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Post Office Box 1147
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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, September 18, 2022
$3B Tax Refund "Ain't Over 'Til
The Fat Lady Sings"
Jump directly
to CLT's Commentary on the News
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Most Relevant News
Excerpts
(Full news reports follow Commentary)
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Following
the State Auditor’s certification yesterday that
Fiscal Year 2022 (FY22) net state tax revenues
exceeded allowable revenues per Chapter 62F by
$2.941 billion, the Baker-Polito Administration has
announced details regarding the return of this
excess revenue to taxpayers.
“Stronger-than expected state tax revenues have led
to a major surplus for Fiscal Year 2022, and we are
pleased to be able to return nearly $3 billion in
excess revenue to the taxpayers,” said Governor
Charlie Baker. “With families facing continued
pressure from high prices and inflation, these
returns will provide some needed relief. Even with
nearly $3 billion going back to taxpayers,
significant state and federal resources remain, and
we look forward to working with the Legislature to
invest this funding into our economy, communities
and families.” ...
In
accordance with the statute, the $2.941 billion will
be returned to eligible taxpayers by the Department
of Revenue in proportion to personal income tax
liability in Massachusetts incurred by taxpayers in
the immediately preceding taxable year – Tax Year
2021. In general, eligible taxpayers will receive a
credit in the form of a refund that is approximately
13% of their Massachusetts Tax Year 2021 personal
income tax liability....
Additional
information about Chapter 62F taxpayer refunds,
including Frequently Asked Questions and a refund
estimator, is available at
www.mass.gov/62frefunds. This website will be
updated as additional information becomes available
in the coming months. A call center will also be
available to answer questions about 62F refunds
beginning Tuesday, September 20, 2022 at
877-677-9727 and will be open Monday through Friday,
9am-4pm. The call center will not be able to provide
exact refund amounts – however, the estimator on the
FAQs page can help individuals calculate a
preliminary estimate.
Commonwealth of Massachusetts
Executive Office for Administration and Finance
Friday, September 16, 2022
Press Release
Baker-Polito Administration
Announces Details for Return of $2.941 Billion in
Excess Tax Revenue to Taxpayers
Chapter 62F refunds expected to be distributed to
approximately 3.6 million taxpayers beginning in
November 2022
About 3.6
million Massachusetts taxpayers are set to receive
cash back this fall after state government hauled in
taxes last year that surpassed the legal limit by
nearly $3 billion, the Baker administration
announced Friday.
Announcing
a plan that conflicts with what some Democrat
lawmakers expected, Gov. Charlie Baker's team, which
oversees the Department of Revenue, said the $2.941
billion that needs to be returned to taxpayers under
a voter-approved law will take the form of mailed
checks or direct deposits, likely starting in
November.
Taxpayers
will "automatically" receive their refunds without
needing to submit any application. To be eligible,
they must have filed a 2021 state tax return by Oct.
17, 2022.
The amount
of each refund will be scaled based on how much
someone paid in state personal income taxes in 2021,
with larger checks going to those who paid larger
shares of the tax haul. Baker's budget office
estimated the refunds will total about 13 percent of
how much a taxpayer owed to Massachusetts in
personal income tax last year, stressing that figure
could change once it is finalized in late
October....
Massachusetts has a flat income tax rate of 5
percent, so an individual who earned $50,000 in
taxable income last year and had a tax liability of
$2,500 could be in line for a rebate of roughly
$325; toward the top of the scale, a Bay Stater who
earned $1 million in taxable income and owed $50,000
in Massachusetts income taxes could face a rebate of
$6,500. However, the final amount of each check will
depend on variables such as whether a taxpayer
claimed earned income credit, senior circuit breaker
credit, or dependent credits on their tax return....
Top
Democrats in the Legislature were caught off guard
by the emergence this summer of the tax cap, and the
news prompted them to toss aside a $4 billion
economic development bill that included $1 billion
in combined one-time and permanent tax relief.
They have
now come around to the reality that the tax relief
under Chapter 62F is due, and the Baker
administration decided to move forward with its
implementation plans even though the Legislature has
not approved Baker's plan to sequester the tax
relief money in a reserve fund.
Spokespeople for both House Speaker Ronald Mariano
and Senate President Karen Spilka declined to make
the top Democrats available for interviews on
Friday.
Mariano,
who previously accused Baker of failing to alert
legislative leaders the tax cap would be triggered,
indicated in a statement that he is basically on
board with the steps Baker outlined.
"Today's
announcement and timeline is consistent with the
Governor's public statements," Mariano said. "I'm
glad to see the Administration has quickly laid out
plans to distribute the money back to taxpayers and
I look forward to see(ing) its implementation."
Not all
members of Mariano's caucus are thrilled with the
plan.
Rep. Mike
Connolly, a Cambridge Democrat in the Legislature's
progressive wing, said he wants lawmakers to
intervene to adjust the distribution formula and
steer more of the money to low- and middle-income
Bay Staters.
"The
fundamental concern here is that at a time where the
working class, the middle class, poor people are
being absolutely crushed by inflation, we have an
administration that is looking to return checks on
the order of tens of thousands of dollars to the
state's top income earners," Connolly said in an
interview.
Connolly
stressed that he supports returning money to
taxpayers this fall, but he wants the Legislature to
reconvene to formally authorize distributing checks
and to reshape the proportional allocation. The
governor's team says it is following the
"proportional" distribution instructions included in
the 1986 law....
The text
of the law says any excess tax revenue must be
returned as a "credit ... applied to the then
current personal income tax liability of all
taxpayers on a proportional basis to the personal
income tax liability incurred by all taxpayers in
the immediately preceding taxable year." When she
published her report Thursday, Bump said a return of
$2.94 billion "in the form of a credit must be
effectuated by the commissioner of DOR."
That's
also the understanding Senate budget chief Michael
Rodrigues had when asked Thursday if the Legislature
needed to approve a closeout budget Baker filed (H
5260) that partitions $2.94 billion to cover the 62F
relief.
"I don't
think so because the law is pretty clear that money
is going to go out in the form of tax credits
against next year's tax liability," Rodrigues said.
"The law is pretty clear, in my opinion, if you read
the law. So if you're going to follow the law, which
we're hoping everybody follows the law, then there
will be credits next year."
The Baker
administration appears confident, though, that
returning cash directly to taxpayers this fall --
before Baker leaves office in January -- is within
bounds. The Executive Office of Administration and
Finance's press release announcing the plan Friday
called it "a credit in the form of a refund."
Baker
aides said Administration and Finance Secretary
Michael Heffernan was unavailable all day Friday to
take questions and discuss the tax relief plans.
An
administration spokesperson who agreed to
communicate only on background said the Legislature
does not need to approve the closeout supplemental
budget before the tax refunds can flow to Bay
Staters. The measure in that bill would allow the
refunds to be paid from currently available fiscal
year 2022 dollars rather than from fiscal year 2023
dollars, but does not serve as a prerequisite to
delivering refunds.
