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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
Saturday, October 8, 2022
Takers Move to
Scuttle Tax Cap Refund
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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The
collectors at the Department of Revenue took in
$4.187 billion in tax revenue last month, putting
the state's coffers more than 5 percent ahead of the
pace that led to a massive surplus in the last
budget year, with one quarter of fiscal 2023 now in
the books.
September
receipts came in $194 million or 4.9 percent
higher than actual collections from September 2021,
and $224 million or 5.7 percent above DOR's
September benchmark of $3.963 billion. Through the
first quarter, fiscal 2023 collections have totaled
about $9.194 billion -- $443 million or 5.1 percent
ahead of fiscal 2022 collections over the same
period of time and $224 million or 2.5 percent
higher than DOR's year-to-date benchmark.
State
House News Service
Wednesday, October 5, 2022
Quarterly Tax
Take Surpasses Record FY 2022 Pace
The
state’s tax windfall streak seems to have continued
right into this fall.
“Massachusetts Department of Revenue (DOR)
Commissioner Geoffrey Snyder today announced that
preliminary revenue collections for September
totaled $4.187 billion, $194 million or 4.9% more
than the actual collections in September 2021, and
$224 million or 5.7% more than benchmark,” revenue
said in a Wednesday release.
So far
this year the state has taken $9.2 billion in taxes,
about $450 million more than at this point last year
and $224 million more than originally forecast....
High tax
takings last year led to the state auditor
determining just last month that Massachusetts had
taken too much in taxes and would need to send about
$3 billion of it back to taxpayers.
It is
unclear if the law that caused the tax rebate,
Chapter 62F of the General Laws, is on track to be
triggered again after 2022.
The state
is forecast to pull in just shy of $40 billion over
the course of the year, more than a billion less
than was brought in last year.
If
September theoretically represents 10% of
the year, the state may be looking at another
windfall year, with perhaps billions more than was
forecast taken by the end of the fiscal year.
The
Boston Herald
Wednesday, October 5, 2022
Massachusetts
again takes more in taxes than expected
Gov.
Charlie Baker continued his push for tax relief
Monday, when he took to the airwaves to declare,
again, that the state has enough money to pass a
stalled economic development bill and send billions
back to taxpayers.
“We filed
in January a whole series of tax relief measures for
low income residents, for people who pay taxes in
Massachusetts who are low income, who don’t pay
federal income taxes because their income is so low,
for renters, for senior homeowners, for people who
have expenses related to dependent care,” he said
during an appearance on GBH with hosts Margery Eagan
and Jim Braude.
Baker
submitted an about $700 million tax cut proposal
along with his budget at the start of the year.
The
proposal was dead on arrival in the Legislature,
seemingly, until April’s tax report revealed the
state had taken billions more than was expected.
Coupled
then with rising fuel prices, the news sent
Lawmakers running to declare they, too, would pursue
tax relief....
Then it
turned out a law from 1986, Chapter 62F of the
General Laws, would require nearly $3 billion in
taxes be returned to taxpayers.
Baker says
the need for relief hasn’t gone away despite any
legislative hesitancy.
“We put a
whole tax package in front of the Legislature, the
vast majority of which was focused on the people we
felt were hurting most, because of inflation and
rising housing prices and gas costs and all the
rest,” Baker said. “That package is currently
sitting in a conference committee.”
Legislative leaders say they are concerned the plan
isn’t affordable considering the 1986 law.
Baker has
said that’s simply not the case and provided the
math to back up his assertion....
Last week,
while making a campaign stop in Boston, Attorney
General Maura Healey, the front runner in the race
for the job Baker will leave in January, was asked
if a Healey administration would carry through with
the tax cuts if they didn’t pass under Baker.
“Yes,” she
replied without hesitation.
The
Boston Herald
Monday, September 26, 2022
Charlie
Baker continues tax cut push, says proposal would
help those who need it
(1 of 3)
"An Act to Put More Money in More People's Pockets
by capping Chapter 62F tax credits for those with
incomes greater than $1 million and evenly
redistributing the excess amount to all other
taxpayers via refund checks authorized by the
General Court."
(2 of 3)
While it's fairly doubtful the regressive, Regan-era
[sic] Ch. 62F would be enacted in today's world of
unprecedented wealth and income inequality, given
that the law is now on the books and few leaders are
willing to critique it, the idea is harm mitigation.
(3 of 3)
The draft concept is to adjust the hugely regressive
Ch. 62F formula such that 99.4% of taxpayers will
get a larger refund — this can be accomplished by
capping refunds at $6,500 (i.e. the approximate
credit for a million dollars in taxable income) and
redistributing the excess.
State
Rep. Mike Connolly (D-Cambridge)
https://twitter.com/MikeConnollyMA
"Activist, attorney, renter, proud progressive
Democrat and DSA member.
State Representative for 26th Middlesex District in
#Somerville & #CambMa."
Wednesday, October 5, 2022
The Baker-Polito
Administration recently announced its plan to begin
providing refunds to taxpayers starting this
November, due to Chapter 62F – the 1986 “tax cap
law” which sets an artificial limit on how much tax
revenue the state collects. A new report,
Fundamentally Flawed: 62F Formula Overstates
“Excess” by $1.4 Billion, from the Massachusetts
Budget and Policy Center (MassBudget) finds, based
on data provided by the Executive Office of
Administration and Finance (ANF), that the Fiscal
Year (FY) 2022 net "excess tax collections" recently
certified by the State Auditor are overstated by
$1.4 billion due to the poor design of the law.
"This
issue underscores how poorly designed the 62F tax
cap is - and how problematic it is that the Governor
is racing to refund $1.4 billion the Commonwealth
doesn't actually have,’ said Kurt Wise, Senior
Policy Analyst at MassBudget and author of the
report. "Despite all the talk of "excess" revenue,
communities around the state need investments that
will improve people's quality of life today and
build toward a more prosperous and equitable
Commonwealth tomorrow. Racing to give away an
imaginary "excess" of $1.4 billion dollars -
overwhelming to the state's richest households - is
shortsighted and irresponsible." ...
