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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, October 16, 2022
Desperate Socialists
Attempt Tax Cap Refund Obstruction
Also: Proposition 2½
Still Stands Against Unfunded Local Mandates
Jump directly
to CLT's Commentary on the News
|
Most Relevant News
Excerpts
(Full news reports follow Commentary)
|
|
A group of
progressive Democrats will push to set a $6,500
limit on the maximum tax credit high-income earners
in Massachusetts can receive under a mandatory
refund law known as Chapter 62F, taking aim at the
policy less than a month before the Baker
administration expects to begin shipping out cash.
Cambridge
Rep. Mike Connolly filed a bill Wednesday (HD.5394)
that would reshape the 1986 voter-approved law
requiring the state to return excess tax collections
on a proportional basis equal to the amount of
income tax they paid. The law has only been trigged
twice since its passage.
The
legislation would cap any 62F credit at $6,500,
roughly the amount a taxpayer who earned $1 million
in 2021 will receive in the current batch of
refunds. If any taxpayer who earns $1 million or
more is due a larger amount, the bill would require
the administration to slice off the overage above
$6,500 and redistribute it equally to all other
taxpayers whose credits do not hit the cap.
Critics of
the law, which was last triggered in 1987, argue
that the formula puts the state's richest taxpayers
in line to receive checks worth tens of thousands of
dollars while offering lower-income earners, for
whom the refunds would make more of a difference,
insignificant amounts.
State
House News Service
Wednesday, October 12, 2022
New Bill Would Limit Refunds
Under 1986 Tax Cap Law
It appears
the state Legislature may not easily let go of the
excess taxpayer dollars taken in 2021 and due for
rebate under a 1986 law.
“This
legislation caps Ch. 62F tax credits at $6,500 per
taxpayer, and it evenly redistributes the resulting
excess to all other eligible taxpayers,” state Rep.
Mike Connolly told colleagues seeking a co-sponsor
for
HD.5394 or An Act Putting More Money In More
People’s Pockets....
He’s
apparently found some traction. Thursday morning
state Sen. Jamie Eldridge and state Rep. Jamie
Belsito joined him outside the statehouse to call
for support of the bill.
“In this
moment where so many people are feeling economic
hardship and economic strain, it’s unconscionable
that the average millionaire will see a refund check
of approximately $22,000, according to Mass Budget,
and the average low-income worker will see a refund
check of $9,” Eldridge said.
That’s
exactly the point of the law, though, according to
Chip Ford, who leads the organization once
chaired by the law’s original proponent, the late
Barbara Anderson.
“The law
as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that
which was extracted from each taxpayer: The more you
paid into the state treasury the larger in dollars
your refund would be” Ford, executive director of
Citizens for Limited Taxation, said in a
Thursday statement.
“CLT’s tax
cap refund was never considered, never mind intended
to be nor become a revenue redistribution scheme. It
is and was intended to be a proportional refund of
excess revenue to those who paid it,” he said.
The
Boston Herald
Thursday, October 13, 2022
Lawmakers float
plan to cap tax rebates under 1986 state law
The day
after progressive Democrats introduced a bill to
limit the size of tax refunds set this fall to flow
back in the largest amounts to the highest earners,
bill sponsors say five legislators have so far
signed on but there's "no indication" that top House
or Senate Democrats are on board.
Cambridge
Rep. Mike Connolly filed the bill (HD
5394) Wednesday to set a $6,500 limit on the
maximum tax credit high-income earners in
Massachusetts can receive under the mandatory refund
law known as Chapter 62F, which kicks in when tax
collections soar....
Bill
sponsors held a press conference outside the State
House to promote the bill, saying it is
"inequitable" for the highest earners to get
disproportionately higher amounts back when the
lowest-income earners are hurt the hardest by
inflation.
"We're
here this morning to once again sound the alarm
about this gross transfer of wealth to the state's
highest income earners," said Sen. Jamie Eldridge of
Acton....
Rep. Jamie
Belsito of Topsfield, another cosponsor of the bill,
echoed Eldridge's sentiments....
Belsito
called the 1986 law, which legislators were
blindsided by in the last hours of formal sessions
in July and derailed a substantial economic
development bill that still hasn't regained any
traction, "a Reaganomics, trickle-down,
Voodoo-economics hangover from 1980s hicks."