State
House News Service
Friday, September 16, 2022
Tax Refunds To Flow
Across Massachusetts This Fall
Shares Of State Surplus Will Come In Checks, Direct
Deposits
State
officials in November plan to start automatically
sending millions of Massachusetts taxpayers their
share of a $3 billion credit under a little-known
law triggered by the state’s record windfall of tax
collections, the Baker administration said Friday.
Roughly
3.6 million taxpayers stand to benefit from the
unprecedented refund, which officials plan to send
in the form of a check or through direct deposit.
State officials on Friday estimated that eligible
taxpayers will automatically get back about 13
percent of their personal state income tax liability
from tax year 2021 — nearly double what Baker
administration officials had initially projected....
The state
ended the last fiscal year in June with a nearly $5
billion surplus after collecting nearly 21 percent
more in tax revenue than it did a year ago, an
extraordinary jump. Aides to Baker have said the
surplus is large enough to cover the credit, and
estimated the state would still have some $2 billion
in surplus revenue, itself a whopping figure....
The
language, however, also leaves it to the state
revenue commissioner to set the rules for
implementing the law.
State
Representative Mike Connolly, a Cambridge Democrat
who has advocated limiting what high-income earners
could get back under the credit, said Friday that he
is considering taking legal action in a bid to stop
Baker from issuing checks in “this unprecedented
fashion.” The law gives taxpayers the option to file
litigation to “enforce the provisions of this
chapter.”
Connolly
said his objective is to not delay people receiving
the money, but for the Legislature to “take action
as soon as possible to explicitly and legally
authorize distribution of these refund checks this
fall, and at the same time, for us to adjust the
distribution formula so middle-income and poor folks
see a greater share” of the nearly $3 billion.
House and
Senate leaders have not indicated they have any
plans to change the law or reshape how the state
distributes the excess revenue.
The
Boston Globe
Friday, September 16, 2022
Millions of
Mass. taxpayers will get money back starting in
November, officials say.
Here are the details.
Gov.
Charlie Baker said on Friday that he intends in
November to start mailing taxpayers tax cap checks
equal to an estimated 13 percent of their 2021
personal income tax liability.
An expert
on the tax cap law says Baker’s move to mail out
checks worth $2.94 billion before he leaves office
is inconsistent with the law. But it’s unclear
whether anyone will file a lawsuit in an attempt to
stop him. Supporters of the law have said they back
the governor’s bid to get the money back to
taxpayers as soon as possible.
The
biggest checks will go to those who had the greatest
income tax liability in 2021. Someone with an
adjusted income tax liability of $100 will get back
$13, while someone with a $1,000 liability will get
back $130. Those with no income tax liability will
receive nothing....
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 tied to wage and salary growth 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....
Peter
Enrich, an attorney who worked as general counsel
and counsel for revenue policy at the Executive
Office for Administration and Finance in 1986 and
1987 when the tax cap law was being debated and
first implemented, said the law is clear the tax cap
money is distributed via credits. He said the
definition of a credit is well established in tax
law – credits reduce taxes that are owed and are not
refunds issued by check....
Baker’s
approach could impact who gets some of their tax
money back. It’s very possible a person could have a
tax liability in 2021 but no liability in 2022.
Under Baker’s approach, that person would be sent a
check. Under the original process, that person would
not be able to take advantage of the credit.
Enrich and
others are also questioning the size of the tax cap
giveback....
Enrich
said the upshot is that wealthy Massachusetts
residents will receive the tax advantages of the
workaround and benefit the most from the tax cap
giveback, since generally those who pay more in
taxes get more money back.
CommonWealth Magazine
Friday, September 16, 2022
Baker presses forward with
hefty tax cap refunds
Law calls for credits but governor prepares to send
out checks
“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 which sponsored the 1986 ballot
question. “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,” continued Ford, “But I'm confident
she's up there joining us joyfully in spirit.”
“This is a
tremendous victory for all taxpayers of the
commonwealth,” said Paul Craney of the Massachusetts
Fiscal Alliance. “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.”
“The 1986
law was regressive when it passed before I was born,
and it is regressive today,” said Jonathan Cohn, the
policy director at the group Progressive
Massachusetts. “It is incumbent upon the Legislature
to ensure that the implementation of such a law does
not make inequality in our state worse, as it
undoubtedly will if it is used to disproportionately
benefit the highest-income residents — those who
bear the impact of inflation and economic turbulence
of any kind the least — as Gov. Baker proposes.”
"I support
the idea to deliver $2.9 billion in relief checks to
taxpayers this fall," said Rep. Mike Connolly
(D-Cambridge). "However, Chapter 62F would send the
largest checks to the state’s top income earners,
while those most impacted by inflation would get the
smallest checks. That’s not just inequitable, it’s
also bad economic policy. Moreover, 62F only
authorizes tax credits for next year, not checks
this fall. That’s why I am calling on legislative
leaders to return to formal session as soon as
possible to adjust the 62F distribution formula so
that middle-income residents and the working poor
are prioritized, as they are the ones who are being
most crushed by inflation. At the same time, I think
the legislature should take action to legally
authorize the distribution of these checks this
fall. Otherwise, Gov. Baker’s rebate scheme could
get tied up in the courts.
Beacon
Hill Roll Call
September 12-16, 2022
$2.9 Billion in Tax Relief is On Its
Way
By Bob Katzen
That great
whooshing noise you heard Friday was the sound of
millions of Bay Staters trying to dig out their 2021
tax return to calculate just how much money the
state could be sending them later this fall.
The
prospect of tax relief under an obscure and
largely-forgotten voter law called Chapter 62F first
emerged in late July like a mirage in the inflation
desert, but two significant announcements this week
have it looking like it's actually a real oasis.
First,
Auditor Suzanne Bump certified that state tax
collections last budget year surpassed the limit
established by 62F by more than $2.94 billion,
confirming that the state is required to return that
amount in proportion to what each taxpayer paid in
income tax. Within about 24 hours, Gov. Charlie
Baker's office announced that about 3.6 million Bay
State taxpayers can expect to get "a credit in the
form of a refund" worth roughly 13 percent of their
income tax liability last year. The credit/refunds
will start going out in November either by mail or
via direct deposit....
The median
income for Massachusetts households from 2016
through 2020 was $84,385, according to the U.S.
Census Bureau. That amount of income (not factoring
in credits or deductions and filed as the head of
the household) would result in a state income tax
liability of $3,999, according to a Forbes income
tax calculator. Thirteen percent of the tax
liability for the median household income -- in
other words, the credit that the median household
could expect -- would be about $520.
Or think
of it this way: For every $1,000 paid in state
income tax, about $130 will be refunded. (You can
also use the
state's own refund calculator.)