Unless
policymakers act to clarify and correct the workings
of Chapter 62F, this flawed statute on average will
shortchange communities across the state when they
are most in need.
Massachusetts Budget and Policy Center (MassBudget)
Wednesday October 5, 2022
Fundamentally Flawed: 62F Formula Overstates
FY 2022 Collections by $1.4 Billion
As the
election nears, Democrats who control the House and
Senate remain unable to agree on how to revive
stalled economic development and tax relief plans
they highlighted as essential over the summer,
pointing to rampant inflation and rising interest
rates as factors complicating their decisions.
Budget
chiefs for both branches and House Speaker Ron
Mariano shed little light Wednesday on the outlook
for the bills they first approved months ago, and
muddied the waters further by suggesting they have
not made decisions on whether to stand by a planned
tax rebate program that the top Senate negotiator
said last week would "probably not" survive in the
final accord.
It's been
69 days since Gov. Charlie Baker publicly announced
he expected state government would need to return
$2.965 billion to taxpayers under a decades-old law
tying allowable state tax revenues to the growth in
wages, 20 days since Auditor Suzanne Bump certified
the amount due back as $2.94 billion, and 19 days
since the Baker administration outlined its plans to
ship out checks and direct deposits starting in
November with individual refunds.
Mariano
said Wednesday that lawmakers still need more time
to work through the impact of the law known as
Chapter 62F.
"What do
you mean it's been settled?" Mariano said of 62F.
"It's been settled in the mind of the governor. It
hasn't been settled in our minds. What that was was
an increase in spending that we hadn't accounted
for, so it forced us to go back and reevaluate some
of the decisions we had made prior to finding out
about 62F and then looking forward, how we're going
to deal with an additional $3 billion in expense."
Although
state tax revenues smashed expectations, soaring
more than 20 percent in one year, and produced a
surplus north of $5 billion, the speaker cautioned
about potential storm clouds on the horizon.
"The
inflation rate is going up, interest rates are going
up. All signs are trying to slow the economy down,
so that was an additional $3 billion -- people seem
to forget that -- we hadn't planned on and was
dumped in the lap of these guys as they were putting
a budget together," the Quincy Democrat said....
The
economic development bills, which the House and
Senate both approved in July before Baker went
public with his expectations about the mandatory 62F
relief, featured about $500 million in permanent tax
breaks for renters, seniors, parents and caretakers,
plus changes to the estate tax.
It also
would have spent $500 million on one-time rebates
for middle-income earners, providing $250 checks to
qualifying single taxpayers and $500 checks to
qualifying married filers.
With
taxpayers across the income spectrum now in line for
payments of varying size under Chapter 62F,
Democrats have not made clear if they plan to also
recommend sticking with the rebates they previously
approved as a way to help Bay Staters manage the
pressures of inflation and high gas prices.
[Senate
Ways and Means Committee Chair Michael] Rodrigues
told WBSM's South Coast Tonight last week those
checks would "probably not" feature in the revived
economic development bill "because $3 billion worth
of checks are going out" thanks to 62F.
Michlewitz, who spoke to reporters standing next to
Rodrigues and Mariano, on Wednesday gave a less
definitive answer about the fate of those
middle-income rebates.
"We're
still working on that. It goes back to the fact that
you take the $3 billion out of the discussion point,
it changes the equation, the math that we were
dealing with. We have to account for that," he said.
"We're trying to figure out right now working
together on exactly what we can and can't afford.
With regard to 62F, that money is going back to the
taxpayers at some point, so people will be getting
checks. Will we have additional money in an economic
development bill? I think we have to decide whether
or not, what we can and can't afford before we make
that determination."
State
House News Service
Wednesday, October 5, 2022
Dems Struggling To
Salvage Jobs, Tax Relief Plans
Refunds Under 1986 Law Forcing Long Reevaluation Of
Plans
What do a
regulatory panel of legal gambling experts and
Democrats in charge of wielding supermajority
margins in the House and Senate have in common?
Up until
Friday afternoon, one answer was clear: paralyzing
indecisiveness.
The
Massachusetts Gaming Commission did ultimately
differentiate itself from legislative leaders, who
still can't find agreement, or at least an accord
that will net the required unanimous vote, on how
much to spend to help businesses and job-seekers
compete and aid taxpayers struggling with high
inflation....
House and
Senate Democrats, meanwhile, are testing the limits
of the adage that no news is good news when it comes
to the more than $4 billion economic development and
tax relief bill they froze on Aug. 1.
They
rolled out effectively the same platitudes about
"constant communication" (Senate budget chief
Michael Rodrigues) and choices about "what we can
and can't afford" (House budget chief chief Aaron
Michlewitz) in their latest comments that closely
resembled what the public has already heard for
weeks if not months.
After
hyping the critical nature of their planned
investments in June and July, the budget chiefs are
now showing no urgency about the bill. They declined
to shed light on a timeline while appearing together
at an unrelated event Wednesday, with Rodrigues
saying only he expected an economic development bill
to pop in the "near future" and then doubling down
on that exact word choice when asked to provide more
details. For those unfamiliar, phrases like "near
future" are tossed about frequently on Beacon Hill
and mean little to anyone.
Swimming
in a sea of surplus tax revenues for the second
straight fiscal year, Democrats still seem thrown
off by the required return of nearly $3 billion to
the taxpayers who paid it under a 1986 law that
legislative leaders failed to realize was in play
until it was basically too late to change it, or
adjust.
They, and
other voices on the left, might find that obligation
especially frustrating. The yearslong effort that
legislative leaders support to raise the tax rate on
Bay Staters who earn more than $1 million could haul
in about $1.3 billion annually; now, state
government must return more than twice that amount
to taxpayers.