She, and
fellow cosponsors of the bill, said they are
determined to get this bill passed to reform 62F by
the end of this session, to affect the tax return
checks that are set to start going out in November.
However, without support from legislative leaders or
Gov. Baker - who legislators said also gave no
indication of supporting the bill - they have a
steep hill to climb before they get there.
State
House News Service
Thursday, October 13, 2022
Handful Of
Lawmakers Join Bid To Redistribute Tax Relief
Eldridge Rips Plans For "Gross Transfer Of Wealth"
The
Massachusetts Fiscal Alliance issued the following
statement in response to a group of left wing
Democratic and Democratic Socialists lawmakers
holding a press conference this morning announcing
their bill to change the 1986 voter approved tax
rebate law. The 1986 voter approved law was
sponsored by Citizens for Limited Taxation (CLT)
and the Massachusetts High Tech Council....
“The
voters in 1986 sent a clear message to State House
politicians that when the state collects too much
money from its taxpayers, the state is obligated to
refund the money collected from each taxpayer in a
fair and even amount. Despite this clear message,
our modern-day left-wing politicians want to break
with the will of the voters so they can redistribute
the money the way they see fit. The same politicians
who are promising the 80% income tax hike [on
"millionaires"] will be spent on transportation and
education are attempting to subvert the will of the
voters who passed the 1986 rebate law. It’s
deceptive and dishonest and the public needs to be
wary. The contradiction could not be any clearer.
Don’t trust these politicians, or their promises on
Question 1. If this tax hike passes, they will do
whatever they want with the money,” stated Paul D. Craney, a spokesman for the
Massachusetts Fiscal
Alliance.
“CLT's
1986 tax cap law can cynically be termed 'flawed'
only by a Democratic Socialist such as self-avowed
state Rep. Mike Connolly. The law as drafted and
adopted was specifically intended as a tax refund of
excess revenue in proportion to that which was
extracted from each taxpayer: The more you paid into
the state treasury the larger in dollars your refund
would be; not 'from each according to his ability to
each according to his need,' said Chip Ford,
executive director of Citizens for Limited
Taxation. Ford added, "The Merriam-Webster
dictionary defines 'refund' as 1) the act of
refunding; 2) a sum refunded. Words it lists as
synonymous to refund are 'reimburse' or 'repay.'
CLT's tax cap refund was never considered, never
mind intended to be nor become a revenue
redistribution scheme. It is and was intended to be
a proportional refund of excess revenue to those who
paid it.”
Massachusetts Fiscal Alliance
Thursday, October 13, 2022
Joint News Release
Lawmakers Seek to Break the will
of the Voters by Changing 1986 Ballot Question
Warning to Voters Ahead of Question 1
[New
England Legal Foundation President Dan] Winslow
today said. “Chapter 62F was enacted by the voters
and not the Legislature. The Legislature can, of
course, change the law going forward and be
accountable to the voters. But the Legislature
cannot change the existing law retroactively without
being accountable to the Constitution. The statutory
right to an apportioned share of the surplus tax
vested as a matter of law on June 30, 2022 cannot be
altered under the Constitution without just
compensation.”
New
England Legal Foundation
Thursday, October 13, 2022
Press Release
Statement by New England Legal
Foundation (NELF) President Dan Winslow in Response
to Legislators’ Efforts to Limit Size of Tax Refunds
Due to be Distributed to Massachusetts Taxpayers,
Starting in November
Rep. Mike
Connolly (D-Cambridge) has filed a bill that would
change the formula for how $2.9 billion in tax
refunds will be distributed to taxpayers based on
Chapter 62F, a 1986 law approved by the voters....
“In this
time of soaring inflation and economic hardship for
so many of our constituents, the goal of this bill
is to limit Chapter 62F tax credits for those with
million-dollar incomes and then redistribute the
resulting excess to taxpayers who have incomes under
one million dollars,” said Connolly. “Under our
proposal, 99.4 percent of Ch. 62F refund recipients
would see an additional $200 included in their
refund checks next month. That’s why I’ve dubbed the
bill ‘Putting More Money In More People's Pockets.’
