Today
State Auditor Suzanne Bump
announced that her office has completed its
review of the report of net tax revenues and
allowable state tax revenues for the fiscal year
ended June 30, 2022, as prepared by the Commissioner
of Revenue. She has determined that the net state
tax revenues of $41,812,654,358 for the fiscal year
ended June 30, 2022 are above the allowable state
tax revenues of $38,871,154,627 (as defined in
Chapter 62F of the General Laws) by the amount of
$2,941,499,731....
". . .
Since FY21 revenues had been $36,789,926,416, the
operation of Chapter 62F caps allowable state tax
revenues for FY22 at $38,871,154,62. The collection
of $41,812,654,358 in FY22 exceeds that cap by
$2,941,499,731. According to Chapter 62F, a return
of this amount in the form of a credit must be
effectuated by the commissioner of DOR.”
Commonwealth of Massachusetts
Office of the State Auditor
Suzanne M. Bump
September 15, 2022
Auditor Bump Determines Net State
Tax Revenue Exceeds Allowable State Tax Revenue
Massachusetts residents could soon be receiving tax
refunds in the mail after state Auditor Suzanne Bump
officially certified that the state’s tax cap law
has been triggered and taxpayers are owed $2.94
billion.
Bump
announced her certification Thursday morning, five
days ahead of the deadline for action. Her decision
means the Baker administration can now set in motion
its somewhat controversial rush-rush plan to return
the money to taxpayers by sending out checks.
Most of
the time, state government moves at a snail’s pace,
but not with the tax cap, even though its very
existence caught most of Beacon Hill by surprise.
The tax
cap was approved in 1986 via a ballot question
sponsored by Citizens for Limited Taxation
and the Massachusetts High Technology Council. The
question set a limit on how much tax revenue the
state could take in during a given year and required
returning any excess collections to taxpayers via
credits on their taxes....
Baker
administration officials are moving to accelerate
the process of returning the funds. In April, well
before the notion that the tax cap could be
triggered surfaced publicly, the Department of
Revenue put out a notice that it intended to rescind
the existing regulation that spells out in detail
the two-step process for returning excess tax
collections to taxpayers.
“This
regulation is being repealed because it is obsolete;
no credit has been required since 1987,” the hearing
notice said. “If a credit becomes available, DOR
will issue guidance and update forms specific to the
year the credit is allowed.”
DOR hasn’t
issued that guidance yet, but Baker has signaled
that he intends to send out refund checks to
taxpayers as soon as possible. Whether that’s legal
or not is an open question.
The 62F
law does not define credit, so the Baker
administration is taking the position that it can
insert its own definition. Baker, at a press scrum
on September 6, indicated he saw no difference
between a refund check and a credit on next year’s
tax forms.
“The
definition of a credit can either be a return of
revenue or credited next year,” he said....
Baker
argues the money should be returned to taxpayers as
soon as possible.
“Inflation
at this point is rising at a dramatic rate. Gas has
come down, but food is still incredibly expensive.
Rents have gone up dramatically,” Baker said on
September 6. “I think one of the best things we can
do here is put money back in the hands of these
folks as soon as possible, and, if we can, before
the holiday season.”
CommonWealth Magazine
Thursday, September 15, 2022
Auditor certification paves
way for giving $2.9b in tax cap credits to taxpayers
Massachusetts taxpayers are due back nearly $3
billion after a windfall of state revenue triggered
an obscure 1980s-era law for just the second time in
nearly four decades, officials said Thursday,
clearing the way for potentially millions of
taxpayers to get a slice of the unprecedented
credit.
State
Auditor Suzanne M. Bump said her office certified
that the state is required to return $2.94 billion
under a law known as Chapter 62F, a 1986
voter-passed measure that is intended to limit state
tax revenue growth to the growth of total wages and
salaries, and turn any excess back over to
taxpayers.
Still,
several crucial details remained unclear Thursday,
notably how, and when, people could receive money
and how much individuals should expect.
Governor
Charlie Baker‘s office released a statement
promising to share “more details soon” about how his
administration intends to distribute the money.
He told
reporters Wednesday before Bump’s announcement that
his goal is to distribute the excess revenue
“sometime this fall.”
“Given the
difficulties associated with inflation, which
continues to rage, we would like to get that money
back to people sooner rather than later,” Baker
said....
The law
stipulates that any credit is applied on a
“proportional basis.” The Baker administration has
previously said more than 3 million taxpayers could
get back roughly 7 percent of the income taxes they
paid in 2021.
That,
analysts and lawmakers say, promises a regressive
distribution, effectively ensuring that those who
pay more in taxes stand to benefit the most.