State
House News Service
Friday, September 16, 2022
Weekly Roundup - Oh, What a
Relief It Is
Amid the
anticipation over subway line reopenings planned for
next week, the Baker administration announced plans
Friday to move forward this fall with nearly $3
billion in tax relief even though the Legislature
has yet to act on a request by Gov. Charlie Baker to
set aside the surplus money "to ensure that it is
easily available" to return to taxpayers. Section 63
of Baker's $1.6 billion spending bill to close the
books on fiscal 2022 calls for the state to treat
the funds needed for tax relief under a 1986 voter
law as a "reserved balance." ...
While
somewhat reluctantly, Democrats appear resigned to
the massive amounts of tax relief due under Chapter
62F, which Baker says will flow this fall as checks
or direct deposits, with larger refunds arriving for
taxpayers who paid more in income taxes, and vice
versa. That approach contrasts with the more
progressive and targeted approach to tax relief that
lawmakers built into their economic development
bills. Legislative leaders who just two months ago
froze action on those bills now appear interested in
reviving them in some form.
State
House News Service
Friday, September 16, 2022
Advances - Week of Sept. 18, 2022
|
Chip Ford's CLT
Commentary |
|
Gov. Baker moved
fast on Friday, the day following State Auditor Bump's
certification of the $3 Billion tax refund owed to taxpayers
from CLT's 1986 Tax Cap law. The Governor announced
his administration will be issuing the refunds starting in
November, even has a
state website set up explaining the process, answering
common questions, and it even provides a calculator so each
taxpayer can determine how much to expect will be returned
to them.
There are numerous
news reports included in today's CLT Update with
comprehensive details as they are known and exist today, but
excerpts from just one by the State House News Service
covers the most prominent factors
and
follows directly below.
It's smart that
the Governor is moving quickly while he still can. If
he doesn't get these refund checks out quickly and into
taxpayers' hands before leaving office in January, the new,
incoming governor will hold that power to decide how the
refunds will be issued, if at all. I do not anticipate
that the new governor —
current-Attorney General Maura Healey by virtually all
expectations (God save the Commonwealth!)
— will be inclined to treat
taxpayers with due respect.
And if for any
reason the issuance of the tax refunds is delayed until
January, I'd expect the Legislature as well to come into
play obstructing or outright repealing the law.
The worst-case
scenario for taxpayers is below following the News Service
report.
State House News
Service
Friday, September 16, 2022
Tax Refunds To Flow Across
Massachusetts This Fall
Shares Of State Surplus Will Come In Checks, Direct Deposits
About 3.6
million Massachusetts taxpayers are set to receive
cash back this fall after state government hauled in
taxes last year that surpassed the legal limit by
nearly $3 billion, the Baker administration
announced Friday.
Announcing a plan
that conflicts with what some Democrat lawmakers expected,
Gov. Charlie Baker's team, which oversees the Department of
Revenue, said the $2.941 billion that needs to be returned
to taxpayers under a voter-approved law will take the form
of mailed checks or direct deposits, likely starting in
November.
Taxpayers will
"automatically" receive their refunds without needing to
submit any application. To be eligible, they must have filed
a 2021 state tax return by Oct. 17, 2022.
The amount of each
refund will be scaled based on how much someone paid in
state personal income taxes in 2021, with larger checks
going to those who paid larger shares of the tax haul.
Baker's budget office estimated the refunds will total about
13 percent of how much a taxpayer owed to Massachusetts in
personal income tax last year, stressing that figure could
change once it is finalized in late October....
Massachusetts has
a flat income tax rate of 5 percent, so an individual who
earned $50,000 in taxable income last year and had a tax
liability of $2,500 could be in line for a rebate of roughly
$325; toward the top of the scale, a Bay Stater who earned
$1 million in taxable income and owed $50,000 in
Massachusetts income taxes could face a rebate of $6,500.
However, the final amount of each check will depend on
variables such as whether a taxpayer claimed earned income
credit, senior circuit breaker credit, or dependent credits
on their tax return....
Top Democrats in
the Legislature were caught off guard by the emergence this
summer of the tax cap, and the news prompted them to toss
aside a $4 billion economic development bill that included
$1 billion in combined one-time and permanent tax relief.
They have now come
around to the reality that the tax relief under Chapter 62F
is due, and the Baker administration decided to move forward
with its implementation plans even though the Legislature
has not approved Baker's plan to sequester the tax relief
money in a reserve fund.
Spokespeople for
both House Speaker Ronald Mariano and Senate President Karen
Spilka declined to make the top Democrats available for
interviews on Friday.
Mariano, who
previously accused Baker of failing to alert legislative
leaders the tax cap would be triggered, indicated in a
statement that he is basically on board with the steps Baker
outlined.
"Today's
announcement and timeline is consistent with the Governor's
public statements," Mariano said. "I'm glad to see the
Administration has quickly laid out plans to distribute the
money back to taxpayers and I look forward to see(ing) its
implementation."
Not all members of
Mariano's caucus are thrilled with the plan.
Rep. Mike
Connolly, a Cambridge Democrat in the Legislature's
progressive wing, said he wants lawmakers to intervene to
adjust the distribution formula and steer more of the money
to low- and middle-income Bay Staters.
"The fundamental
concern here is that at a time where the working class, the
middle class, poor people are being absolutely crushed by
inflation, we have an administration that is looking to
return checks on the order of tens of thousands of dollars
to the state's top income earners," Connolly said in an
interview.
Connolly stressed
that he supports returning money to taxpayers this fall, but
he wants the Legislature to reconvene to formally authorize
distributing checks and to reshape the proportional
allocation. The governor's team says it is following the
"proportional" distribution instructions included in the
1986 law....
The text of the
law says any excess tax revenue must be returned as a
"credit ... applied to the then current personal income tax
liability of all taxpayers on a proportional basis to the
personal income tax liability incurred by all taxpayers in
the immediately preceding taxable year." When she published
her report Thursday, Bump said a return of $2.94 billion "in
the form of a credit must be effectuated by the commissioner
of DOR."
That's also the
understanding Senate budget chief Michael Rodrigues had when
asked Thursday if the Legislature needed to approve a
closeout budget Baker filed (H 5260) that partitions $2.94
billion to cover the 62F relief.
"I don't think so
because the law is pretty clear that money is going to go
out in the form of tax credits against next year's tax
liability," Rodrigues said. "The law is pretty clear, in my
opinion, if you read the law. So if you're going to follow
the law, which we're hoping everybody follows the law, then
there will be credits next year."
The Baker
administration appears confident, though, that returning
cash directly to taxpayers this fall -- before Baker leaves
office in January -- is within bounds. The Executive Office
of Administration and Finance's press release announcing the
plan Friday called it "a credit in the form of a refund."
Baker aides said
Administration and Finance Secretary Michael Heffernan was
unavailable all day Friday to take questions and discuss the
tax relief plans.