...
"CLT’s
1986 tax cap law can cynically be termed 'flawed'
only by an avowed member of the Democratic
Socialists of America like state Rep. Mike
Connolly,” said Chip Ford, executive director
of Citizens for Limited Taxation who called
the measure absurd and dubbed it as “Revenge of the
Socialists.”
“The law
as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that
which was extracted from each taxpayer. The more you
paid into the state treasury the larger in dollars
your refund would be … CLT's tax cap refund was
never considered, never mind intended, to be nor
become a revenue redistribution scheme. The
Merriam-Webster dictionary defines 'refund' as: 1:
the act of refunding; 2: a sum refunded. Words it
lists as synonymous to refund are 'reimburse' or
'repay.' It is and has always intended to be a
proportional refund of excess revenue to those who
paid it.”
“The
voters in 1986 sent a clear message to Statehouse
politicians that when the state collects too much
money from its taxpayers, the state is obligated to
refund the money collected from each taxpayer in a
fair and even amount,” said Paul Craney, a
spokesperson for the Massachusetts Fiscal Alliance.
“Despite this clear message, our modern-day
left-wing politicians want to break with the will of
the voters so they can redistribute the money the
way they see fit. The same politicians who are
promising the 80 percent income tax hike will be
spent on transportation and education are attempting
to subvert the will of the voters who passed the
1986 rebate law. It’s deceptive and dishonest and
the public needs to be wary. The contradiction could
not be any clearer. Don’t trust these politicians.”
Beacon
Hill Roll Call
October 10-14, 2022
Change Distribution Formula For $2.9
Billion In Tax Relief (HD 5394)
The Baker
administration on Friday made official its repeal of
the regulation that governs how a taxpayer obtains a
credit when the state auditor has determined under
Chapter 62F that excess tax revenues for the
previous fiscal year exist, as Auditor Suzanne Bump
has done for the most recent budget year.
Though the fact that
the 1986 voter law known as Chapter 62F would
require about $3 billion in excess fiscal year 2022
state revenue be returned to taxpayers was not clear
until July, the Department of Revenue began the
process of repealing the "obsolete" regulation in
April when it posted notice of a May hearing on the
little-known rules.
"If a credit becomes
available, DOR will issue guidance and update forms
specific to the year the credit is allowed," the
administration said at the time.
The Baker
administration told the New Service in August that
it got no public comments on its plan to repeal the
regulation (830 CMR 62F.6.1) stemming from the May
hearing. On Friday, DOR sent a notice saying that
the regulation had officially been
repealed "because it is out-of-date." ...
The administration
appears ready to move ahead with its own plan. An
FAQ page hosted by DOR tells taxpayers "If you are
eligible for a refund, you 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."
State
House News Service
Friday, October 14, 2022
Baker Administration Repeals
Rule Governing Tax Cap Law
It’s
raining money on Beacon Hill, with unexpectedly high
revenue streaming in from all manner of taxes. Now,
because of an obscure 1986 law, the state is poised
to send some of that back to residents. But unless
the Baker administration gives the Legislature time
to revise the law, the money will go back in an
unfair way that stiffs the state’s poorest
residents....
The
biggest beneficiaries of this tax rebate scheme will
be the state’s wealthiest households; the poorest
residents stand to get nothing. In fact, according
to the Massachusetts Budget and Policy Center,
households that make over $1 million could receive
over $28,000, while the bottom 20 percent of
households could get a rebate as low as a paltry $9.
People making under $25,000 will not receive any
relief at all.
This
outcome would be a major fiscal policy failure on
the part of the Legislature. Since when is it a good
idea to send billions of dollars primarily to
wealthy residents when both a recession and budget
shortfalls are in the forecast? The good news is
that it doesn’t have to be this way. State
Representative Mike Connolly introduced legislation
that would cap the tax credits at $6,500 for the
wealthiest households, allowing the state to more
fairly redistribute the $3 billion among the rest of
Massachusetts’ taxpayers.
But time
is growing short. Last month, Governor Charlie Baker
announced that millions of residents will start
seeing refund checks or direct deposits in November,
and as soon as that happens, it’ll be too late to
adjust how the rebates are calculated and
distributed. But while Connolly’s legislation faces
an uphill battle, there’s no reason for it to be
constrained by the timeline Baker imposed....