Baker
suggested in July the money returned to residents
could be issued as rebates — a more direct form of
payment than a credit, which typically reduces the
taxes a person owes.
But
whether the administration can do that appears to be
an open debate. Kurt Wise, a senior policy analyst
at the Massachusetts Budget and Policy Center, said
the law is clear in calling the refund a “tax
credit,” effectively limiting the form it can take,
and noted that Bump in her own statement described
it as taking the “form of a credit.”
The
language, however, also leaves it to the
commissioner to set the rules for implementing the
law. That effectively gives the department a “good
bit of leeway” in determining how to issue the
money, said Leanne Scott, a state and local tax
principal and member of the Department of Revenue’s
advisory council.
“With the
election coming up this fall and wanting to make
people happy, I imagine they’ll get this out as
quickly as possible,” Scott said, adding it’s
possible the state could issue the credit in the
form of checks or even a direct deposit into
someone’s account....
“Our tax
cap was intended as an automatic release valve for
when revenue surpluses reach an unnecessary level,
especially such an extraordinary level as recently,”
said Chip Ford, executive director of
Citizens for Limited Taxation, which pushed the
original ballot measure with the Massachusetts High
Technology Council in the mid-1980s. “It was meant
as a check on unlimited taxation and unsustainable
spending.”
The
potential — and now certainty — of billions flowing
back to taxpayers has roiled Beacon Hill, and lands
amid a separate ongoing debate about whether the
state should raise taxes on some of its wealthiest
residents....
Some in
the Legislature have also advocated that lawmakers
take a more proactive role in determining how the
money is divided up. State Representative Mike
Connolly, a Cambridge Democrat, has advocated
passing language into law that would cap what is
returned to higher-income earners to ensure low- and
middle-income residents get a larger share of the
$2.9 billion.
By
determining credits on a proportional basis, it
ensures those who make the most — and pay the most
in taxes — would benefit the most at a time when
low-income workers feel the pain of inflation the
most, Connolly said.
“I
certainly don’t think that someone like Patriots
owner Bob Kraft should be getting back tens of
thousands of dollars when someone working at minimum
wage would only see a miniscule return,” he mused.
But
legislative leaders gave no indication Thursday they
plan to change the law or potentially slow the
distribution of the excess revenue.
In a
statement Thursday, Mariano said with Bump’s office
making official the size of the credit, legislative
leaders intend to continue talks over a potential
economic development package “under these new
circumstances.”
“I look
forward to the plans to distribute the money back to
the taxpayers,” the Quincy Democrat....
Voters in
November are also weighing a ballot question that
would impose a 4 percent surtax on annual earnings
above $1 million. It pushes before residents a
debate about who should be taxed more, and just how
much revenue the state needs, at a time taxpayers
stand to reap a windfall.
Proponents
such as labor unions have argued the proposed
constitutional amendment, known as the millionaires
tax, would help raise billions of new dollars in
revenue that could be steered toward education and
transportation.
Business
leaders and others have railed against it, charging
that a tax surcharge will hurt Massachusetts’
competitiveness and spur entrepreneurs and companies
to grow elsewhere. And, critics have argued, state
coffers are already overflowing with cash.
The
Boston Globe
Thursday, September 15, 2022
Mass. taxpayers to get $3 billion
back under obscure law, state officials say
Citizens for Limited Taxation thanks State
Auditor Suzanne M. Bump for her timely certification
of the CLT tax cap refund (aka, Chapter 62F)
directly and without drama. We're sure that
taxpayers of the commonwealth will appreciate it as
well when they receive their refunds.
"That our
tax cap has been dormant for over three decades
until today shows that it is working exactly as it
was designed to do," said Chip Ford,
executive director of Citizens for Limited Taxation.
"Our tax cap was intended as an automatic release
valve for when revenue surpluses reach an
unnecessary level, especially such an extraordinary
level as recently; it was meant as a check on
unlimited taxation and unsustainable spending
growth."
"It's
unfortunate that our late-executive director
Barbara Anderson, who worked so hard for
adoption of our 1986 ballot question (and so many
other tax reforms) is no longer with us to celebrate
this success she achieved for all taxpayers of
Massachusetts," Ford added, "but I'm confident she's
up there joining us joyfully in spirit."
Citizens
for Limited Taxation
Thursday, September 15, 2022
News Release
CLT Thanks
Auditor Bump for Smooth Certification of Tax Cap
Refund
“This is a
tremendous victory for all taxpayers of the
Commonwealth. We were fully prepared to bring the
Auditor to the Supreme Judicial Court to enforce
this certification and are even more thrilled that
they’ve made this certification ahead of the
September 20 deadline,” stated Paul D. Craney, a
spokesman for the Massachusetts Fiscal Alliance.
