his committee was
looking to offer "real relief and real money in the pockets
of everyone across the commonwealth, not just drivers."
So why now? Well, the size of the surplus from the budget
year that just ended is starting to come into view, with the
Mass. Taxpayers Foundation estimating that lawmakers will
have a "historic" surplus of about $3.6 billion to spend
down once all the accountants have their say.
At a cost of $500 million to $510 million, the rebate plan
would not quite reach the pockets of everyone across the
commonwealth. Instead, given the income restrictions, it
would help a little more than half of all income tax filers
in Massachusetts -- there were 3,952,750 income tax returns
filed for tax year 2018, according to the most recently
released Department of Revenue analysis.
"It's all a numbers game as far as fitting this income,
these income limits in what we could afford to invest back
to the taxpayers immediately, which is $500 million," Senate
budget chief Michael Rodrigues said this week.
If $500 million is all that the Legislature feels it can
"afford" to return to the taxpayers -- additional tax relief
remains under discussion -- it begs the question of what
lawmakers think they need the rest of the estimated $3.6
billion surplus for and why they didn't plan for those needs
in the first place. Remember: the surplus is the money
that's come in beyond what lawmakers unanimously agreed last
year was going to be enough to meet the state's needs while
also stashing money in a reserve account that's already at
record levels.
Rodrigues a year ago said the fiscal year 2022 budget was "a
forward-looking, fiscally responsible plan that doubles down
on our commitment to an equitable recovery; bolsters our
Rainy Day fund, ensuring healthy reserves for years to come,
and more importantly, leaves our Commonwealth in a much
stronger fiscal position than before the COVID-19 pandemic."
Either the same lawmakers who are now going [to] decide how to
spend the surplus were way off last year or $3 billion worth
of new problems cropped up in the last year.
"If we gave all the money back, they'd be complaining that
we didn't do enough for roads and education," Mariano said
Thursday, correctly pointing out that "people are going to
be upset no matter what we do."
Sure enough...
"This is a poorly thought-out gimmick being done right
before the election simply to score points with voters,
plain and simple," the right-leaning Mass. Fiscal Alliance's
Paul Craney, who has been calling for tax relief for months,
said. "[I]f this is the best plan they can come up with it
should be rejected."
Democratic candidate for attorney general Quentin Palfrey
tweeted Friday, "It is so frustrating that Beacon Hill would
exclude low income people from a measure that seeks to
alleviate the economic pain of rising costs -- that's who
needs it the most!"
Republican gubernatorial candidate Chris Doughty said he
welcomes relief for taxpayers. But like Craney, he suggested
there might be a political motivation behind the Democrats'
long-awaited proposal.
"After waiting months, I can't help but wonder why the
checks would be going out in September? With the mail-in
ballot process beginning 45 days before the election, the
September timeframe looks awfully suspicious," Doughty said.
And wouldn't you know it, two Democrats with
tougher-than-usual elections this cycle were quick Thursday
to try to claim some modicum of credit for the agreement
between leaders at the highest levels of the Legislature.
"Massachusetts residents deserve immediate financial support
through these difficult times, and I am proud and honored
that my policy proposal to offset high gas prices will put
money back in Bay Staters' pockets..." Sen. Becca Rausch
said Thursday. She drew a straight line from a budget
amendment she filed in May -- which the Senate rejected --
that would have spent $500 million by sending $200 debit
cards to people who own or lease a car and reported certain
levels of income to Thursday's announcement.
Republican Rep. Shawn Dooley of Norfolk is challenging
Rausch, a Needham Democrat, for her seat in the Senate,
which she narrowly flipped in 2018 when the district had
different boundaries. She's one of just 15 incumbent Senate
Democrats who could face a Republican on this November's
ballot.
Rep. David LeBoeuf, who would certainly rather have voters
hear about his support for tax relief than about the drunken
driving case he recently resolved quietly, said the
announcement Thursday came following his "press appearances
on the issue in June."
"I spoke about it at length last month, and I cannot stress
enough my continued commitment to winning substantial direct
relief payments for Massachusetts families," he said.
The Worcester Democrat made quick moves towards a run to
succeed Harriette Chandler in the Senate, but opted instead
to seek reelection in the 17th Worcester District. He faces
a Democrat in a primary and a Republican is lined up to
contest the seat in November.
Thursday's tax rebates announcement came at the end of what
was a busy week for the House and Senate. And if the lion's
share of the attention was on the Legislature this week,
that was probably quite alright with Gov. Charlie Baker and
his staff.
In a detailed account based on email and phone records, the
Boston Globe this week laid out how Baker's chief of staff
and communications team worked to keep the truth --
specifically that there had been three derailments at the
MBTA in three days -- from the public. Even when the general
manager of the T had his own communications person push
back, the response was that Baker's team would dictate the
T's public statements.