Unless the
Legislature changes the law, the result will be an
absurdity. The poorest residents of Massachusetts
might not pay income tax, but the tax they pay on
the goods and services they purchase will be added
to the pot of money that will now be redistributed
to people far wealthier than them. With high
inflation and a looming recession, that’s not only
unfair; it’s reckless policy. And what voters should
know is that both the governor and the Legislature
can do something about it if they actually wanted
to.
The
Boston Globe
Saturday, October 15, 2022
A Boston Globe editorial
Give Beacon Hill time to rework
tax refund law, Governor Baker
Auditor
Suzanne Bump's
report flags gaps in state aid for school
transportation, education, veterans' benefits, and
other services within cities and towns. The school
transportation gap was estimated at $448 million in
the report, which pegged the education aid gap at
$711 million and attributed $401 million of that gap
to insufficient special education assistance.
In a
statement, Bump said the new report provides
legislators "with the information they need to
address the burden of unfunded mandates."
"The
solution to the problem of unfunded mandates is to
prioritize funding of them. It is a simple solution,
but it may require some hard choices," said Bump, a
former state representative....
The report
commends the state for recent increases in local aid
to cities and towns, but provides a framework for
debate expected in 2023 over the adequacy of aid and
the state's local mandate law, which generally
provides that post-1980 laws or regulations that
impose new service or cost obligations on cities and
towns shall be effective only if accepted locally or
fully funded by the state.
State
House News Service
Thursday, October 13, 2022
Auditor Flags $1.26 Billion Unfunded Mandates Gap
A new report identifies a
$1.26 billion shortfall between state appropriations
and
actual municipal spending on existing programs that
are mandated by the state.
The
Division of Local Mandates (DLM) was established by
Proposition 2½, an initiative to limit property tax
increases, in order to determine the financial
impacts of proposed or existing state laws,
regulations, and rules on cities and towns.
Proposition 2½ limits a city or town’s authority to
raise real estate and personal property taxes.
The Local
Mandate Law,
c. 29, § 27C of the Massachusetts General Laws (M.G.L.),
generally provides that post-1980 laws, regulations,
or rules that impose new service or cost obligations
on cities, towns, regional school districts, or
educational collaboratives and meet certain
thresholds shall be effective only if locally
accepted or fully funded by the Commonwealth....
Office of
the State Auditor
Thursday, October 13, 2022
Excerpt from State Auditor Suzanne Bump's
Report on Local Mandates
SECTION 2.
Chapter 29 of the General Laws is hereby amended by
inserting after section 27B the following new
section:
Section
27C. Notwithstanding any provision of any special or
general law to the contrary:
(a) Any
law imposing any direct service or cost obligation
upon any city or town shall be effective in any city
or town only if such law is accepted by vote or by
the appropriation of money for such purposes, in the
case of a city by the city council in accordance
with its charter, and in the case of a town by a
town meeting, unless the general court, at the same
session in which such law is enacted, provides, by
general law and by appropriation, for the assumption
by the commonwealth of such cost, exclusive of
incidental local administration expenses and unless
the general court provides by appropriation in each
successive year for such assumption....
(e) Any
city or own, or ten taxable inhabitants of an city
or town may in a class action suit petition the
superior court alleging that under the provisions of
subsections (a), (b) and (c) of this section with
respect to a general or special law or rule or
regulation of any administrative agency of the
commonwealth under which any city or town is
required to expend funds in anticipation of
reimbursement by the commonwealth, the amount
necessary for such reimbursement has not been
included in the general or any special appropriation
bill for any year. . . . [MORE]
Massachusetts Information For Voters Booklet
— 1980
Question 2 [known as Proposition 2½]
An Act limiting state and local taxation and
expenditures
|
Chip Ford's CLT
Commentary |
|
Half a dozen
radical-left "progressive" and socialist state reps (Mike
Connolly [D-Cambridge], Jamie Zahlaway Belsito [D-Topsfield], James Eldridge
[D-Acton], Lindsay Sabadosa [D-Northampton], Steven Owens [D-Watertown] and Tami Gouveia
[D-Acton]) on Wednesday filed a bill (with an emergency
preamble which would require the bill to immediately take
effect upon passage into law) to overturn Chapter 62F
— CLT's tax cap refund.