And
because the checks will flow out in proportion to
taxes paid in, higher earners are in line for more
substantial windfalls. In 2019, people who earned
more than $1 million - the same population targeted
with the surtax plan - paid about 23 percent of the
state's entire income tax haul, according to
Department of Revenue data. They are likely in
line to receive a similarly large share of the total
outlay coming up under Chapter 62F.
"Unless
policymakers act to clarify and correct the workings
of 62F, this fundamentally flawed statute is poised
to make after-tax income inequality in Massachusetts
worse than it now is, while also reducing the
resources available to support important priorities
throughout the Commonwealth," the left-leaning
Massachusetts Budget and Policy Center wrote in a
report this week.
Both
branches gaveled out Thursday for a four-day holiday
without any action on the stalled bill nor movement
on Gov. Charlie Baker's closeout budget bill for
fiscal year 2022, which Comptroller William McNamara
wanted to be complete by the end of September in
order to meet his own Oct. 31 reporting deadline.
While
lawmakers grapple with their spending choices, the
dollars continue to flow, perhaps planting seeds of
worry in some minds that the tax cap could come into
effect again next year. The Department of Revenue
reported that tax collections through the first
quarter are $224 million or 2.5 percent higher than
the projected year-to-date benchmark and $443
million or 5.1 percent ahead of the same surplus
span in 2021.
State
House News Service
Friday, October 7, 2022
Weekly Roundup
On Beacon
Hill, Democrats who run the House and Senate seem to
be having trouble threading the needle on a rich
package of tax breaks and spending measures as well
as legislation needed to close out the books on
fiscal 2022. On the other hand, the perils of trying
to pass major legislation during informal sessions
right before an election may be causing them to hold
their $4 billion economic development bill in their
back pockets and wait to act on it after the
election or perhaps early in 2023, when there will
be a new governor.
Gov.
Charlie Baker's team at the Department of Revenue is
not waiting on another important matter. They are
readying tax refunds totaling nearly $3 billion to
be delivered starting next month and representing
shares of money due back to taxpayers under a 1986
law intended to force state government to share
massive surpluses with the workers who helped create
them. Those refund numbers will be larger for many
wealthier taxpayers, running counter to the goal of
a surtax on household income above $1 million per
year that will be decided by voters on Nov. 8 in the
form of Question 1.
State
House News Service
Friday, October 7, 2022
Advances - Week of Oct. 9, 2022
Wednesday,
Oct. 12, 2022
INCOME
SURTAX DEBATE: Max Page, president of the
Massachusetts Teachers Association, and Dan
Cence, spokesman for the
Coalition to Stop the Tax Hike Amendment, debate
the merits of the proposal on this year's ballot to
add a 4 percent surtax on household income above $1
million. Page and the MTA support Question 1 on the
November ballot, which is estimated to raise about
$1.3 billion a year that lawmakers are supposed to
use for education and transportation investments.
Cence represents a group of mostly business
organizations that oppose the question on the belief
that it will make Massachusetts a less competitive
place for business activity and give politicians
more money to spend as they see fit. Supporters see
the measure as a way to make wealthier residents pay
their "fare share" while generating money for
education and transportation. The debate is hosted
by the Frederick E. Berry Institute of Politics at
Salem State University. (Wednesday, 12:15 p.m.,
Ellison Campus Center, North Campus, 1 Meier Dr.,
Salem |
More Info)
State
House News Service
Friday, October 7, 2022
Advances - Week of Oct. 9, 2022
|
Chip Ford's CLT
Commentary |
|
The revenue
bonanza continues to pour into the state treasury at
record-breaking levels.
The State
House News Service reported on Wednesday ("Quarterly Tax
Take Surpasses Record FY 2022 Pace"):
The
collectors at the Department of Revenue took in
$4.187 billion in tax revenue last month, putting
the state's coffers more than 5 percent ahead of the
pace that led to a massive surplus in the last
budget year, with one quarter of fiscal 2023 now in
the books.
September
receipts came in $194 million or 4.9 percent
higher than actual collections from September 2021,
and $224 million or 5.7 percent above DOR's
September benchmark of $3.963 billion. Through the
first quarter, fiscal 2023 collections have totaled
about $9.194 billion -- $443 million or 5.1 percent
ahead of fiscal 2022 collections over the same
period of time and $224 million or 2.5 percent
higher than DOR's year-to-date benchmark.
The
Boston Herald noted ("Massachusetts
again takes more in taxes than expected"):
The
state’s tax windfall streak seems to have continued
right into this fall....
So far
this year the state has taken $9.2 billion in taxes,
about $450 million more than at this point last year
and $224 million more than originally forecast....
High tax
takings last year led to the state auditor
determining just last month that Massachusetts had
taken too much in taxes and would need to send about
$3 billion of it back to taxpayers.
It is
unclear if the law that caused the tax rebate,
Chapter 62F of the General Laws, is on track to be
triggered again after 2022....
If
September theoretically represents 10% of
the year, the state may be looking at another
windfall year, with perhaps billions more than was
forecast taken by the end of the fiscal year.
Another tax cap
refund may be in the cards for next year! That's the
good news. The bad news overtook it this week,
starting with the Tweet from Democrat-Socialist state
Representative Mike Connolly (D-Cambridge), self-described
on
his Twitter account as:
"Activist, attorney, renter, proud progressive
Democrat and DSA member.
State Representative for 26th Middlesex District in
#Somerville & #CambMa."
Comrade Connolly posted:
(1 of 3)
"An Act to Put More Money in More People's Pockets
by capping Chapter 62F tax credits for those with
incomes greater than $1 million and evenly
redistributing the excess amount to all other
taxpayers via refund checks authorized by the
General Court."
(2 of 3)
While it's fairly doubtful the regressive, Regan-era
[sic] Ch. 62F would be enacted in today's world of
unprecedented wealth and income inequality, given
that the law is now on the books and few leaders are
willing to critique it, the idea is harm mitigation.