"Baker's communications team, acting on orders from
[Transportation Secretary Jamey] Tesler and Baker chief of
staff Tim Buckley, instructed [T GM Steve] Poftak to
underplay the truth. How often does this happen? This gets
at leadership and culture issues that affect safety," the
Globe's editorial board wrote Friday in an editorial that
took Baker to task for having walked "away from taking
responsibility for serious safety issues highlighted by a
recent Federal Transit Administration audit, in glaring
contrast to the way he responded to the T's troubles in the
winter of 2015."
Later Friday, the Globe changed the language of its
editorial as it appeared online and added a clarification to
the bottom of the page: "Clarification: While MBTA General
Manager Steve Poftak indicated in an email obtained by the
Globe that he needed permission from Transportation
Secretary Jamey Tesler and Baker chief of staff Tim Buckley
to send out a statement about derailments on the Blue Line,
the instruction to withhold some information about the
incidents came from the governor's communications staff."
Baker walked into office in 2015 having to deal with the
MBTA and its inability to provide basic service during that
winter's historic snowfall. He is now poised to leave office
with a transit system made up of new train cars, modern
switches and as much new third rail as the state could buy,
but run by an agency that is still operated in a deeply
dysfunctional way.
LOOSE ENDS: With just more than three weeks left for formal
sessions, pretty much everything is a loose end at this
point -- especially the overdue annual state budget.
Bookmark the News Service's Conference Committee Scorecard
to track the efforts to tie those ends off.
STORY OF THE WEEK: With full plates already before them,
Democratic leaders announce a plan to add another
significant item to the list of things they hope to
accomplish in the next three-ish weeks.
SONG OF THE WEEK: As Beacon Hill prepares to deal with a
"historic" surplus north of $3 billion, the
inflation-hammered taxpayers who generated that surplus are
asking, "Brother, can you spare a dime?"
The Salem
News
Tuesday, July 5, 2022
Mass. among last states to approve budget, again
By Christian M. Wade
The state started a new fiscal year without a formal budget,
for the fifth year in a row, as lawmakers continued to
wrangle behind closed doors over a final spending package.
The fiscal year began Friday, July 1, but lawmakers haven’t
reached agreement on controversial policy issues and other
sticking points in the nearly $50 billion plan.
Massachusetts is one of only two states — Pennsylvania is
the other — without an approved fiscal 2023 budget,
according to the National Conference of State Legislatures.
Michigan’s state lawmakers passed a final budget package on
Friday, sending it to Gov. Gretchen Whitmer for review.
On Beacon Hill, a six-member legislative committee is still
negotiating.
Lawmakers broke for the July 4 holiday weekend but started
up again Tuesday.
Like most states, Massachusetts is required to have a
budget, even if temporary, to keep the government running.
There are no penalties for approving it late.
Tardy spending packages have become common on Beacon Hill in
recent years, with the past six state budgets coming in
after the July 1 deadline.
In 2020, approval of the FY2021 budget was delayed until
mid-December as the state ran on a series of supplemental
budgets amid the economic uncertainty of the COVID-19
pandemic.
Exactly what’s holding up the budget this year isn’t clear,
as the lawmakers deliberating on the spending package have
closed their proceedings to the press and public.
The House and Senate approved separate versions of the
nearly $50 billion budget months ago, but a final spending
package remains tied up in negotiations. Both budget plans
call for tapping the state’s record surplus revenues to make
investments in schools, child care, workforce development
and housing.
One possible sticking point could be policy changes, such as
a plan to spend $20 million to reimburse county sheriffs for
the cost of providing free phone calls at state prisons and
correctional facilities. The House included that provision
in its version of the budget, but the Senate didn’t.
Lawmakers also have a packed agenda as the two-year session
winds down, with less than a month before the House and
Senate wrap up formal sessions.
Several large bills remain tied up in closed-door conference
committee negotiations, including proposals dealing with
energy and climate policies, sports wagering and access to
mental health services.
Lawmakers are also considering major infrastructure and
economic development bills as well as a tax relief proposal
filed by Republican Gov. Charlie Baker.
The conservative Massachusetts Fiscal Alliance said the late
budget is an example of Beacon Hill’s “dysfunctional”
leadership that it claims is resisting calls to cut state
taxes amid a windfall of surplus revenues.
The group took aim specifically at House Speaker Ron
Mariano, D-Quincy, and Senate President Karen Spilka,
D-Ashland, for the logjam of legislation.
“There’s less than a month left before the legislative
session ends and they are so dysfunctional and greedy that
they can’t or won’t figure out how to give taxpayers some of
their money back,” said MassFiscal spokesman Paul Craney.
“They can’t even pass their annual budget on time.”
To be sure, lawmakers are considering Baker’s tax relief
package as part of a separate proposal that cleared the
Revenue Committee last week.
Once lawmakers agree on a final budget, the House and Senate
will hold up or down votes, with no amendments allowed. The
package then goes to Baker, who has 10 days to review it.
Democrats have large enough majorities in both chambers to
override any of Baker’s vetoes on policy or spending items,
as they have in previous budget cycles.