The
State
House News Service reported ("New Bill Would Limit Refunds
Under 1986 Tax Cap Law"):
A group of
progressive Democrats will push to set a $6,500
limit on the maximum tax credit high-income earners
in Massachusetts can receive under a mandatory
refund law known as Chapter 62F, taking aim at the
policy less than a month before the Baker
administration expects to begin shipping out cash.
Cambridge
Rep. Mike Connolly filed a bill Wednesday (HD.5394)
that would reshape the 1986 voter-approved law
requiring the state to return excess tax collections
on a proportional basis equal to the amount of
income tax they paid. The law has only been trigged
twice since its passage.
The
legislation would cap any 62F credit at $6,500,
roughly the amount a taxpayer who earned $1 million
in 2021 will receive in the current batch of
refunds. If any taxpayer who earns $1 million or
more is due a larger amount, the bill would require
the administration to slice off the overage above
$6,500 and redistribute it equally to all other
taxpayers whose credits do not hit the cap.
Critics of
the law, which was last triggered in 1987, argue
that the formula puts the state's richest taxpayers
in line to receive checks worth tens of thousands of
dollars while offering lower-income earners, for
whom the refunds would make more of a difference,
insignificant amounts.
On Thursday the
News Service reported ("Handful Of
Lawmakers Join Bid To Redistribute Tax Relief
— Eldridge Rips Plans For 'Gross Transfer Of Wealth'"):
Bill
sponsors held a press conference outside the State
House to promote the bill, saying it is
"inequitable" for the highest earners to get
disproportionately higher amounts back when the
lowest-income earners are hurt the hardest by
inflation.
"We're
here this morning to once again sound the alarm
about this gross transfer of wealth to the state's
highest income earners," said Sen. Jamie Eldridge of
Acton....
Rep. Jamie
Belsito of Topsfield, another cosponsor of the bill,
echoed Eldridge's sentiments....
Belsito
called the 1986 law, which legislators were
blindsided by in the last hours of formal sessions
in July and derailed a substantial economic
development bill that still hasn't regained any
traction, "a Reaganomics, trickle-down,
Voodoo-economics hangover from 1980s hicks."
She, and
fellow cosponsors of the bill, said they are
determined to get this bill passed to reform 62F by
the end of this session, to affect the tax return
checks that are set to start going out in November.
However, without support from legislative leaders or
Gov. Baker - who legislators said also gave no
indication of supporting the bill - they have a
steep hill to climb before they get there.
"Belsito
called the 1986 law ... 'a Reaganomics, trickle-down,
Voodoo-economics hangover from 1980s hicks.'"
The
Boston Herald reported ("Lawmakers float
plan to cap tax rebates under 1986 state law"):
It appears
the state Legislature may not easily let go of the
excess taxpayer dollars taken in 2021 and due for
rebate under a 1986 law.
“This
legislation caps Ch. 62F tax credits at $6,500 per
taxpayer, and it evenly redistributes the resulting
excess to all other eligible taxpayers,” state Rep.
Mike Connolly told colleagues seeking a co-sponsor
for
HD.5394 or An Act Putting More Money In More
People’s Pockets....
He’s
apparently found some traction. Thursday morning
state Sen. Jamie Eldridge and state Rep. Jamie
Belsito joined him outside the statehouse to call
for support of the bill.
“In this
moment where so many people are feeling economic
hardship and economic strain, it’s unconscionable
that the average millionaire will see a refund check
of approximately $22,000, according to Mass Budget,
and the average low-income worker will see a refund
check of $9,” Eldridge said.
That’s
exactly the point of the law, though, according to
Chip Ford, who leads the organization once
chaired by the law’s original proponent, the late Barbara Anderson.
“The law
as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that
which was extracted from each taxpayer: The more you
paid into the state treasury the larger in dollars
your refund would be” Ford, executive director of Citizens for Limited Taxation, said in a
Thursday statement.