(3 of 3)
The draft concept is to adjust the hugely regressive
Ch. 62F formula such that 99.4% of taxpayers will
get a larger refund — this can be accomplished by
capping refunds at $6,500 (i.e. the approximate
credit for a million dollars in taxable income) and
redistributing the excess.
On the same day (Wednesday)
the
left-wing
Massachusetts Budget and Policy Center released its
latest assault on productive taxpayers with a new report ("Fundamentally Flawed: 62F Formula Overstates
FY 2022 Collections by $1.4 Billion"):
The Baker-Polito
Administration recently announced its plan to begin
providing refunds to taxpayers starting this
November, due to Chapter 62F – the 1986 “tax cap
law” which sets an artificial limit on how much tax
revenue the state collects. A new report,
Fundamentally Flawed: 62F Formula Overstates
“Excess” by $1.4 Billion, from the Massachusetts
Budget and Policy Center (MassBudget) finds, based
on data provided by the Executive Office of
Administration and Finance (ANF), that the Fiscal
Year (FY) 2022 net "excess tax collections" recently
certified by the State Auditor are overstated by
$1.4 billion due to the poor design of the law.
"This
issue underscores how poorly designed the 62F tax
cap is - and how problematic it is that the Governor
is racing to refund $1.4 billion the Commonwealth
doesn't actually have,’ said Kurt Wise, Senior
Policy Analyst at MassBudget and author of the
report. "Despite all the talk of "excess" revenue,
communities around the state need investments that
will improve people's quality of life today and
build toward a more prosperous and equitable
Commonwealth tomorrow. Racing to give away an
imaginary "excess" of $1.4 billion dollars -
overwhelming to the state's richest households - is
shortsighted and irresponsible." ...
Unless
policymakers act to clarify and correct the workings
of Chapter 62F, this flawed statute on average will
shortchange communities across the state when they
are most in need.
The Socialists'
knives are out. They hope to first dilute the current
tax cap refund and, plotting ahead, to transmogrify CLT's
1986 tax cap law into something by no stretch was it ever
intended to be: Just another redistributionist scheme
to pervert the purpose and definition of a tax refund.
According to the
Merriam-Webster dictionary, the definition of
"refund" is:
1: the act of refunding
2: a sum refunded
Words listed there that are synonymous with
refund are "reimburse" or "repay."
When asked by
Beacon Hill Roll Call for my reaction to these machinations,
I responded:
“It’s
pathetic to watch the Bay State socialist wing
scrambling in panic at even the thought of a tax
refund being returned to those who paid the excess
taxation into the $5B revenue surplus without their
ability to instead direct it to their favored
constituencies, if not spend it,” said Chip Ford,
executive director of Citizens for Limited Taxation. (CLT along with the Massachusetts High Technology
Council delivered this tax cap onto the 1986 ballot
where it was successfully adopted by the voters.)
“’The Takers’ had 36 years to again attack our tax
cap law, as did their precursor, the Tax Equity
Alliance for Massachusetts which unsuccessfully
attempted to block it in court from ever reaching
the ballot. Add to TEAM’s failed effort back then
and to this eleventh-hour distraction, a bill just
announced by avowed Democratic Socialist Rep. Mike
Connolly, ‘An Act to Put More Money in More People's
Pockets by capping Chapter 62F tax credits’ and
‘evenly redistributing’ it, according to him. Redistributionist dogma and congenital class-envy
are racing blindly in overdrive.”
Asked to
specifically address a few points made in the MassBudget
report I went on to explain:
“The
62F refund formula heavily favors very high-income
households, so most of this $1.4 billion overstatement
will flow to the state’s highest income households.”
The refund is just that
—
a refund of excess taxes paid.
The “state’s highest income households” pay the highest
amount of 5%
income taxes. [Note: See the
Department of Revenue breakdown, from the State
House Weekly Roundup report below.]
If you paid $5,000 to the DOR in annual income tax your
refund will be (reportedly) 13% of that $5,000 you paid.
If you paid $1,000,000 to the DOR in the annual income
tax your refund will be (reportedly) 13% of that $1M you
paid.
The refund is a (reportedly) 13% return of whatever
you paid
—
returned
to everyone who paid a personal income tax to the
Commonwealth in tax year 2021.
Every resident who paid an income tax will be refunded
the same percentage of the excess based on however much
they paid, period.
In the old days (until a few years ago) this was called
“equality” and was not a bad thing.
“Due to Chapter 62F’s failure to account properly
for pass-through entity tax credits, the Commonwealth
will refund an additional $13,700, on average, to
households with million-plus-incomes. For contrast,
based on ANF data from tax year 2020, nearly 53% of tax
filers with incomes under $25,000 will not receive a 62F
credit at all. Unless policymakers act to clarify and
correct the workings of Chapter 62F, this flawed statute
on average will shortchange communities across the state
when they are most in need.
“For contrast, based on ANF data from tax year 2020,
nearly 53% of tax filers with incomes under $25,000 will
not receive a 62F credit at all.”
This is likely due to that 53% being low-income workers
who don't owe or pay any income tax after taking all
their deductions, exemptions, and tax credits
—
and considering earned-income tax credits, the state is
likely paying them upon filing their return.
. . . “this flawed statute on average will
shortchange communities across the state when they are
most in need.”
Where do they find shortchanged “communities” affected
by the tax cap refund? “Communities” don’t pay
income taxes
—
at least “communities” in the historic sense, not the
woke “communities of … whatever.”
In its
Weekly Roundup the State
House News Service reported on Friday:
Swimming
in a sea of surplus tax revenues for the second
straight fiscal year, Democrats still seem thrown
off by the required return of nearly $3 billion to
the taxpayers who paid it under a 1986 law that
legislative leaders failed to realize was in play
until it was basically too late to change it, or
adjust.