— Christian M. Wade covers
the Massachusetts Statehouse for North of Boston Media
Group’s newspapers and websites.
Pioneer Institute
Wednesday, July 6, 2022
Survey of Business Sentiment:
MA Income Tax Hike Would Lead to Employer Exodus
Majority of respondents pay taxes on the biggest portion of
their income via individual returns, would be subject to the
tax hike
BOSTON – Nearly three quarters (73 percent) of Massachusetts
business leaders think business associates will leave the
state if a constitutional amendment appearing on the
November ballot to hike taxes is successful, according to a
survey conducted by Pioneer Institute.
Pioneer was invited to survey members of the Retailers
Association of Massachusetts and the state chapter of the
National Federation of Independent Businesses. Local
chambers of commerce also participated in the survey, and a
total of 133 individuals responded.
“The survey suggests that business owners and executives are
beginning to realize the negative impacts on the economy and
tax base of the tax hike amendment,” said Pioneer Executive
Director Jim Stergios.
“Small business owners are nearing a breaking point
following pandemic-related shutdowns and restrictions, labor
shortages, supply chain disruptions, and now record high
inflation,” added Christopher Carlozzi, state director of
the National Federation of Independent Business. “Instead of
increasing taxes for job creators, Massachusetts must create
an atmosphere that encourages economic growth and
expansion.”
Of the respondents:
● 57 percent report the largest portion of their
income on individual returns and would be subject to the
surtax. Mostly small “pass-through” businesses such as S
corporations, partnerships and limited liability
corporations pay taxes via individual returns.
● 72 percent of respondents said they plan to retire
in the next decade and 56 percent said they plan to sell
their businesses within that period. Of those planning to
sell, 58 percent said they expect the gain from the business
sale would exceed $1 million, making them subject to the
surtax.
● A smaller portion (22 percent) said they expect to
sell their current home to help fund retirement. Of those,
56 percent will have lived in the home for at least 30 years
before retirement.
● A three-to-one margin (76 percent) believes that
Massachusetts is “on the wrong track,” and 62 percent oppose
the tax-hike amendment.
“I was surprised by both how many of our members are
“pass-through” entities and how many are looking to sell or
retire within the decade,” said Retailers Association of
Massachusetts President Jon Hurst. “Those numbers should be
a wake-up call that our Main Streets are in danger in coming
years, and that our public policy leaders need to make sure
the Commonwealth has tax and employment laws that will
foster a whole new generation of entrepreneurs and risk
takers.”
https://pioneerinstitute.org/news/survey-of-business-sentiment-ma-income-tax-hike-would-lead-to-employer-exodus/
The Boston
Herald
Thursday, July 7, 2022
A Boston Herald editorial
‘Fair Share’ tax means farewell to many businesses
If you spike it, they will leave.
That’s the gist of a Pioneer Institute survey of
Massachusetts business leaders, which asked if they thought
companies would leave the state if a constitutional tax hike
amendment on the November ballot is successful. A whopping
73% said we can expect a rush for the exits.
Pioneer surveyed members of the Retailers Association of
Massachusetts and the state chapter of the National
Federation of Independent Businesses. Local chambers of
commerce also participated.
These are the people who understand how businesses work and
the different factors that have an impact on a company’s
success or failure.
They are swimming against the tide on this one.
The proposed “Fair Share Amendment” is touted by proponents
as a windfall for the state. It’s estimated to bring in $1.3
billion a year and the revenue is earmarked for
transportation and education, according to the State House
News.
Small businesses, chambers of commerce, trade organizations,
retirees, citizens, farmers and some lawmakers pushed back
on the ballot move, highlighting the ensuing economic pain
to come from such a tax hike.
They did not succeed, and neither will the state if such a
take hike takes effect.
“The survey suggests that business owners and executives are
beginning to realize the negative impacts on the economy and
tax base of the tax hike amendment,” said Pioneer Executive
Director Jim Stergios.
“Small business owners are nearing a breaking point
following pandemic-related shutdowns and restrictions, labor
shortages, supply chain disruptions, and now record high
inflation,” added Christopher Carlozzi, state director of
the National Federation of Independent Business. “Instead of
increasing taxes for job creators, Massachusetts must create
an atmosphere that encourages economic growth and
expansion.”
But progressive pols paint those in the business sector with
the same brush, proclaiming that people who reap profits
from an enterprise aren’t paying their “fair share.”
It’s a broad brush, and the Pioneer Survey captures just how
many could be negatively affected.
Mostly small “pass-through” businesses such as S
corporations, partnerships and limited liability
corporations pay taxes via individual returns, and 57% of
those surveyed report the largest portion of their income on
individual returns and would be subject to the surtax.
The tax hike will hit many who’ve poured years into their
businesses: 72% said they plan to retire in the next decade
and 56% said they plan to sell their businesses within that
period. Of those planning to sell, 58% said they expect the
gain from the business sale would exceed $1 million, making
them subject to the surtax.
So much for the fruits of your labor.