“CLT’s tax
cap refund was never considered, never mind intended
to be nor become a revenue redistribution scheme. It
is and was intended to be a proportional refund of
excess revenue to those who paid it,” he said.
Massachusetts Fiscal Alliance and Citizens for
Limited Taxation quickly reacted with a joint news
release ("Lawmakers Seek to Break the will
of the Voters by Changing 1986 Ballot Question
—
Warning to Voters Ahead of Question 1"):
The
Massachusetts Fiscal Alliance issued the following
statement in response to a group of left wing
Democratic and Democratic Socialists lawmakers
holding a press conference this morning announcing
their bill to change the 1986 voter approved tax
rebate law. The 1986 voter approved law was
sponsored by Citizens for Limited Taxation (CLT)
and the Massachusetts High Tech Council....
“The
voters in 1986 sent a clear message to State House
politicians that when the state collects too much
money from its taxpayers, the state is obligated to
refund the money collected from each taxpayer in a
fair and even amount. Despite this clear message,
our modern-day left-wing politicians want to break
with the will of the voters so they can redistribute
the money the way they see fit. The same politicians
who are promising the 80% income tax hike [on
"millionaires"] will be spent on transportation and
education are attempting to subvert the will of the
voters who passed the 1986 rebate law. It’s
deceptive and dishonest and the public needs to be
wary. The contradiction could not be any clearer.
Don’t trust these politicians, or their promises on
Question 1. If this tax hike passes, they will do
whatever they want with the money,” stated Paul D. Craney, a spokesman for the
Massachusetts Fiscal
Alliance.
“CLT's
1986 tax cap law can cynically be termed 'flawed'
only by a Democratic Socialist such as self-avowed
state Rep. Mike Connolly. The law as drafted and
adopted was specifically intended as a tax refund of
excess revenue in proportion to that which was
extracted from each taxpayer: The more you paid into
the state treasury the larger in dollars your refund
would be; not 'from each according to his ability to
each according to his need,' said Chip Ford,
executive director of Citizens for Limited
Taxation. Ford added, "The Merriam-Webster
dictionary defines 'refund' as 1) the act of
refunding; 2) a sum refunded. Words it lists as
synonymous to refund are 'reimburse' or 'repay.'
CLT's tax cap refund was never considered, never
mind intended to be nor become a revenue
redistribution scheme. It is and was intended to be
a proportional refund of excess revenue to those who
paid it.”
Beacon
Hill Roll Call reported ("Change Distribution Formula For $2.9
Billion In Tax Relief (HD 5394)"):
“In this time of soaring inflation and economic hardship
for so many of our constituents, the goal of this bill
is to limit Chapter 62F tax credits for those with
million-dollar incomes and then redistribute the
resulting excess to taxpayers who have incomes under one
million dollars,” said Connolly. “Under our proposal,
99.4 percent of Ch. 62F refund recipients would see an
additional $200 included in their refund checks next
month. That’s why I’ve dubbed the bill ‘Putting More
Money In More People's Pockets.’ ..."
"CLT’s
1986 tax cap law can cynically be termed 'flawed'
only by an avowed member of the Democratic
Socialists of America like state Rep. Mike
Connolly,” said Chip Ford, executive director
of Citizens for Limited Taxation who called
the measure absurd and dubbed it as “Revenge of the
Socialists.”
“The law
as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that
which was extracted from each taxpayer. The more you
paid into the state treasury the larger in dollars
your refund would be … CLT's tax cap refund was
never considered, never mind intended, to be nor
become a revenue redistribution scheme. The
Merriam-Webster dictionary defines 'refund' as: 1:
the act of refunding; 2: a sum refunded. Words it
lists as synonymous to refund are 'reimburse' or
'repay.' It is and has always intended to be a
proportional refund of excess revenue to those who
paid it.”
“The
voters in 1986 sent a clear message to Statehouse
politicians that when the state collects too much
money from its taxpayers, the state is obligated to
refund the money collected from each taxpayer in a
fair and even amount,” said Paul Craney, a
spokesperson for the Massachusetts Fiscal Alliance.
“Despite this clear message, our modern-day
left-wing politicians want to break with the will of
the voters so they can redistribute the money the
way they see fit. The same politicians who are
promising the 80 percent income tax hike will be
spent on transportation and education are attempting
to subvert the will of the voters who passed the
1986 rebate law. It’s deceptive and dishonest and
the public needs to be wary. The contradiction could
not be any clearer. Don’t trust these politicians.”