An administration
spokesperson who agreed to communicate only on background
said the Legislature does not need to approve the closeout
supplemental budget before the tax refunds can flow to Bay
Staters. The measure in that bill would allow the refunds to
be paid from currently available fiscal year 2022 dollars
rather than from fiscal year 2023 dollars, but does not
serve as a prerequisite to delivering refunds.
Avowed
Democratic Socialist state Rep. Mike Connolly
(D-Cambridge) and other "progressives" (Marxists) seem to be
setting the narrative and the stage for delaying Gov.
Baker's ongoing rebate plan. Peter Enrich, general
counsel and counsel for revenue policy in the Dukakis
administration's Office of Administration and Finance, led
the charge
beginning on August 11 and continues to build the
narrative.
CommonWealth Magazine reported on Friday ("Baker presses forward with
hefty tax cap refunds —
Law calls for credits but governor prepares to send
out checks"):
Peter
Enrich, an attorney who worked as general counsel
and counsel for revenue policy at the Executive
Office for Administration and Finance in 1986 and
1987 when the tax cap law was being debated and
first implemented, said the law is clear the tax cap
money is distributed via credits. He said the
definition of a credit is well established in tax
law – credits reduce taxes that are owed and are not
refunds issued by check....
Baker’s
approach could impact who gets some of their tax
money back. It’s very possible a person could have a
tax liability in 2021 but no liability in 2022.
Under Baker’s approach, that person would be sent a
check. Under the original process, that person would
not be able to take advantage of the credit.
Enrich and
others are also questioning the size of the tax cap
giveback....
Enrich
said the upshot is that wealthy Massachusetts
residents will receive the tax advantages of the
workaround and benefit the most from the tax cap
giveback, since generally those who pay more in
taxes get more money back.
"Generally those
who pay more in taxes get more money back" Enrich (and
others, see below) complain. Well, duh, no kidding!
That is
precisely the whole nature and entire purpose of a tax
REFUND. Are these people just that stupid or are
they intentionally manipulative and deceptive, a rhetorical
question of course. This brings us full-circle back to
The Takers' view of whether a tax is "fair"
unless some pay at a higher rate than
others — and ours where everyone pays at the same
rate, the same percentage regardless of their income.
That's the difference between their "equity" and our
"equality."
The Takers'
justification comes straight from Karl Marx: "From
each according to his ability, to each according to his
needs."
As to the question
of and dispute over how the "excess revenue" refund is to be
returned to taxpayers who paid it, the State House News
Service reported my response
on Thursday ("Lawmakers
Closer To Revisiting Economic Development Bill
— Mariano Cites State's 'Financially Strong
Position'"):
. . . 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.
But the conga line
of Takers has been expanding.
Beacon Hill Roll
Call's Bob Katzen reported on Friday ("$2.9 Billion in Tax Relief is On Its Way"):
“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 which sponsored the 1986 ballot
question. “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,” continued Ford, “But I'm confident
she's up there joining us joyfully in spirit.” ...
“The 1986
law was regressive when it passed before I was born,
and it is regressive today,” said Jonathan Cohn, the
policy director at the group Progressive
Massachusetts. “It is incumbent upon the Legislature
to ensure that the implementation of such a law does
not make inequality in our state worse, as it
undoubtedly will if it is used to disproportionately
benefit the highest-income residents — those who
bear the impact of inflation and economic turbulence
of any kind the least — as Gov. Baker proposes.”
"I support the
idea to deliver $2.9 billion in relief checks to taxpayers
this fall," said Rep. Mike Connolly (D-Cambridge). "However,
Chapter 62F would send the largest checks to the state’s top
income earners, while those most impacted by inflation would
get the smallest checks. That’s not just inequitable, it’s
also bad economic policy. Moreover, 62F only authorizes tax
credits for next year, not checks this fall. That’s why I am
calling on legislative leaders to return to formal session
as soon as possible to adjust the 62F distribution formula
so that middle-income residents and the working poor are
prioritized, as they are the ones who are being most crushed
by inflation. At the same time, I think the legislature
should take action to legally authorize the distribution of
these checks this fall. Otherwise, Gov. Baker’s rebate
scheme could get tied up in the courts.
The
Boston Globe on Friday reported ("Millions of
Mass. taxpayers will get money back starting in
November, officials say"):
State
Representative Mike Connolly, a Cambridge Democrat
who has advocated limiting what high-income earners
could get back under the credit, said Friday that he
is considering taking legal action in a bid to stop
Baker from issuing checks in “this unprecedented
fashion.” The law gives taxpayers the option to file
litigation to “enforce the provisions of this
chapter.”
Connolly
said his objective is to not delay people receiving
the money, but for the Legislature to “take action
as soon as possible to explicitly and legally
authorize distribution of these refund checks this
fall, and at the same time, for us to adjust the
distribution formula so middle-income and poor folks
see a greater share” of the nearly $3 billion.
The Globe in that
article also reported: "House and
Senate leaders have not indicated they have any
plans to change the law or reshape how the state
distributes the excess revenue."
At this moment I don't
think we have anything to be concerned about. So far
the recognition of our tax cap refund law seems to be moving
ahead smoothly. But in the days ahead will those
"leaders" in the House and Senate and their flock of
followers encourage the Legislature's leftwing radicals to
run interference, leaving them with publicly clean hands and no
incriminating fingerprints at the crime scene as they quietly celebrate
behind the curtain — until
January?
Fortunately for taxpayers, our attorneys at the
Goldwater Institute and New England Legal Foundation
are standing by still ready to launch a lawsuit on
our behalf if necessary. Their news release on
Thursday ("Taxpayer
Advocates Celebrate $3B Tax Credit Win for
Massachusetts Citizens, But They Caution that Vested
Property Right Cannot be Undone") closed with:
. . . “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.”
"It ain't over 'til
the fat lady sings" the old cliché goes, and she won't be
crooning until those mandated refund checks are in
taxpayers' hands.
|
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Chip Ford
Executive Director |
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Commonwealth of
Massachusetts
Executive Office for Administration and Finance
Press Release
Friday, September 16, 2022
Baker-Polito Administration Announces Details for Return of
$2.941 Billion in Excess Tax Revenue to Taxpayers
Chapter 62F refunds expected to be distributed to
approximately 3.6 million taxpayers beginning in November
2022
For Immediate Release:
September 16, 2022
Boston — Following the State Auditor’s certification
yesterday that Fiscal Year 2022 (FY22) net state tax
revenues exceeded allowable revenues per Chapter 62F by
$2.941 billion, the Baker-Polito Administration has
announced details regarding the return of this excess
revenue to taxpayers.