They, and
other voices on the left, might find that obligation
especially frustrating. The yearslong effort that
legislative leaders support to raise the tax rate on
Bay Staters who earn more than $1 million could haul
in about $1.3 billion annually; now, state
government must return more than twice that amount
to taxpayers.
And
because the checks will flow out in proportion to
taxes paid in, higher earners are in line for more
substantial windfalls. In 2019, people who earned
more than $1 million - the same population targeted
with the surtax plan - paid about 23 percent of the
state's entire income tax haul, according to
Department of Revenue data. They are likely in
line to receive a similarly large share of the total
outlay coming up under Chapter 62F.
"Unless
policymakers act to clarify and correct the workings
of 62F, this fundamentally flawed statute is poised
to make after-tax income inequality in Massachusetts
worse than it now is, while also reducing the
resources available to support important priorities
throughout the Commonwealth," the left-leaning
Massachusetts Budget and Policy Center wrote in a
report this week....
While
lawmakers grapple with their spending choices, the
dollars continue to flow, perhaps planting seeds of
worry in some minds that the tax cap could come into
effect again next year. The Department of Revenue
reported that tax collections through the first
quarter are $224 million or 2.5 percent higher than
the projected year-to-date benchmark and $443
million or 5.1 percent ahead of the same surplus
span in 2021.
In its
"Advances - Week of Oct. 9, 2022" the News Service
also noted on Friday:
Gov.
Charlie Baker's team at the Department of Revenue .
. . are
readying tax refunds totaling nearly $3 billion to
be delivered starting next month and representing
shares of money due back to taxpayers under a 1986
law [see
here] intended to force state government to share
massive surpluses with the workers who helped create
them. Those refund numbers will be larger for many
wealthier taxpayers, running counter to the goal of
a surtax on household income above $1 million per
year that will be decided by voters on Nov. 8 in the
form of Question 1.
I had intended to
dedicate this CLT Update to the Graduated Income Tax "Fair
Share Amendment" Question 1 ballot question. I
have been intending to do that since back on July 27 when Boston Globe
columnist Jeff Jacoby's excellent column on the topic was
published — but that was
the very day that news broke of CLT's tax cap
likely kicking in this year and the whirlwind began.
During this relative lull while awaiting the refunds to be
sent out, this
was the week I was going to catch up with that update on
Question 1 — but along came the
above threats and all focus went back onto the tax
cap refund.
Life is a
challenge. "Man makes plans and God laughs"!
|
 |
 |
|
Chip Ford
Executive Director |
|
|
|
State House News
Service
Wednesday, October 5, 2022
Quarterly Tax Take Surpasses Record FY 2022 Pace
By Colin A. Young
The collectors at the Department of Revenue took in $4.187
billion in tax revenue last month, putting the state's
coffers more than 5 percent ahead of the pace that led to a
massive surplus in the last budget year, with one quarter of
fiscal 2023 now in the books.
September
receipts came in $194 million or 4.9 percent higher than
actual collections from September 2021, and $224 million or
5.7 percent above DOR's September benchmark of $3.963
billion. Through the first quarter, fiscal 2023 collections
have totaled about $9.194 billion -- $443 million or 5.1
percent ahead of fiscal 2022 collections over the same
period of time and $224 million or 2.5 percent higher than
DOR's year-to-date benchmark.
"September collections were above monthly benchmarks and
above collections from the same period last year. September
revenue included increases in most major tax types relative
to September 2021 collections, including increases in
withholding, non-withholding income tax, and sales, and
partially offset by a decrease in corporate and business
tax," Revenue Commissioner Geoffrey Snyder said in a
statement. "The increase in withholding is likely related to
strong labor market conditions. The increase in sales tax
reflects continued strength in retail sales."
After adjusting for a pass-through entity excise that
officials have said has affected comparisons, year-to-date
tax collections are $231 million or 2.6 percent greater than
collections in the same period of fiscal 2022 and $169
million or 1.9 percent more than the year-to-date benchmark,
DOR said.
While DOR has now established monthly revenue benchmarks for
September through June 2023, there is a good chance the
agency will adjust those expectations as the budget year
goes on. The benchmarks are all based on the assumption
(agreed to by legislative leaders and the Baker
administration) that fiscal 2023 revenue will total $39.618
billion. That would be a drop of almost 4 percent from the
$41.105 billion that was hauled in during fiscal year 2022,
a year in which state tax revenue surged so high compared to
wage growth that it triggered a long-forgotten tax relief
law.
Estimated payments are required from many corporations and
individuals in September, DOR said, which makes the month a
significant one for state tax collections. The month
generally accounts for 10 percent of the annual haul, making
it the "third or fourth largest revenue month of the year,"
DOR said.
October revenues will be due from DOR on Thursday, Nov. 3.
The benchmark for October collections has been set at $2.066
billion, DOR said.
The Boston
Herald
Wednesday, October 5, 2022
Massachusetts again takes more in taxes than expected
By Matthew Medsger
The state’s tax windfall streak seems to have continued
right into this fall.
“Massachusetts Department of Revenue (DOR) Commissioner
Geoffrey Snyder today announced that preliminary revenue
collections for September totaled $4.187 billion, $194
million or 4.9% more than the actual collections in
September 2021, and $224 million or 5.7% more than
benchmark,” revenue said in a Wednesday release.
So far this year the state has taken $9.2 billion in taxes,
about $450 million more than at this point last year and
$224 million more than originally forecast.
Income taxes accounted for about $2.2 billion of September’s
revenue, an increase over 2021 of 7.4% and $131 million more
than expected.
Withholding taxes made up another $1.2 billion, 7.6% more
than last year.
Sales tax brought in $766 million, 10% more than was taken
in 2021 and nearly 12% more than was forecast.