In a separate
press release ("Statement by New England Legal
Foundation (NELF) President Dan Winslow") our
lead attorney Dan Winslow, who attended the left-wingers'
State House news conference, announced:
[New
England Legal Foundation President Dan] Winslow
today said. “Chapter 62F was enacted by the voters
and not the Legislature. The Legislature can, of
course, change the law going forward and be
accountable to the voters. But the Legislature
cannot change the existing law retroactively without
being accountable to the Constitution. The statutory
right to an apportioned share of the surplus tax
vested as a matter of law on June 30, 2022 cannot be
altered under the Constitution without just
compensation.”
On Friday
Gov. Baker made it official that the excess revenue
refunds under our tax cap would be going out quickly
as planned, as the
State
House News Service reported ("Baker Administration Repeals
Rule Governing Tax Cap Law"):
The Baker
administration on Friday made official its repeal of
the regulation that governs how a taxpayer obtains a
credit when the state auditor has determined under
Chapter 62F that excess tax revenues for the
previous fiscal year exist, as Auditor Suzanne Bump
has done for the most recent budget year.
Though the fact that
the 1986 voter law known as Chapter 62F would
require about $3 billion in excess fiscal year 2022
state revenue be returned to taxpayers was not clear
until July, the Department of Revenue began the
process of repealing the "obsolete" regulation in
April when it posted notice of a May hearing on the
little-known rules.
"If a credit becomes
available, DOR will issue guidance and update forms
specific to the year the credit is allowed," the
administration said at the time.
The Baker
administration told the New Service in August that
it got no public comments on its plan to repeal the
regulation (830 CMR 62F.6.1) stemming from the May
hearing. On Friday, DOR sent a notice saying that
the regulation had officially been
repealed "because it is out-of-date." ...
The administration
appears ready to move ahead with its own plan. An
FAQ page hosted by DOR tells taxpayers "If you are
eligible for a refund, you 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."
In its no doubt
choreographed and lengthy editorial yesterday
The
Boston Globe immediately came out swinging with
everything it had ("Give Beacon Hill time to rework
tax refund law, Governor Baker"):
It’s
raining money on Beacon Hill, with unexpectedly high
revenue streaming in from all manner of taxes. Now,
because of an obscure 1986 law, the state is poised
to send some of that back to residents. But unless
the Baker administration gives the Legislature time
to revise the law, the money will go back in an
unfair way that stiffs the state’s poorest
residents....
The
biggest beneficiaries of this tax rebate scheme will
be the state’s wealthiest households; the poorest
residents stand to get nothing. In fact, according
to the Massachusetts Budget and Policy Center,
households that make over $1 million could receive
over $28,000, while the bottom 20 percent of
households could get a rebate as low as a paltry $9.
People making under $25,000 will not receive any
relief at all.
This
outcome would be a major fiscal policy failure on
the part of the Legislature. Since when is it a good
idea to send billions of dollars primarily to
wealthy residents when both a recession and budget
shortfalls are in the forecast? The good news is
that it doesn’t have to be this way. State
Representative Mike Connolly introduced legislation
that would cap the tax credits at $6,500 for the
wealthiest households, allowing the state to more
fairly redistribute the $3 billion among the rest of
Massachusetts’ taxpayers.
But time
is growing short. Last month, Governor Charlie Baker
announced that millions of residents will start
seeing refund checks or direct deposits in November,
and as soon as that happens, it’ll be too late to
adjust how the rebates are calculated and
distributed. But while Connolly’s legislation faces
an uphill battle, there’s no reason for it to be
constrained by the timeline Baker imposed....
Unless the
Legislature changes the law, the result will be an
absurdity. The poorest residents of Massachusetts
might not pay income tax, but the tax they pay on
the goods and services they purchase will be added
to the pot of money that will now be redistributed
to people far wealthier than them. With high
inflation and a looming recession, that’s not only
unfair; it’s reckless policy. And what voters should
know is that both the governor and the Legislature
can do something about it if they actually wanted
to.