“Stronger-than expected state tax revenues have led to a
major surplus for Fiscal Year 2022, and we are pleased to be
able to return nearly $3 billion in excess revenue to the
taxpayers,” said Governor Charlie Baker. “With families
facing continued pressure from high prices and inflation,
these returns will provide some needed relief. Even with
nearly $3 billion going back to taxpayers, significant state
and federal resources remain, and we look forward to working
with the Legislature to invest this funding into our
economy, communities and families.”
“Strong economic growth throughout our Commonwealth,
combined with careful management of state tax dollars, has
resulted in a significant surplus this past fiscal year,”
said Lt. Governor Karyn Polito. “In the coming months, our
administration will work diligently to distribute these
funds back to taxpayers, and we look forward to working with
the Legislature to invest additional surplus dollars in
local economies across our state.”
In accordance with the statute, the $2.941 billion will be
returned to eligible taxpayers by the Department of Revenue
in proportion to personal income tax liability in
Massachusetts incurred by taxpayers in the immediately
preceding taxable year – Tax Year 2021. In general, eligible
taxpayers will receive a credit in the form of a refund that
is approximately 13% of their Massachusetts Tax Year 2021
personal income tax liability. This percentage is a
preliminary estimate and will be finalized in late October,
after all 2021 tax returns are filed. To be eligible,
individuals must have filed a 2021 state tax return on or
before October 17, 2022. An individual’s credit may be
reduced due to refund intercepts, including for unpaid
taxes, unpaid child support, and certain other debts.
Individuals eligible for a refund will receive it
automatically as a check sent through the mail or through
direct deposit. Distribution of refunds is expected to begin
in November 2022.
"While the exceptionally high tax collections we saw in FY22
are a testament to the strength and resilience of the
Massachusetts economy, we are pleased to be in a position to
return a substantial portion of this revenue back to
taxpayers," said Administration and Finance Secretary
Michael J. Heffernan. "With many feeling the strain of
rising prices, these refunds will be a welcome source of
relief for more than three million hardworking individuals
across the state, and we look forward to executing on the
delivery of the refunds in the coming months."
In total, $41.812 billion was collected in FY22,
representing overall revenue growth of more than 20% above
Fiscal Year 2021. After accounting for the Chapter 62F
refunds and the recently filed $840 million final FY22
supplemental budget, a surplus of $1.5 billion remains
available to support permanent tax relief measures and other
critical investments pending in the FORWARD/economic
development bill, in combination with $2.2 billion in
remaining American Rescue Plan Act funds.
Additional information about Chapter 62F taxpayer refunds,
including Frequently Asked Questions and a refund estimator,
is available at
www.mass.gov/62frefunds. This website will be updated as
additional information becomes available in the coming
months. A call center will also be available to answer
questions about 62F refunds beginning Tuesday, September 20,
2022 at 877-677-9727 and will be open Monday through Friday,
9am-4pm. The call center will not be able to provide exact
refund amounts – however, the estimator on the FAQs page can
help individuals calculate a preliminary estimate.
About Chapter 62F
Chapter 62F is a Massachusetts law enacted by voters in 1986
via a ballot question that requires the Department of
Revenue to issue a credit to taxpayers if total tax revenues
in a given fiscal year exceed an annual cap tied to wage and
salary growth in the Commonwealth.
The law requires that the Department of Revenue submit a
report to the State Auditor on the net state tax revenues
and the allowable state tax revenues for each fiscal year by
September 1st. The State Auditor then makes the
determination of whether net state tax revenues exceed
allowable state tax revenues – and, if so, by what amount –
on or before the third Tuesday of September. View the State
Auditor’s report for Fiscal Year 2022.
The Chapter 62F process has been triggered once before, in
1987.
State House News
Service
Friday, September 16, 2022
Tax Refunds To Flow Across Massachusetts This Fall
Shares Of State Surplus Will Come In Checks, Direct Deposits
By Chris Lisinski
About 3.6 million Massachusetts taxpayers are set to receive
cash back this fall after state government hauled in taxes
last year that surpassed the legal limit by nearly $3
billion, the Baker administration announced Friday.
Announcing a plan that conflicts with what some Democrat
lawmakers expected, Gov. Charlie Baker's team, which
oversees the Department of Revenue, said the $2.941 billion
that needs to be returned to taxpayers under a
voter-approved law will take the form of mailed checks or
direct deposits, likely starting in November.
Taxpayers will "automatically" receive their refunds without
needing to submit any application. To be eligible, they must
have filed a 2021 state tax return by Oct. 17, 2022.
The amount of each refund will be scaled based on how much
someone paid in state personal income taxes in 2021, with
larger checks going to those who paid larger shares of the
tax haul. Baker's budget office estimated the refunds will
total about 13 percent of how much a taxpayer owed to
Massachusetts in personal income tax last year, stressing
that figure could change once it is finalized in late
October.
"With families facing continued pressure from high prices
and inflation, these returns will provide some needed
relief," Baker said in a statement. "Even with nearly $3
billion going back to taxpayers, significant state and
federal resources remain, and we look forward to working
with the Legislature to invest this funding into our
economy, communities and families."
Bay Staters can use an online calculator the Baker
administration launched to get a projection of what to
expect.
Massachusetts has a flat income tax rate of 5 percent, so an
individual who earned $50,000 in taxable income last year
and had a tax liability of $2,500 could be in line for a
rebate of roughly $325; toward the top of the scale, a Bay
Stater who earned $1 million in taxable income and owed
$50,000 in Massachusetts income taxes could face a rebate of
$6,500. However, the final amount of each check will depend
on variables such as whether a taxpayer claimed earned
income credit, senior circuit breaker credit, or dependent
credits on their tax return.
Rebates might also be reduced due to refund intercepts for
unpaid taxes, unpaid child support or other debts, officials
said.
The administration's implementation plans were rolled out a
day after Auditor Suzanne Bump certified that Massachusetts
collected $2.941 billion more in taxes last year than the
cap set by a voter-approved 1986 law linking tax and wage
growth.
"This rebate could not come at a better time," said
Retailers Association of Massachusetts President Jon Hurst.
"Inflation has hurt our consumers and small businesses, and
putting these tax dollars back in the pockets of the
taxpayers will help with high heating and grocery costs, and
will put important consumer dollars back into our local
economy for the holidays."
Top Democrats in the Legislature were caught off guard by
the emergence this summer of the tax cap, and the news
prompted them to toss aside a $4 billion economic
development bill that included $1 billion in combined
one-time and permanent tax relief.
They have now come around to the reality that the tax relief
under Chapter 62F is due, and the Baker administration
decided to move forward with its implementation plans even
though the Legislature has not approved Baker's plan to
sequester the tax relief money in a reserve fund.
Spokespeople for both House Speaker Ronald Mariano and
Senate President Karen Spilka declined to make the top
Democrats available for interviews on Friday.
Mariano, who previously accused Baker of failing to alert
legislative leaders the tax cap would be triggered,
indicated in a statement that he is basically on board with
the steps Baker outlined.