“September revenue included increases in most major tax
types relative to September 2021 collections, including
increases in withholding, non-withholding income tax, and
sales, and partially offset by a decrease in corporate and
business tax. The increase in withholding is likely related
to strong labor market conditions. The increase in sales tax
reflects continued strength in retail sales,” Snyder said in
the release.
Revenue says that September tends to be a good tax month due
to the arrival of quarterly estimated payments from
corporations and contractors but cautions the fiscal year is
young enough September alone should not be taken as an
indicator of how the rest of the year will go.
However, the month does normally account for a full tenth of
the yearly take, they said.
“Historically, roughly 10% of annual revenue, on average,
has been received during September,” the department said.
High tax takings last year led to the state auditor
determining just last month that Massachusetts had taken too
much in taxes and would need to send about $3 billion of it
back to taxpayers.
It is unclear if the law that caused the tax rebate, Chapter
62F of the General Laws, is on track to be triggered again
after 2022.
The state is forecast to pull in just shy of $40 billion
over the course of the year, more than a billion less than
was brought in last year.
If September theoretically represents 10% of the
year, the state may be looking at another windfall year,
with perhaps billions more than was forecast taken by the
end of the fiscal year.
— Herald wire services
contributed.
The Boston
Herald
Monday, September 26, 2022
Charlie Baker continues tax cut push, says proposal would
help those who need it
By Matthew Medsger
Gov. Charlie Baker continued his push for tax relief Monday,
when he took to the airwaves to declare, again, that the
state has enough money to pass a stalled economic
development bill and send billions back to taxpayers.
“We filed in January a whole series of tax relief measures
for low income residents, for people who pay taxes in
Massachusetts who are low income, who don’t pay federal
income taxes because their income is so low, for renters,
for senior homeowners, for people who have expenses related
to dependent care,” he said during an appearance on GBH with
hosts Margery Eagan and Jim Braude.
Baker submitted an about $700 million tax cut proposal along
with his budget at the start of the year.
The proposal was dead on arrival in the Legislature,
seemingly, until April’s tax report revealed the state had
taken billions more than was expected.
Coupled then with rising fuel prices, the news sent
Lawmakers running to declare they, too, would pursue tax
relief.
The House, on July 11, announced it had developed its own
plan which would couple about $500 million in tax cuts with
another $500 million in direct rebate checks. The Senate was
quick to announce a similar plan. The proposals passed both
chambers unanimously.
Then it turned out a law from 1986, Chapter 62F of the
General Laws, would require nearly $3 billion in taxes be
returned to taxpayers.
Baker says the need for relief hasn’t gone away despite any
legislative hesitancy.
“We put a whole tax package in front of the Legislature, the
vast majority of which was focused on the people we felt
were hurting most, because of inflation and rising housing
prices and gas costs and all the rest,” Baker said. “That
package is currently sitting in a conference committee.”
Legislative leaders say they are concerned the plan isn’t
affordable considering the 1986 law.
Baker has said that’s simply not the case and provided the
math to back up his assertion.
He said said Monday there is still time for lawmakers to act
on the bill, despite the fact they are no longer meeting
formally.
“A lot of the rest of it, they could do in an informal, and
the versions that are currently in conference that passed
the House and the Senate both passed unanimously, so I don’t
think there’s going to be a lot of negativity in either
branch about supporting the non-bond pieces if they come
out,” he said.
Even if lawmakers don’t pass the bill this session, tax cuts
are not necessarily dead.
Last week, while making a campaign stop in Boston, Attorney
General Maura Healey, the front runner in the race for the
job Baker will leave in January, was asked if a Healey
administration would carry through with the tax cuts if they
didn’t pass under Baker.
“Yes,” she replied without hesitation.
Massachusetts Budget and
Policy Center (MassBudget)
Wednesday October 5, 2022
Fundamentally Flawed: 62F Formula Overstates
FY 2022 Collections by $1.4 Billion
New MassBudget highlights updated data on the impacts of
Chapter 62F in the Commonwealth
For Immediate Release
Wednesday October 5, 2022
BOSTON – The Baker-Polito Administration recently announced
its plan to begin providing refunds to taxpayers starting
this November, due to Chapter 62F – the 1986 “tax cap law”
which sets an artificial limit on how much tax revenue the
state collects. A new report,
Fundamentally Flawed: 62F
Formula Overstates “Excess” by $1.4 Billion, from the
Massachusetts Budget and Policy Center (MassBudget) finds,
based on data provided by the Executive Office of
Administration and Finance (ANF), that the Fiscal Year (FY)
2022 net "excess tax collections" recently certified by the
State Auditor are overstated by $1.4 billion due to the poor
design of the law.
"This issue underscores how poorly designed the 62F tax cap
is - and how problematic it is that the Governor is racing
to refund $1.4 billion the Commonwealth doesn't actually
have,’ said Kurt Wise, Senior Policy Analyst at MassBudget
and author of the report. "Despite all the talk of "excess"
revenue, communities around the state need investments that
will improve people's quality of life today and build toward
a more prosperous and equitable Commonwealth tomorrow.
Racing to give away an imaginary "excess" of $1.4 billion
dollars - overwhelming to the state's richest households -
is shortsighted and irresponsible."
Key takeaways from the report include:
• Fundamental flaws in the 62F formula have resulted in an
overstatement of FY22 excess tax collections by about $1.4
billion;
• The artificially high
calculation of excess tax collections in FY22 is due to a
timing mismatch between when tax filers paid their
pass-through entity (PTE) excise taxes and the lag in
claiming their corresponding credits on those taxes;
• This calculation mismatch
almost doubles the total amount of money designated for 62F
tax refunds; and
• The 62F refund formula
heavily favors very high-income households, so most of this
$1.4 billion overstatement will flow to the state’s highest
income households.