“Those numbers should be a wake-up call that our Main
Streets are in danger in coming years, and that our public
policy leaders need to make sure the commonwealth has tax
and employment laws that will foster a whole new generation
of entrepreneurs and risk takers,” said Retailers
Association of Massachusetts President Jon Hurst.
Unfortunately, the progressive emphasis isn’t on innovating,
creating and earning, it’s on ramped up taxing and spending.
That’s not how you “Make it in Massachusetts.”
CommonWealth
Magazine
Sunday, July 3, 2022
Look at the history: Taxes do make the wealthy migrate
By Thomas A. Barnico
Massachusetts voters in November will consider a
constitutional amendment that would impose an annual 4
percent surcharge on incomes over $1 million. The debate
over the surcharge and the merits of the two common types of
income taxation—graduated and flat—will likely focus on the
“fairness” of tax rates and the “ability to pay.” A related
debate will also flare: whether the amendment will drive
higher-income taxpayers out of the Commonwealth and into the
arms of low-or-no-income-tax states.
Some opponents of the “millionaire tax” argue that high
earners are deeply sensitive to tax rates and that even
earners under the proposed $1 million threshold will fear
that, with the flat tax wall breached, a further graduation
of rates will follow.
Opponents also argue that, even if high-income residents
stay put, their money will not; rather, it will fly on the
dauntless wings of capital to friendlier climes. As the
voters ponder this “migration” issue, they should note how
past migration within Massachusetts by wealthy Massachusetts
taxpayers led to the current “flat tax” scheme erected in
1915.
Amendment Article 44 of the Massachusetts Constitution,
adopted in 1915, provides: “Full power and authority are
hereby given and granted to the general court to impose and
levy a tax on income, in the manner hereinafter provided.
Such tax may be at different rates upon income derived from
different classes of property, but shall be levied at a
uniform rate throughout the Commonwealth upon incomes
derived from the same class of property. The general court
may tax income not derived from property at a lower rate
than income derived from property, and may grant reasonable
exemptions and abatements.”
This amendment authorized, among other things, the first
statewide income tax, while barring graduated rates. It
responded in part to the intrastate migration of wealthy
Massachusetts personal property taxpayers in the mid-to-late
late 1800s and early 1900s.
The history of this intrastate taxpayer migration is
summarized in the dissenting opinion of Justice Robert Cordy
in a case decided by the Supreme Judicial Court in 2004. In
Peterson v. Commissioner of Revenue, the court held that
Article 44 foreclosed the Legislature from establishing
different income tax rates for different portions of the
same calendar year.
Cordy’s dissent explains some of the historical forces that
drove the adoption of Article 44. Before the amendment in
1915, the principal taxes collected in the Commonwealth were
local taxes. The then-existing Constitution required that
each municipality apply a single rate of taxation to the
total value of real and personal property of each taxpayer
within the municipality. Tax rates could differ from town to
town, but not within each town.
As the nature of property changed in the mid-to-late 1800s,
however, issues arose. According to a 1930s tax treatise by
Philip Nichols, before that time, “all the personal property
of each individual was tangible and visible and kept in the
town in which he dwelt.”
The rise of “intangible” property—such as stocks, bonds, and
other financial instruments— changed that. Intangible
property and income derived from it became hard to trace. As
a special commission of the Legislature explained the
history in 1969: “The burden of the tax on intangibles alone
furnished strong motive for concealment of intangible
property, and also for transfers of domicile from Boston and
other cities to smaller communities having lower tax rates
and less efficient assessors."
As Justice Cordy noted, “because intangible property was
taxed at its owner’s domicile, the wealthy could lower their
tax burden by shifting their domiciles from cities with high
tax rates and sophisticated assessors to homes in rural
communities with low tax rates and less aggressive and
knowledgeable assessors. As a consequence, tax rates in the
cities grew even higher (to make up for the lost wealth),
and tax rates in rural communities moved artificially lower,
magnifying the differences in municipal revenues.” Nichols
noted that this intrastate migration had left “hardly a
fifth of the personal property in [the] Commonwealth . . .
subject to taxation.”
Joseph Garland of Gloucester painted a more vivid portrait
of this flight of capital in his colorful book, The North
Shore: A Social History of Summers Among the Noteworthy,
Fashionable, Rich, Eccentric and Ordinary on Boston’s Gold
Coast, 1823-1929. He noted that “the practice of the
wealthy, most of them from Boston, of evading the general
personal property tax in their winter quarters by taking up
legal residence in the outlying suburbs, where the rates
were incomparably lower, started in Nahant in 1870, and
there was not much the Boston assessors could do about it.
The dodge was perfectly legal and, because valuations [of
personal property] were based on demonstrable holdings,
tangible property such as real estate carried the burden
while the elusive stock certificate on which the greater
wealth was based escaped any detection at all except by the
most sophisticated city assessors.