"Today's announcement and timeline is consistent with the
Governor's public statements," Mariano said. "I'm glad to
see the Administration has quickly laid out plans to
distribute the money back to taxpayers and I look forward to
see(ing) its implementation."
Not all members of Mariano's caucus are thrilled with the
plan.
Rep. Mike Connolly, a Cambridge Democrat in the
Legislature's progressive wing, said he wants lawmakers to
intervene to adjust the distribution formula and steer more
of the money to low- and middle-income Bay Staters.
"The fundamental concern here is that at a time where the
working class, the middle class, poor people are being
absolutely crushed by inflation, we have an administration
that is looking to return checks on the order of tens of
thousands of dollars to the state's top income earners,"
Connolly said in an interview.
Connolly stressed that he supports returning money to
taxpayers this fall, but he wants the Legislature to
reconvene to formally authorize distributing checks and to
reshape the proportional allocation. The governor's team
says it is following the "proportional" distribution
instructions included in the 1986 law.
Lawmakers this year approved, but have not finalized, plans
to send one-time $250 checks to single filers who earned
between $38,000 and $100,000 in 2021 and $500 checks to
married joint filers who earned between $38,000 and
$150,000, pitching it as a way to relieve the pressure of
skyrocketing inflation and surging gas prices.
That measure has been in limbo since Democrats failed to
find agreement on their economic development bill when
formal sessions for the term ended on Aug. 1, though
legislative leaders signaled Thursday they are moving closer
to reviving the proposal.
For some taxpayers who were in line to receive $250 checks,
the Baker administration's plan could offer similar relief.
Without factoring in credits or deductions, a taxable income
of $38,000 could translate to a rebate of $247 using the
preliminary projections the administration produced Friday.
Confusion lingered through the summer over how the 62F
relief would be returned to taxpayers. In 1987, the only
other time the cap was triggered, the state allowed
taxpayers to claim a share on their income tax returns the
following year.
The text of the law says any excess tax revenue must be
returned as a "credit ... applied to the then current
personal income tax liability of all taxpayers on a
proportional basis to the personal income tax liability
incurred by all taxpayers in the immediately preceding
taxable year." When she published her report Thursday, Bump
said a return of $2.94 billion "in the form of a credit must
be effectuated by the commissioner of DOR."
That's also the understanding Senate budget chief Michael
Rodrigues had when asked Thursday if the Legislature needed
to approve a closeout budget Baker filed (H 5260) that
partitions $2.94 billion to cover the 62F relief.
"I don't think so because the law is pretty clear that money
is going to go out in the form of tax credits against next
year's tax liability," Rodrigues said. "The law is pretty
clear, in my opinion, if you read the law. So if you're
going to follow the law, which we're hoping everybody
follows the law, then there will be credits next year."
The Baker administration appears confident, though, that
returning cash directly to taxpayers this fall -- before
Baker leaves office in January -- is within bounds. The
Executive Office of Administration and Finance's press
release announcing the plan Friday called it "a credit in
the form of a refund."
Baker aides said Administration and Finance Secretary
Michael Heffernan was unavailable all day Friday to take
questions and discuss the tax relief plans.
An administration spokesperson who agreed to communicate
only on background said the Legislature does not need to
approve the closeout supplemental budget before the tax
refunds can flow to Bay Staters. The measure in that bill
would allow the refunds to be paid from currently available
fiscal year 2022 dollars rather than from fiscal year 2023
dollars, but does not serve as a prerequisite to delivering
refunds.
The Boston
Globe
Friday, September 16, 2022
Millions of Mass. taxpayers will get money back starting in
November, officials say.
Here are the details.
By Matt Stout
Millions of Massachusetts taxpayers could begin receiving
automatic state tax refunds in November at amounts nearly
double what officials had initially projected, the Baker
administration said Friday, as part of an unprecedented
return of $3 billion under a once little-known 1980s-era
law.
In all, roughly 3.6 million taxpayers stand to receive a
payment, either by check or direct deposit, at a time when
rising inflation continues to squeeze families and the
prospect of other tax relief flowing from Beacon Hill this
year remains muddy, at best.
Baker administration officials on Friday estimated that
eligible taxpayers will get back about 13 percent of their
personal state income tax liability from tax year 2021 — far
more than the 7 percent they had initially projected in
July.
To be eligible, taxpayers must have filed a 2021 state tax
return by Oct. 17. State officials said someone’s refund
could be reduced if they have unpaid taxes, unpaid child
support, or other debts.
State officials said they plan to start sending payments in
November, with the expectation that all refunds will go out
before the end of the year.
It would mark a speedy — some argue unlawfully so —
distribution of billions of dollars, and would effectively
ensure millions of people get checks before Governor Charlie
Baker, a Republican who thrice ran for the corner office
pitching himself as a dependable steward of tax dollars,
leaves office in January.
Some of the state’s highest earners also stand to be among
those who benefit most. The law stipulates that any credit
is applied on a “proportional basis,” meaning the more
someone owed in income taxes, the higher the refund they’re
due.
Baker administration officials cautioned that the 13 percent
refund is a preliminary estimate and that officials will
finalize it in late October, after all 2021 tax returns are
filed.
“These are going to big checks for some people, but for most
people they’re not going to be huge checks,” said Luke
Stein, an assistant professor of finance at Babson College.
Stein said given the checks’ timing shortly before the
holiday season, it could nevertheless mean many people use
the extra cash on discretionary items they “otherwise would
not have bought.”
“Maybe to take a trip or eat a restaurant meal they wouldn’t
otherwise have,” he said. “Every dollar helps.”
Baker released his plans for the payments a day after
Auditor Suzanne M. Bump certified that the state is required
to return $2.94 billion to taxpayers under a 1986
voter-passed measure intended to limit state tax revenue
growth to the growth of total wages and salaries, and return
any excess to taxpayers.
It marks just the second instance the law has been triggered
in nearly 40 years.
The state ended the last fiscal year in June with a nearly
$5 billion surplus after collecting nearly 21 percent more
in tax revenue than it did a year ago, an extraordinary
jump. Aides to Baker said the surplus is large enough to
cover the credit, and estimated the state would still have
some $2 billion in surplus revenue, itself a whopping
figure.
“With families facing continued pressure from high prices
and inflation, these returns will provide some needed
relief,” Baker, who is not seeking another term, said in a
statement Friday. “Even with nearly $3 billion going back to
taxpayers, significant state and federal resources remain.”
State officials have set up a website where people can
calculate their estimated credit. The state also plans to
launch a five-day-a-week call center starting Tuesday to
help answer questions.
The only other time the law was triggered was in 1987 when
tax collections exceeded the allowable amount by $29.2
million, according to a previous report from Bump’s office.
At the time, the state did not issue the credit directly,
but instead added a line to the 1987 version of the
individual income tax return form where individual taxpayers
could “insert his or her individually calculated share.” The
state ultimately issued $16.8 million in credits, leaving
nearly $12.4 million unclaimed.