The
Massachusetts Fiscal Alliance, the Fiscal Alliance
Foundation, and Citizens for Limited Taxation
had partnered with the New England Legal Foundation
and the Goldwater Institute to bring suit to enforce
Chapter 62F of Massachusetts law, should that action
have been necessary.
“We’d
especially like to thank Chip Ford of
Citizens for Limited Taxation and Chris Anderson of
Mass High Tech Council for their involvement with
and support of the lawsuit. It was the campaign they
waged in 1986 that brought us to the point where
this tax rebate was possible. Their incredibly hard
work, dedication, and foresight is still paying
dividends nearly forty years on,” closed Craney.
Massachusetts Fiscal Alliance
September 15, 2022
News Release
MassFiscal Statement on
Auditor's Certification of Revenue Surplus
The
taxpayer advocates who championed the Massachusetts
tax credit rebate law, and their lawyers, today
celebrated the state Auditor’s certification of
nearly $3 billion of tax credits that are slated for
reimbursement to taxpayers under the terms of a 1986
citizen initiative law....
The
taxpayer groups had lined up legal firepower to
ensure compliance with the law by engaging
Arizona-based Goldwater Institute, a national
individual rights litigation powerhouse, along with
Boston-based New England Legal Foundation which
advocates free enterprise, property rights and
limited government in the New England state and
federal courts.
“It is
great to see this law work as it was designed to by
delivering much needed tax relief to hardworking
Massachusetts taxpayers,” said Jon Riches, Vice
President for Litigation at the Goldwater Institute.
“We
applaud this next step in complying with the tax
credit law,” said NELF President Dan Winslow, “but
will continue to monitor the situation to ensure
that any property rights that have now vested for
each taxpayer will be respected as the state
Constitution requires.” Winslow’s co-counsel for the
project is NELF Senior Staff Attorney Ben Robbins.
New
England Legal Foundation
Thursday, September 15, 2022
News Release
Taxpayer Advocates Celebrate $3B Tax
Credit Win for Massachusetts Citizens,
But They Caution that Vested Property Right Cannot
be Undone
The
Commonwealth of Massachusetts owes its taxpayers
more than $2.9 billion, the state’s auditor
determined this week.
“As a
result of our review and as disclosed in the
accompanying report, we have determined that the net
state tax revenues of $41,812,654,358 for the fiscal
year ended June 30, 2022 were above the allowable
state tax revenues of $38,871,154,627 (as defined in
Chapter 62F of the General Laws) by the amount of
$2,941,499,731,” State Auditor Suzanne Bump said in
a report issued to state lawmakers Thursday.
Bump’s
report is nearly the last step in determining the
effects of an apparently forgotten — but suddenly
very relevant — 1986 law which says that when the
commonwealth takes too much in taxes it must send
some of it back....
Lawmakers
have been unclear on how the money will be returned
this time around, whether as a credit when taxpayers
file next year, or as a direct rebate sooner.
House Ways
and Means Chairman Aaron Michlewitz has said that
lawmakers were looking at what exactly a “credit”
could mean as it is written in the law....
“That our
tax cap has been dormant for over three decades
until today shows that it is working exactly as it
was designed to do,” said Chip Ford,
executive director of Citizens for Limited
Taxation. “Our tax cap was intended as an
automatic release valve for when revenue surpluses
reach an unnecessary level, especially such an
extraordinary level as recently; it was meant as a
check on unlimited taxation and unsustainable
spending growth.”
“It’s
unfortunate that our late-executive director
Barbara Anderson, who worked so hard for
adoption of our 1986 ballot question (and so many
other tax reforms) is no longer with us to celebrate
this success she achieved for all taxpayers of
Massachusetts,” Ford added, “but I’m confident she’s
up there joining us joyfully in spirit.”
The
Boston Herald
Thursday, September 15, 2022
Massachusetts owes its taxpayers
about $3 billion, auditor says
Lawmakers
moved closer to reviving a stalled economic
development bill they shelved two and a half months
ago now that Auditor Suzanne Bump on Thursday
certified that Massachusetts must return nearly $3
billion to taxpayers.
The
monthslong Beacon Hill kerfuffle over tax relief and
economic development lurched into a new phase with
publication of Bump's report, which confirmed the
Baker administration's projection that surging state
tax revenues blew about $2.94 billion past the
amount allowed under a 1986 voter-approved law.
The
spotlight now shifts back to the executive branch,
which hasn't said how and when it plans to
distribute the mandatory relief, and to top House
and Senate Democrats, whose froze their tax relief
and spending plans after learning that Massachusetts
was on track to trigger the tax cap law for the
first time in 35 years.