Tax collectors in the small suburbs and resorts like Nahant
were only too happy to provide havens for the rich commuters
and summer residents, assessing them at face value for what
they were permitted to see with their own eyes, leaving the
hidden intangibles to the owner and his conscience.”
Harvard economist Charles J. Bullock, in his 1916 history of
Massachusetts taxation, likewise noted that “personal
property [in the post-Civil War era] was rapidly migrating
from Boston, and between 1869 and 1873 not less than
$13,900,000 of taxable personal estate was removed from
Boston to eight suburban towns and Newport, Rhode Island.”
Through the same decades, many questioned whether it was
wise for cities to place any reliance at all on the taxation
of such intangible personal property, given that—as one
political economist put it—it “floats about from place to
place with ease.” Noam Maggor, in Brahmin Capitalism
(Harvard, 2017), quotes a report of the Special Commission
on Taxation endorsed by then-Boston mayor Nathan Matthews in
1891, which criticized the existing tax on personal
property: “Boston and Massachusetts are both avoided like a
house guarded by a savage dog. It is true that one might not
be bitten; but it is pleasanter to go where the dog is not
so fierce. Our system is a scarecrow and an efficient one.”
In the wake of this history, the voters adopted Article 44
in 1915. Their authorization for a statewide income tax and
geographic uniformity of rates sought to address the past
migration. Indeed, the Nichols treatise cited by Justice
Cordy states that the purpose of the constitutional
amendment “was intended to enable the state to impose a tax
on intangible securities which was capable of enforcement
with some degree of equality without driving capital out of
the state.”
Proponents, opponents, and neutral analysts of the 2022
ballot question offer different predictions about the risk
of taxpayer migration. A January 2022 study by the Center
for State Policy Analysis at Tufts University found: “Some
high-income residents may relocate to other states, but the
number of movers is likely to be small,” between 250 to
1,000 million-dollar earners,” likely reducing the expected
revenue from the new tax “by around 5 percent and costing
the state roughly $100 million in 2023.”
In 2021, the Pioneer Institute published a white paper
entitled: “Do the Wealthy Migrate from High-Tax States?” The
paper found that the “[a]ffluent taxpayers are responsible
for an outsized proportion of state tax revenue,” and that
the “data show a strong correlation between state taxes and
migration.”
Also in 2021, the Beacon Hill Institute published “The
Economic Effects of a Massachusetts Millionaire’s Tax,”
which found that ‘[t]he proposed surtax would decrease the
demand for labor services and the quantity of labor services
supplied, the latter through a reduction in labor-force
participation and out-migration of high-income workers.”
Others have noted that the 2018 federal law limiting the
income tax deduction for state and local taxes to $10,000
may further skew patterns of migration.
In the coming debate this fall, an income tax surcharge—not
a personal property tax on financial instruments—is at
issue. But, as voters weigh predictions about a possible
“flight of capital” from Massachusetts, they might recall
that taxpayer flight was itself a catalyst for the existing
“flat” income tax rate required by Article 44. The history
of Article 44 shows that 19th-century Massachusetts
taxpayers often voted with their feet.
— Thomas A. Barnico teaches
at Boston College Law School. As an assistant attorney
general, he argued the Peterson case. He is the author of a
recent novel, War College, set in the Vietnam War
era.
The Boston
Globe
Tuesday, July 5, 2022
State’s high court to hear GOP challenge to Mass. mail-in
voting law
By Samantha J. Gross
The state’s highest court is moving with uncharacteristic
swiftness to weigh a recent challenge by the Massachusetts
Republican Party that argues a new law that makes universal
mail-in voting permanent is not constitutional.
At stake is the VOTES Act, a sweeping election law that
makes no-excuse mail-in voting permanent, expands early
voting options, and implements post-election audits, among
other reforms. The law offers millions of Massachusetts
voters the ability to vote before primary and general
election days from the comfort of their homes with no reason
needed.
With two months until this year’s Sept. 6 primary, time is
of the essence. Oral arguments are set for Wednesday
morning, less than two weeks after the Republican Party
filed its lawsuit, which claimed mail ballots introduce the
potential for fraud in elections.
Meanwhile, Secretary of State William F. Galvin is readying
to send ballot applications to more than 4.7 million voters
by July 23, he said. Millions of dollars in postage have
already been purchased, and the proofs for ballot design and
signage have been approved. He said, for now, his office is
waiting on the court’s green light.
“Due to the significant time constraints in this matter, and
because the complaint raises wide-ranging and novel
constitutional challenges to the new election law
implicating the fundamental right to vote, I hereby exercise
my discretion to reserve and report the matter to the full
court for decision,” Supreme Judicial Court Associate
Justice Scott L. Kafker wrote in an order last week.
Before the new legislation was enacted, state law allowed
for absentee voting if a voter would be out of town for
Election Day, had a religious-based conflict on Election
Day, or a disability. During the height of the COVID-19
pandemic, no-excuse mail-in voting was temporarily allowed
to keep voters safe from the coronavirus.