Whether the Baker administration can, in fact, issue the
credits as a direct refund may be an open debate.
Kurt Wise, a senior policy analyst at the Massachusetts
Budget and Policy Center, told the Globe on Thursday that
the law is clear in calling the refund a “tax credit,”
effectively limiting the form it can take. Wise also noted
that Bump in her own statement described it as taking the
“form of a credit,” which typically reduces the taxes a
person owes.
The language, however, also leaves it to the state revenue
commissioner to set the rules for implementing the law.
“That a different method was used in 1987 doesn’t preclude
DOR from making a different choice now based on current
circumstances,” a spokesperson for Baker’s budget office
said.
State Representative Mike Connolly, a Cambridge Democrat who
has advocated limiting what high-income earners could get
back under the credit, said Friday that he is considering
taking legal action in a bid to stop Baker from issuing
checks in “this unprecedented fashion.” The law gives
taxpayers the option to file litigation to “enforce the
provisions of this chapter.”
Connolly said his objective is not to delay people receiving
the money, but for the Legislature to “take action as soon
as possible to explicitly and legally authorize distribution
of these refund checks this fall, and at the same time, for
us to adjust the distribution formula so middle-income and
poor folks see a greater share” of the nearly $3 billion.
House and Senate leaders have not indicated they have any
plans to change the law or reshape how the state distributes
the excess revenue. And one top legislative official hinted
he’s OK with Baker’s plan.
In a statement Friday, House Speaker Ronald Mariano said he
is “glad to see the administration has quickly laid out
plans to distribute the money back to taxpayers.”
“I look forward to [seeing] its implementation,” the Quincy
Democrat said.
The likelihood of billions flowing back to taxpayers has
roiled Beacon Hill, landing amid a separate ongoing debate
about whether the state should raise taxes on some of its
wealthiest residents.
Baker’s disclosure during the final days of the
Legislature’s formal sessions in July that the state was
poised to trigger the decades-old law upended talks over a
$4.5 billion spending package that included roughly $1
billion in proposed tax relief.
The Legislature gaveled its formal sessions to a close the
morning of Aug. 1 with no deal on the legislation, leaving
the fate of a final package in limbo. Mariano said this week
that legislative leaders intend to continue talks over a
potential economic development package, though when and in
what form it could emerge is unclear.
CommonWealth Magazine
Friday, September 16, 2022
Baker presses forward with hefty tax cap refunds
Law calls for credits but governor prepares to send out
checks
By Bruce Mohl
Gov. Charlie Baker said on Friday that he intends in
November to start mailing taxpayers tax cap checks equal to
an estimated 13 percent of their 2021 personal income tax
liability.
An expert on the tax cap law says Baker’s move to mail out
checks worth $2.94 billion before he leaves office is
inconsistent with the law. But it’s unclear whether anyone
will file a lawsuit in an attempt to stop him. Supporters of
the law have said they back the governor’s bid to get the
money back to taxpayers as soon as possible.
The biggest checks will go to those who had the greatest
income tax liability in 2021. Someone with an adjusted
income tax liability of $100 will get back $13, while
someone with a $1,000 liability will get back $130. Those
with no income tax liability will receive nothing.
To determine what you would receive, take the amount on line
32 of your Massachusetts 2021 tax return and subtract any
money you received from the earned income tax credit, the
senior circuit breaker, and other credits (line 43, 44, 45,
45, and 47 on your tax return). Multiply the resulting
number by 13 percent and that’s the amount you would receive
via check or direct deposit. Checks will go to any tax filer
who paid Massachusetts income taxes in 2021, whether they
live here or not. (For more details and a refund calculator,
check the state’s website.)
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 tied to wage and salary growth 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.
The tax cap has only been triggered only once before, in
1987, when $29.2 million in credits were offered to
taxpayers. CommonWealth first reported on July 27 that the
tax cap was about to be triggered again for the first time
in 35 years – and for a lot more money. Lawmakers were
caught off-guard by the tax cap, which had largely been
forgotten on Beacon Hill, and the $2.94 billion eventual
total cost cast some doubt on the state’s financial
situation.
Baker on Friday said the state still has plenty of money on
hand, enough to pass an economic development bill that
contains a number of permanent tax cuts. Even after paying
out the $2.94 billion and spending $840 million in a
proposed supplemental budget, Baker said the state still has
a surplus of $1.5 billion and $2.2 billion in American
Rescue Plan Act funds.
Baker has moved quickly to return the tax cap money to
taxpayers, but his approach has raised questions about
whether he is operating in compliance with the law.
The tax cap law says the money must be returned as a credit
and regulations that had long been in place called for a
two-step process in returning the money. First, a taxpayer
would calculate the size of the credit the same way the
Baker administration is proposing, by multiplying 13 percent
by the individual’s personal tax liability in 2021. But
under the regulations the credit would be applied on the
individual’s tax form for 2022, reducing any tax liability
that is owed.
Baker, whose administration is in the process of scrapping
the existing regulations, is proposing to do away with the
second step and just send checks to taxpayers based on the
2021 calculation. In other words, the Baker administration
is proposing to issue refunds instead of credits.
In the press release that went out announcing how the tax
cap money would be returned, the Baker administration dealt
with the shift from credit to refund by conflating the two
approaches. “In general,” the press release said, “eligible
taxpayers will receive a credit in the form of a refund that
is approximately 13 percent of their Massachusetts Tax Year
2021 personal income tax liability.”
Peter Enrich, an attorney who worked as general counsel and
counsel for revenue policy at the Executive Office for
Administration and Finance in 1986 and 1987 when the tax cap
law was being debated and first implemented, said the law is
clear the tax cap money is distributed via credits. He said
the definition of a credit is well established in tax law –
credits reduce taxes that are owed and are not refunds
issued by check.
Enrich said the approach being taken by Baker is very
similar to what former president Donald Trump often did when
he ignored laws. “It’s inconsistent with the statute and
inconsistent with the constitution,” Enrich said.
Enrich said Baker should seek the Legislature’s approval to
change the law if that’s what he wants to do. “The governor
doesn’t just get to give away money all by himself,” he
said.
Baker’s approach could impact who gets some of their tax
money back. It’s very possible a person could have a tax
liability in 2021 but no liability in 2022. Under Baker’s
approach, that person would be sent a check. Under the
original process, that person would not be able to take
advantage of the credit.
Enrich and others are also questioning the size of the tax
cap giveback. They note tax revenues were inflated in fiscal
2022 by a workaround to the $10,000 federal limit on state
and local tax deductions that will be offset in future years
by state tax credits. Enrich estimated as much as half of
the $2.94 billion that exceeded the state tax cap is
attributable to the workaround.
State Auditor Suzanne Bump, in certifying the $2.94 billion
figure on Thursday, drew attention to the workaround’s
impact but chose not to make an adjustment to the tax cap
giveback.