Due to Chapter 62F’s failure to account properly for
pass-through entity tax credits, the Commonwealth will
refund an additional $13,700, on average, to households with
million-plus-incomes. For contrast, based on ANF data from
tax year 2020, nearly 53% of tax filers with incomes under
$25,000 will not receive a 62F credit at all. Unless
policymakers act to clarify and correct the workings of
Chapter 62F, this flawed statute on average will shortchange
communities across the state when they are most in need.
Key staff related to this report are available to discuss in
further detail.
###
Related Content:
62F Credits Benefit the Rich
A Blast From the Past: Reagan-Era Tax Law Hits Hard
State House News
Service
Wednesday, October 5, 2022
Dems Struggling To Salvage Jobs, Tax Relief Plans
Refunds Under 1986 Law Forcing Long Reevaluation Of Plans
By Chris Lisinski
As the election nears, Democrats who control the House and
Senate remain unable to agree on how to revive stalled
economic development and tax relief plans they highlighted
as essential over the summer, pointing to rampant inflation
and rising interest rates as factors complicating their
decisions.
Budget chiefs for both branches and House Speaker Ron
Mariano shed little light Wednesday on the outlook for the
bills they first approved months ago, and muddied the waters
further by suggesting they have not made decisions on
whether to stand by a planned tax rebate program that the
top Senate negotiator said last week would "probably not"
survive in the final accord.
It's been 69 days since Gov. Charlie Baker publicly
announced he expected state government would need to return
$2.965 billion to taxpayers under a decades-old law tying
allowable state tax revenues to the growth in wages, 20 days
since Auditor Suzanne Bump certified the amount due back as
$2.94 billion, and 19 days since the Baker administration
outlined its plans to ship out checks and direct deposits
starting in November with individual refunds.
Mariano said Wednesday that lawmakers still need more time
to work through the impact of the law known as Chapter 62F.
"What do you mean it's been settled?" Mariano said of 62F.
"It's been settled in the mind of the governor. It hasn't
been settled in our minds. What that was was an increase in
spending that we hadn't accounted for, so it forced us to go
back and reevaluate some of the decisions we had made prior
to finding out about 62F and then looking forward, how we're
going to deal with an additional $3 billion in expense."
Although state tax revenues smashed expectations, soaring
more than 20 percent in one year, and produced a surplus
north of $5 billion, the speaker cautioned about potential
storm clouds on the horizon.
"The inflation rate is going up, interest rates are going
up. All signs are trying to slow the economy down, so that
was an additional $3 billion -- people seem to forget that
-- we hadn't planned on and was dumped in the lap of these
guys as they were putting a budget together," the Quincy
Democrat said.
Baker has suggested action on the bill, which originally
carried a bottom line of more than $4 billion combining
surplus, American Rescue Plan Act aid and bond
authorizations, might come in October.
Lawmakers shed no light Wednesday on a timeline for action.
Senate Ways and Means Committee Chair Michael Rodrigues said
he is "confident that we're going to get it done in the very
near future."
Asked what he meant by "near future," Rodrigues replied,
"The near future."
Legislative leaders have just about one month left if they
hope to get their work on the bill complete before all 200
seats in the House and Senate are up for election, and House
Ways and Means Committee Chairman Aaron Michlewitz said that
the Nov. 8 election date is not a pressure point in the
slow-moving talks.
"I don't think it's determinant on whether it's before or
after the election. I think we don't have an agreement,"
Michlewitz said. "Until we have an agreement, we can't make
any determination on when exactly that's going to be ready.
We're working diligently, as the senator said, talking
almost every day about this and we're hopeful to get it done
as soon as possible."
"We take our jobs very seriously and responsibly," Rodrigues
added. "We're talking about billions of dollars of
taxpayers' money. We want to make sure we do reach an
agreement on what is the best investment of those taxpayer
dollars."
The economic development bills, which the House and Senate
both approved in July before Baker went public with his
expectations about the mandatory 62F relief, featured about
$500 million in permanent tax breaks for renters, seniors,
parents and caretakers, plus changes to the estate tax.
It also would have spent $500 million on one-time rebates
for middle-income earners, providing $250 checks to
qualifying single taxpayers and $500 checks to qualifying
married filers.
With taxpayers across the income spectrum now in line for
payments of varying size under Chapter 62F, Democrats have
not made clear if they plan to also recommend sticking with
the rebates they previously approved as a way to help Bay
Staters manage the pressures of inflation and high gas
prices.
Rodrigues told WBSM's South Coast Tonight last week those
checks would "probably not" feature in the revived economic
development bill "because $3 billion worth of checks are
going out" thanks to 62F.
Michlewitz, who spoke to reporters standing next to
Rodrigues and Mariano, on Wednesday gave a less definitive
answer about the fate of those middle-income rebates.
"We're still working on that. It goes back to the fact that
you take the $3 billion out of the discussion point, it
changes the equation, the math that we were dealing with. We
have to account for that," he said. "We're trying to figure
out right now working together on exactly what we can and
can't afford. With regard to 62F, that money is going back
to the taxpayers at some point, so people will be getting
checks. Will we have additional money in an economic
development bill? I think we have to decide whether or not,
what we can and can't afford before we make that
determination."
The House's original version of the bill also included $10
million toward the Low Income Home Energy Assistance
Program, or LIHEAP, which has been thrust into the spotlight
by projections that Massachusetts heating prices will soar
this winter.
Mariano said Wednesday it "remains to be seen" if the
Legislature will take action to provide immediate assistance
to families squeezed by utility bills as the temperatures
drop.
"We are expecting huge increases in November because of the
natural gas increases. We're in a very different economic
situation now with OPEC closing down the gas pipelines and
the Russians shutting down their delivery to Europe,"
Mariano said. "We don't know where this is going to end up.
We're going to need federal help. We're all going to have to
work together to solve some of these problems, but we are
expecting to see very large increases."
— Sam Drysdale contributed
reporting.
State House News
Service
Friday, October 7, 2022
Weekly Roundup - Heavy Is The Head
Recap and analysis of the week in state government
By Chris Lisinski
What do a regulatory panel of legal gambling experts and
Democrats in charge of wielding supermajority margins in the
House and Senate have in common?