In 2020, more than 3.6 million residents cast ballots in the
state’s general election. Of those, about 42 percent voted
by mail, 23 percent voted early in person, and only about 35
percent voted on Election Day.
The wide-ranging VOTES Act, signed into law by Governor
Charlie Baker last month, makes vote-by-mail a permanent
option in the state, and would also increase ballot access
for voters with disabilities and overseas military and
ensure that eligible voters who are incarcerated can request
a mail-in ballot, among other provisions.
With the law, Massachusetts joined 26 states and Washington,
D.C., to offer “no-excuse” absentee voting, according to the
National Conference of State Legislatures.
But with the COVID-19 emergency no longer in effect, the
Republican Party argues that the method should not be made
permanent, claiming that mail-in voting is “vulnerable to
fraud” and that, ultimately, the Legislature does not have
the power to make laws “contrary to this constitution.”
The chairman of the Massachusetts Republican Party, GOP
candidates for state and federal office, a member of the
Massachusetts Republican State Committee, and a member of a
ballot question committee challenged the law the day after
Baker signed the bill, and sought an emergency temporary
restraining order to enjoin Galvin from implementing the
VOTES Act for the primary and general state elections. Last
Tuesday, Galvin’s office filed a motion to dismiss the
complaint and an opposition to the motion for a temporary
restraining order.
In a 71-page brief filed Tuesday morning, the Republican
Party made their case against the Legislature’s authority to
enact the VOTES Act, arguing that “this case is not,
substantially, about voting rights but rather about the
power of the Legislature to enact the current measures in
relation to absentee and early voting.” The brief challenges
all parts of the VOTES Act, not just the mail-in voting
piece.
“The Legislature, in the VOTES ACT, clearly wanted to push
the envelope of its power,” the party’s lawyer wrote.
In the original 32-page complaint, the plaintiffs also
argued that “since absentee ballots are not cast at the
polls, the potential for fraud, undue pressure being placed
on the voter, or someone other than the voter completing the
ballot is much greater.”
“We think the potential for fraud, while not eliminated, is
significantly lessened when votes are cast in person at the
polling place, even by voters on an inactive voters list,”
he wrote.
Galvin told the Globe Tuesday: “the only thing fraudulent
here are their arguments.”
“This is more a political stunt than it is a credible legal
challenge,” he said.
Attorney General Maura Healey filed an 87-page brief Tuesday
defending the new law on behalf of Galvin’s office, arguing
that the VOTES Act makes it easier for qualified voters to
cast their ballots, and that the new law “reflects the most
recent, reasoned judgment of the Legislature on how best to
regulate the manner of elections in the Commonwealth.”
She called the Republican Party’s argument against the law
“threadbare,” arguing that their brief “fails to articulate
a single plausible claim that anything in the VOTES Act
poses a threat to secure voting.” She also characterized the
Republican Party’s arguments as “scaremongering,” asserting
that the new law is in line with the state constitution.
GOP Party Chair Jim Lyons declined to comment ahead of the
arguments, but said in a statement last week that the state
Legislature “violated the Constitution when it made
emergency pandemic-era mail-in voting laws permanent.”
“When we take something special like Election Day and expand
it into Election Month . . . we are harming people’s
time-tested faith in our elections, and that trust is
something we can never get back once it’s gone,” he said.
Voting rights advocates who worked on the VOTES Act
legislation say the GOP’s lawsuit puts up an “unnecessary
barrier” to the implementation of the law, which is
wide-ranging.
Geoff Foster, of Common Cause Massachusetts, said he is
confident the court will rule in the state’s favor, and that
lawmakers will feel emboldened to further expand voting
access, such as passing laws to allow same-day voter
registration or to lower the voting age to 16 for local
elections.
“The hope here is that this could make the green light even
brighter for the Legislature to take further action to make
access to voting even stronger,“ said Foster, who filed an
amicus brief in the case. “It will be important to have the
precedent.”
At an unrelated event in Springfield Tuesday, Baker said he
felt it was important that the courts make the final
decision sooner rather than later.
“I think it’s appropriate that they take the case early,” he
said. “Because they know it’s important that this issue be
resolved before we have an election under the new rules.”
— Globe correspondent Simon
Levien contributed to this report.
CommonWealth
Magazine
Wednesday, July 6, 2022
SJC hears arguments on whether to allow permanent voting by
mail
Republicans challenged new law as unconstitutional
By Shira Schoenberg
The Supreme Judicial Court is poised to decide whether to
overturn the new law allowing Massachusetts residents to
vote by mail for any reason.
Gov. Charlie Baker on June 22 signed the VOTES Act, a bill
passed by the Democratic-led Legislature allowing no-excuse
mail-in voting along with expanded early voting, electronic
voting for people with disabilities and overseas military
voters, and other changes aimed at making it easier to vote.
A group of Republicans immediately filed a lawsuit seeking
to overturn the law. They include Massachusetts Republican
Party Chair Jim Lyons, Secretary of the Commonwealth
candidate Rayla Campbell, congressional candidate Robert
May, Republican State Committee member Evelyn Curley, and
Raymond Xie, a member of the ballot committee seeking a
referendum to overturn the law giving driver’s licenses to
immigrants without legal status.