Legislative leaders signaled Thursday that they will
work to pluck some form of the $4 billion economic
development and tax relief bill from limbo and
advance a $1.6 billion fiscal year 2022 closeout
budget that sets aside money for the Chapter 62F
relief. They offered few details on the scope or
timeline for action, however, and both branches
gaveled out for the weekend without taking any new
steps.
"We will
be moving forward on something now that we have the
finite knowledge of how much money we have," Senate
Ways and Means Committee Co-chair Michael Rodrigues,
who co-chairs a conference committee tasked with
negotiating a final bill, told the News Service.
The
roughly $1 billion in tax relief lawmakers wove into
the original House and Senate bills, including $500
million in one-time rebates and $500 million in
targeted tax law changes, "are all in conversation,"
Rodrigues said, stressing that the final contours
are "still to be determined." ...
House- and
Senate-approved versions of an economic development
bill (H 5034 / S 3030), both of which sought to
combine American Rescue Plan Act funds, surplus tax
revenues and bond authorizations to make a slew of
investments, remain bottled up in a six-member
conference committee tasked with producing a final
accord....
It was not
immediately clear Thursday if the conference
committee had scheduled a meeting to examine Bump's
report or continue its work, though Rodrigues said
he spent the summer "in constant contact and
conversation" with Michlewitz and the Baker
administration....
House
Speaker Ronald Mariano and Senate President Karen
Spilka diverged in the ensuing months, with Spilka
publicly arguing that the Legislature could afford
both its original tax relief proposal and the
required returns and Mariano keeping his foot on the
brakes.
Mariano on
Thursday described the auditor's report as evidence
that Massachusetts is in a "financially strong
position."
"Now that
the Auditor has officially certified the final
revenue numbers, and with the knowledge of the exact
amount that will be given back to taxpayers under
62F, conferees currently negotiating an economic
development package will continue their ongoing
talks," Mariano said in a statement. "I look forward
to the plans to distribute the money back to the
taxpayers."
He
described the conference committee talks as facing
"new circumstances," though the final $2.941 billion
figure Bump certified Thursday doesn't differ
markedly from the $2.965 billion estimate Baker's
budget office produced in late July.
"At a time
of historic inflation that is causing many families
to struggle to pay their bills, our residents should
be provided relief," Spilka added in her own
statement. "With the certification of 62F, it is my
hope that we may now expeditiously pass an economic
development bill that provides additional and
equitable tax relief to residents and that invests
in communities, small businesses, human service
workers and industries particularly hard hit by
COVID-19 like hospitals, nursing homes, and others
struggling to find solid footing amid economic
uncertainty."
Bump said
the voter-approved law set a cap on allowable state
tax revenues in fiscal 2022 of $38,871,154,627.
State government hauled in $41,812,654,358 in FY22,
leading to an overage of $2,941,499,731, she
said....
Details
about how the money will flow back to Bay Staters
remain unclear. A Baker administration official said
this week the statute calls for excess revenue to be
distributed on a proportional basis, meaning
taxpayers with a higher income tax liability last
year will receive a larger boost.
It's also
murky whether the relief would take the form of
credits applied to next year's tax returns, direct
rebates, or something else.
Baker said
in mid-August that he expects "people will be
receiving their refund sometime between the end of
November and the beginning of December," a timeline
that would take place before he leaves office and
does not line up with a personal income tax
liability credit.
The Baker
administration has worked behind the scenes through
the Department of Revenue (DOR) since the spring to
reexamine the regulations around Chapter 62F, but no
final revisions have been announced.
A
spokesperson for the Executive Office of
Administration and Finance on Thursday said the
administration received the auditor's report and
"will share more details soon regarding the
distribution of this revenue to taxpayers."
In
Rodrigues's view, the voter-approved law is "pretty
clear that money is going to go out in the form of
tax credits against next year's liability."
"The law
is pretty clear, in my opinion, if you read the
law," he said. "So if you're going to follow the
law, which we're hoping everybody follows the law,
then there will be credits next year."
Bump said
Thursday that a return to taxpayers of $2.94 billion
"in the form of a credit must be effectuated by the
commissioner of DOR."
But
Citizens for Limited Taxation Executive Director
Chip Ford, who helped secure passage of the
law via a 1986 ballot question, said last month that
the measure's authors did not intend for the word
"credit" to mean only a credit against future tax
liability.
State
House News Service
Thursday, September 15, 2022 - 3:48 PM
Lawmakers Closer To Revisiting
Economic Development Bill
Mariano Cites State's "Financially Strong Position"