Up until Friday afternoon, one answer was clear: paralyzing
indecisiveness.
The Massachusetts Gaming Commission did ultimately
differentiate itself from legislative leaders, who still
can't find agreement, or at least an accord that will net
the required unanimous vote, on how much to spend to help
businesses and job-seekers compete and aid taxpayers
struggling with high inflation. On Friday afternoon, they
voted to identify "late January" as the launch date for
in-person sports betting at casinos and the state's slots
parlor and to identify "early March" as the targeted launch
date for mobile sports betting.
They needed triple overtime to get there. The commission met
for eight-plus hours on Thursday, often tripping over
disagreements with one another and coming up shy of their
goal of stating when residents might be able to start
betting under a law that was approved in early August.
"I am concerned about our ability to move forward,"
chairwoman Cathy Judd-Stein lamented as that meeting wound
to its close.
By the time the clock hit 6 p.m., regulators still did not
have consensus and opted to resume their work Friday on an
"emergency" basis, the emergency being their inability to
reach an agreement on Thursday. After three more hours of
talk on Friday, they agreed on a framework that had been in
play all day on Thursday.
Unlike lawmakers, who keep most of their many disagreements
private, the gaming panel's debate played out in full
public, livestreamed view, giving anyone interested a
glimpse.
House and Senate Democrats, meanwhile, are testing the
limits of the adage that no news is good news when it comes
to the more than $4 billion economic development and tax
relief bill they froze on Aug. 1.
They rolled out effectively the same platitudes about
"constant communication" (Senate budget chief Michael
Rodrigues) and choices about "what we can and can't afford"
(House budget chief chief Aaron Michlewitz) in their latest
comments that closely resembled what the public has already
heard for weeks if not months.
After hyping the critical nature of their planned
investments in June and July, the budget chiefs are now
showing no urgency about the bill. They declined to shed
light on a timeline while appearing together at an unrelated
event Wednesday, with Rodrigues saying only he expected an
economic development bill to pop in the "near future" and
then doubling down on that exact word choice when asked to
provide more details. For those unfamiliar, phrases like
"near future" are tossed about frequently on Beacon Hill and
mean little to anyone.
Swimming in a sea of surplus tax revenues for the second
straight fiscal year, Democrats still seem thrown off by the
required return of nearly $3 billion to the taxpayers who
paid it under a 1986 law that legislative leaders failed to
realize was in play until it was basically too late to
change it, or adjust.
They, and other voices on the left, might find that
obligation especially frustrating. The yearslong effort that
legislative leaders support to raise the tax rate on Bay
Staters who earn more than $1 million could haul in about
$1.3 billion annually; now, state government must return
more than twice that amount to taxpayers.
And because the checks will flow out in proportion to taxes
paid in, higher earners are in line for more substantial
windfalls. In 2019, people who earned more than $1 million -
the same population targeted with the surtax plan - paid
about 23 percent of the state's entire income tax haul,
according to _Department of Revenue data._ They are likely
in line to receive a similarly large share of the total
outlay coming up under Chapter 62F.
https://cltg.org/cltg/clt2022/docs/22-10-07_2019_Quintile_Table.pdf
"Unless policymakers act to clarify and correct the workings
of 62F, this fundamentally flawed statute is poised to make
after-tax income inequality in Massachusetts worse than it
now is, while also reducing the resources available to
support important priorities throughout the Commonwealth,"
the left-leaning Massachusetts Budget and Policy Center
wrote in a report this week.
https://cltg.org/cltg/clt2022/docs/22-10-05_62F-Formula-Overstates-Excess.pdf
Both branches gaveled out Thursday for a four-day holiday
without any action on the stalled bill nor movement on Gov.
Charlie Baker's closeout budget bill for fiscal year 2022,
which Comptroller William McNamara wanted to be complete by
the end of September in order to meet his own Oct. 31
reporting deadline.
While lawmakers grapple with their spending choices, the
dollars continue to flow, perhaps planting seeds of worry in
some minds that the tax cap could come into effect again
next year. The Department of Revenue reported that tax
collections through the first quarter are $224 million or
2.5 percent higher than the projected year-to-date benchmark
and $443 million or 5.1 percent ahead of the same surplus
span in 2021.
Baker flew out to Utah for a conference hosted by one of his
predecessors, Sen. Mitt Romney, after delivering his final
annual address to the Providers' Council, an event where he
touted his work over the past eight years to boost human
service provider rates and industry representatives poured
on the praise.
As Baker took a victory lap, the frontrunner to succeed him
kept her campaign on cruise control.
Attorney General Maura Healey, who easily secured the
Democratic nomination for governor, made great effort not to
diverge from a pre-planned message about housing, education,
affordability and health care at her latest campaign event.
Asked three times how she might wield the office differently
than Baker, Healey dodged every time. Instead of offering
any type of example, she said she has "a lot of regard and
respect" for the Republican governor and even suggested that
the question itself puts the "cart ... before the horse."
Healey took a firmer stance on another topic later on
Thursday, telling the Boston Globe via a brief statement
from her press team that she would move to pardon state
convictions for simple marijuana possession if elected,
following President Joe Biden's blockbuster announcement
that he would offer pardons to those with federal marijuana
possession convictions and undertake an expedited review of
the drug's classification.
Republican gubernatorial nominee Geoff Diehl criticized
Biden's proposal as "the latest in a series of outrageous
moves" that "eliminate consequences for wrongful actions,"
though he said he would respect the voter-approved law
legalizing recreational marijuana here.
STORY OF THE WEEK: Beacon Hill lost a towering figure
Saturday when former Senate Clerk William Welch died at 72.
Lawmakers and former colleagues remembered him as a
"consummate professional," someone who was "even-keeled" and
"always proper and correct."
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