The case is time-sensitive since Secretary of the
Commonwealth William Galvin is required to send out ballot
applications for the September primary to all voters by July
23. The Supreme Judicial Court heard oral arguments via
videoconference on Wednesday.
The state constitution lays out reasons why someone can vote
absentee – they are out of town, have a religious belief
that prevents them from voting on Election Day, or have a
disability. The central argument in this case relates to
whether no-excuse mail-in voting circumvents the
constitution.
The Republicans argue that early voting by mail allows what
is essentially absentee voting for reasons not allowed by
the Constitution. “Faithful adherence to [the
Constitution’s] words and principles are rigorously required
and social policy, even beneficial and useful must bend to
it,” the complainants wrote in a court brief.
The Republicans’ brief traces the requirement for personal
presence at the polls from the Provincial Charter that
governed the Massachusetts Bay Colony in the 1600s through
the 1917 constitutional amendment that authorized absentee
voting. They argue that any argument that early voting by
mail is legally distinct from absentee balloting is “nothing
more than a legal slight of hand, to pretend that
constitutional limitations do not apply simply because of a
terminology change.”
The Republicans’ brief says Attorney General Maura Healey,
whose office is representing Galvin, “must choose between
Scylla and Charbidis,” the lesser of two evils. If early
voting is not absentee voting, the Legislature has no
authority to allow it, since the Constitution sets the date
for Election Day. If it is absentee voting, it is
constrained by the circumstances under which absentee voting
is allowed.
Michael Walsh, an attorney representing the Republicans,
argued in court that the 1917 constitutional convention that
adopted absentee voting made clear that any mail-in voting
must comply with its requirements.
But several justices questioned his analysis. Justice Scott
Kafker said that convention featured a debate about
selective treatment for different groups, such as whether
servicemen or laborers deserved the right to vote absentee.
“This enhances for everyone the right to vote equally,”
Kafker said.
Justice David Lowy said at the 1917 constitutional
convention, “We have no reference to early voting, we have
no reference to mail-in voting.” He questioned Walsh on
whether that authority is then left to the Legislature.
Walsh responded that many constitutional amendments, on
issues from parkland protection to zoning districts, give
the Legislature more power – implying that lawmakers have
narrow authority without an amendment.
Galvin’s office, in a brief written by attorneys from
Healey’s office, argues that the reasons laid out in the
Constitution for allowing absentee voting “sets a floor for
what the Legislature can do, not a ceiling.” He suggested
that lawmakers can expand voting opportunities beyond those
reasons. “The Legislature retains the broad power to go
above this floor, and it appropriately exercised this broad
power when it expanded the ways in which voters could
exercise their fundamental right to vote by making permanent
an expanded version of early voting by mail,” Galvin’s brief
states.
The brief argues that early voting by mail is different from
absentee voting, and the Constitution “says nothing
whatsoever about early voting, a different species of
balloting statutorily created by the Legislature.”
“The VOTES Act reflects the most recent, reasoned judgment
of the Legislature on how best to regulate the manner of
elections in the Commonwealth while ensuring that qualified
voters can securely, efficiently, and safely exercise the
franchise,” Galvin’s attorneys wrote in the court brief.
Galvin and Healey are Democrats.
Assistant Attorney General Adam Hornstine argued in court
that the Legislature has “broad power to act absent any
specific circumscription of that authority by the
Constitution.”
“Early voting by mail wasn’t on the minds of the framers
during the 1917 constitutional convention,” Hornstine said.
“Though there may be practical similarities between absentee
voting and early voting by mail, the two have a different
origin, the two have a different genesis.” Hornstine said
the Constitution set a floor for absentee voting but “didn’t
say the Legislature couldn’t go beyond that to allow more
people to participate in a free, fair, and orderly election
in the commonwealth.”
Kafker questioned that interpretation, noting, “It doesn’t
say it sets a minimum, that’s your gloss.”
The court will also consider whether early and mail-in
voting should be allowed for primaries, the rules for which
are not laid out in the Constitution. Kafker sounded
skeptical that any argument can be made for not allowing
early and mail-in voting for primaries, telling Walsh
bluntly, “Your brief doesn’t make any sense on this point.”
Justices sounded more open to reconsidering other aspects of
the law, including a provision that removes consideration of
party affiliation from the appointment of election officers.
Now, election officers must be appointed to preserve equal
representation of political parties. The new law has
election officers appointed without regard to party
affiliation during a six-week period before the election –
but preserves consideration of party affiliation before that
time and when a worker is replaced on Election Day. Kafker
questioned why it makes sense to consider party affiliation
early in the process and on Election Day, but not for six
weeks in the middle.
Hornstine said lawmakers tried to balance the interests of
keeping party balance and ensuring that polling places,
particularly in small towns, are fully staffed.