“I would underscore for the Legislature and the public one
key element in the FY22 revenue increase,” Bump said in a
press release. “The change in the taxation of so-called
passthrough business entities which just took effect last
year generated $2.25 billion in revenue, much of which has
yet to be claimed in the form of personal income tax credits
and deductions by the business owners.”
Enrich said the upshot is that wealthy Massachusetts
residents will receive the tax advantages of the workaround
and benefit the most from the tax cap giveback, since
generally those who pay more in taxes get more money back.
Beacon Hill Roll
Call
September 12-16, 2022
$2.9 Billion in Tax Relief is On Its Way
By Bob Katzen
$2.9 BILLION IN TAX RELIEF IS ON ITS WAY – State Auditor
Suzanne Bump has certified that the Department of Revenue’s
(DOR) figures are correct and Massachusetts must return $2.9
billion to taxpayers based on Chapter 62F, a 1986 law
approved by the voters. That law requires that tax revenue
above a certain amount collected by the state go back to the
taxpayers. Bump has determined that the net state tax
revenues of $41,812,654,358 for the fiscal year ended June
30, 2022 is $2,941,499,731 above the allowable state tax
revenues of $38,871,154,627.
“Our review requires us to do more than check DOR’s math,”
said Bump. “As has been done each year of my tenure, we
apply generally accepted government auditing standards in
our review to verify the accuracy and completeness of the
report provided by DOR. This provides us with reasonable
assurance required by those standards that DOR’s figures are
correct.”
“Stronger-than expected state tax revenues have led to a
major surplus for fiscal year 2022, and we are pleased to be
able to return nearly $3 billion in excess revenue to the
taxpayers,” said Gov. Charlie Baker. “With families facing
continued pressure from high prices and inflation, these
returns will provide some needed relief. Even with nearly $3
billion going back to taxpayers, significant state and
federal resources remain, and we look forward to working
with the Legislature to invest this funding into our
economy, communities and families.”
According to the Baker Administration, the $2.9 billion will
be returned to eligible taxpayers by the DOR in proportion
to personal income tax liability in Massachusetts incurred
by taxpayers in 2021. “Eligible taxpayers will receive a
credit in the form of a refund that is approximately 13
percent of their 2021 personal income tax liability,” said a
statement released by the Office of Administration and
Finance. “This percentage is a preliminary estimate and will
be finalized in late October, after all 2021 tax returns are
filed. To be eligible, individuals must have filed a 2021
state tax return on or before October 17, 2022. An
individual’s credit may be reduced due to refund intercepts,
including for unpaid taxes, unpaid child support and certain
other debts.
“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 which sponsored the
1986 ballot question. “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,” continued Ford, “But I'm
confident she's up there joining us joyfully in spirit.”
“This is a tremendous victory for all taxpayers of the
commonwealth,” said Paul Craney of the Massachusetts Fiscal
Alliance. “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.”
“The 1986 law was regressive when it passed before I was
born, and it is regressive today,” said Jonathan Cohn, the
policy director at the group Progressive Massachusetts. “It
is incumbent upon the Legislature to ensure that the
implementation of such a law does not make inequality in our
state worse, as it undoubtedly will if it is used to
disproportionately benefit the highest-income residents —
those who bear the impact of inflation and economic
turbulence of any kind the least — as Gov. Baker proposes.”
"I support the idea to deliver $2.9 billion in relief checks
to taxpayers this fall," said Rep. Mike Connolly
(D-Cambridge). "However, Chapter 62F would send the largest
checks to the state’s top income earners, while those most
impacted by inflation would get the smallest checks. That’s
not just inequitable, it’s also bad economic policy.
Moreover, 62F only authorizes tax credits for next year, not
checks this fall. That’s why I am calling on legislative
leaders to return to formal session as soon as possible to
adjust the 62F distribution formula so that middle-income
residents and the working poor are prioritized, as they are
the ones who are being most crushed by inflation. At the
same time, I think the legislature should take action to
legally authorize the distribution of these checks this
fall. Otherwise, Gov. Baker’s rebate scheme could get tied
up in the courts.
State House News
Service
Friday, September 16, 2022
Weekly Roundup - Oh, What a Relief It Is
Recap and analysis of the week in state government
By Colin A. Young
That great whooshing noise you heard Friday was the sound of
millions of Bay Staters trying to dig out their 2021 tax
return to calculate just how much money the state could be
sending them later this fall.
The prospect of tax relief under an obscure and
largely-forgotten voter law called Chapter 62F first emerged
in late July like a mirage in the inflation desert, but two
significant announcements this week have it looking like
it's actually a real oasis.
First, Auditor Suzanne Bump certified that state tax
collections last budget year surpassed the limit established
by 62F by more than $2.94 billion, confirming that the state
is required to return that amount in proportion to what each
taxpayer paid in income tax. Within about 24 hours, Gov.
Charlie Baker's office announced that about 3.6 million Bay
State taxpayers can expect to get "a credit in the form of a
refund" worth roughly 13 percent of their income tax
liability last year. The credit/refunds will start going out
in November either by mail or via direct deposit.
The median income for Massachusetts households from 2016
through 2020 was $84,385, according to the U.S. Census
Bureau. That amount of income (not factoring in credits or
deductions and filed as the head of the household) would
result in a state income tax liability of $3,999, according
to a Forbes income tax calculator. Thirteen percent of the
tax liability for the median household income -- in other
words, the credit that the median household could expect --
would be about $520.
Or think of it this way: For every $1,000 paid in state
income tax, about $130 will be refunded. (You can also use
the
state's own refund calculator.)
With the fate of the Chapter 62F tax relief mostly settled
-- some Democrats are miffed that Baker plan to issue
refunds rather than credits on next year's taxes and others
are still talking about trying to alter the law to make the
distribution of the excess tax revenue more equitable -- the
big question now is what will become of the $1 billion in
tax refunds and reforms that legislative Democrats had
already agreed to before they realized that 62F would come
into play.
"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," Senate President Karen
Spilka said this week.
Problem is, House Speaker Ron Mariano doesn't seem to see
things the same way. While Baker and Spilka have repeatedly
said they think there is enough left over from the fiscal
year 2022 surplus (about $2.3 billion after the 62F money is
returned) to move ahead with the tax relief and investments
in the economic development bill that's been stalled since
late July, Mariano still has not been convinced.
"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 without
explicitly voicing the same kind of support for additional
tax relief as Spilka.
If anything is going to get done before the legislative
session officially ends the first week of January,
coordination between Spilka and Mariano will have to sync
up. Now that formal sessions have ended under the House and
Senate rules, the objection of any one representative or
senator can grind all work to a halt. So both leaders will
have to work to get their members on board with whatever
plan they come up with.
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Citizens for Limited Taxation ▪
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▪ (781) 639-9709
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