The lawsuit also asks the court to consider whether a ban on
electioneering – things like waving signs or wearing shirts
with messages – near a polling place unconstitutionally
infringes on free speech when it is expanded to cover early
voting locations, which includes town halls, for weeks at a
time. “What was once a carefully tailored, limited
application, limited duration restriction becomes a
gargantuan first-amendment black-out period for weeks at a
time over the central halls of municipal government,” the
Republicans wrote in their brief.
Galvin’s brief defends the buffer zones. “Massachusetts has
a compelling interest in the orderly administration of
elections, which includes…ensuring that voters can cast
their votes free from intimidation and fraud,” his brief
writes.
The court will also consider the legality of letting
disabled and overseas military voters cast ballots
electronically, and the issue of “zombie votes,” when a
voter casts a ballot early, then dies before Election Day.
The Boston
Herald
Wednesday, July 6, 2022
Universal mail-in voting in Massachusetts unconstitutional
By James P. Ehrhard
The Massachusetts state constitution written by John Adams
prohibited voting in elections by any other means than in
person. As Adams famously said, “elections to office, which
are the great objects of ambition, I look at with terror!”
For self-evident reasons, in-person voting inherently
protects against wide-scale fraud as an individual must face
an election officer as they check in to vote. No election
system is perfect, but in-person voting has grounded the
commonwealth’s elections throughout its history and built
public confidence in our democratic system.
Absentee voting was only first allowed in 1917 when the
state constitutional convention of that year specifically
added an amendment providing for absentee balloting when a
voter was going to be out of town. As a lawmaker said at the
time, the Legislature wanted to let “the soldiers, the
traveling men, and the laboring man who may be kept away, or
the railroad man” vote. Further allowances for absentee
voting for “disability” and religion-based conflict with
election day were later added.
When COVID swept across Massachusetts in 2020-2021, the
progressives on Beacon Hill saw an opportunity to work
around the constitutional structure and throw out over 300
years of voting integrity. They had a governor acting as a
quasi-king under COVID “emergency powers” to implement their
bidding. Remember, under COVID, everybody was “disabled”
and, therefore, every single voter could vote by mail under
the constitution. At least that was the talking point by the
powers on high.
The people of Massachusetts, and America generally, are not
stupid. They are a reasonably thoughtful people who only
want fairness and transparency in their elections. Democracy
has thrived in America because of faith in our elections.
But when mail-in voting swept across America and the
commonwealth under “COVID emergency powers” in the last
presidential and state election people lost faith.
Indeed, polls show that over 40% of Americans still do not
believe that Biden was legitimately elected. These are
mostly not crackpot fringe Americans who see conspiracy
around every corner. Mail-in voting en masse is ripe for
fraudulent manipulation and voters inherently know this.
This is why the Massachusetts constitution fails to allow
anything but exceptionally limited mail-in voting.
“There’s been a long-term traditional view that
opportunities to vote by mail in Massachusetts are
constrained by the Constitution, which specifies particular
conditions under which you can do this,” said Evan Horowitz,
executive director of the Center for State Policy Analysis
at Tufts University in Commonwealth Magazine in 2021. In
fact, the state legislature conceded the constitutional
restrictions on mail in voting when it took up the issue in
the 2013 legislative session. Indeed, Secretary of State
William Galvin acknowledged these concerns back in 2013.
But apparently Galvin has memory loss. He helped guide the
Legislature in passing a universal mail-in voting law which
Governor Charlie Baker signed into law on June 22. Along
with myriad questionable provisions (including the ability
to vote electronically when overseas), this law will mail a
ballot to every registered voter which they can mail back.
No identification required. No proof of who actually voted.
All the dead people on the voter rolls now get a second
chance to live. No constitutionally limited requirement for
disability, religious conflict or located out of town on
election day.
The MassGOP and others immediately filed a lawsuit asking
the Supreme Judicial Court to rule the law unconstitutional.
Galvin retorted that the lawsuit was “baseless,” “without
merit,” and “really outrageous.” Calling 2013 Bill Galvin.
Please come back to us.
The SJC disagrees with Galvin’s dismissive attitude about
the GOP lawsuit. Supreme Judicial Court Chief Justice Scott
Kafker ordered Thursday that “due to the significant time
constraints in this matter, and because the complaint raises
wide-ranging and novel constitutional challenges to the new
election law implicating the fundamental right to vote, I
hereby exercise my discretion to reserve and report the
matter to the full court for decision,” Kafker scheduled
oral arguments in the case for this week.
The oral argument defending fair and transparent elections
will take place in the aptly named John Adams Courthouse.
— James P. Ehrhard is a
writer whose columns have appeared in the Wall Street
Journal, Washington Examiner, Boston Herald, Lowell Sun,
Worcester Telegram, Springfield Republican and other
publications. He is the owner and manager of the Worcester
law firm Ehrhard & Associates.
|
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ (781) 639-9709
BACK TO CLT
HOMEPAGE
|