Noteworthy
is its statement of recognition: "But time is
growing short. Last month, Governor Charlie Baker
announced that millions of residents will start
seeing refund checks or direct deposits in November,
and as soon as that happens, it’ll be too late to
adjust how the rebates are calculated and
distributed."
Realistically, the
best Democrat Socialists of America member state Rep. Mike
Connolly and his comrades can hope for at this moment is to stall
the statutory refund in court into January when the
Legislature begins its next scheduled formal session
— at which time, I predict,
CLT's tax cap will be perverted into something
unrecognizable if not outright repealed.
This is why
Attorney Dan Winslow's statement is so critical: "The
Legislature can, of course, change the law going forward and
be accountable to the voters. But the Legislature cannot
change the existing law retroactively without being
accountable to the Constitution. The statutory right to an
apportioned share of the surplus tax vested as a matter of
law on June 30, 2022 cannot be altered under the
Constitution without just compensation.”
I advise CLT's
eleven members (of the twenty-four resident taxpayers in total) who've agreed
to be plaintiffs in defense of our tax cap law if necessary
that necessity may still be coming.
Some Massachusetts
residents may know that CLT's Proposition 2½
protects them from unlimited property tax increases.
More than a few likely don't. But most don't know
what else Prop
2½ provides,
just as an example:
Section 9 of CLT's proposal reduced the annual municipal
auto excise (tax) from $66/per $1,000 of vehicle evaluation
to $25/$1,000 —
a 62% reduction.
Section 11 provides for a 50% income
tax deduction for renters on rents (the deduction up to
$3,000 — Gov. Baker's tax relief bill, still in Legislature
limbo,
would increase that to $5,000).
Section 2 of Proposition 2½
forbids the state from imposing unfunded mandates on cities
and towns, and provides recourse for taxpayers through the courts if the
state attempts to do so, and created the state Division of
Local Mandates under the State Auditor's office to oversee such
potential mandates. (More
details below.)
The State House News Service reported on Thursday,
October 13, 2022 ("Auditor Flags
$1.26 Billion Unfunded Mandates Gap"):
Auditor Suzanne Bump's
report flags gaps in state aid for school
transportation, education, veterans' benefits, and other
services within cities and towns. The school
transportation gap was estimated at $448 million in the
report, which pegged the education aid gap at $711
million and attributed $401 million of that gap to
insufficient special education assistance.
In a statement, Bump said the new
report provides legislators "with the information they
need to address the burden of unfunded mandates."
"The solution to the problem of
unfunded mandates is to prioritize funding of them. It
is a simple solution, but it may require some hard
choices," said Bump, a former state representative....
The report commends the state for
recent increases in local aid to cities and towns, but
provides a framework for debate expected in 2023 over
the adequacy of aid and the state's local mandate law,
which generally provides that post-1980 laws or
regulations that impose new service or cost obligations
on cities and towns shall be effective only if accepted
locally or fully funded by the state.
In her
actual
report, State Auditor Suzanne Bump noted:
The Division of Local Mandates (DLM)
was established by Proposition 2½, an initiative to
limit property tax increases, in order to determine the
financial impacts of proposed or existing state laws,
regulations, and rules on cities and towns. Proposition
2½ limits a city or town’s authority to raise real
estate and personal property taxes.
The Local Mandate Law,
c. 29, § 27C of the Massachusetts General Laws (M.G.L.),
generally provides that post-1980 laws, regulations, or
rules that impose new service or cost obligations on
cities, towns, regional school districts, or educational
collaboratives and meet certain thresholds shall be
effective only if locally accepted or fully funded by
the Commonwealth....
Here's the
actual language of the 1980 Proposition 2½
ballot question:
Click
here or the above graphic to open
Massachusetts Information For Voters Booklet
— 1980
Question 2 [known as Proposition 2½]
An Act limiting state and local taxation and expenditures
Here is an
excerpt
of the relevant section prohibiting unfunded state mandates
on municipal governments — and
taxpayers' available recourse in response to violations:
SECTION 2. Chapter 29
of the General Laws is hereby amended by inserting after
section 27B the following new section:
Section 27C.
Notwithstanding any provision of any special or general
law to the contrary:
(a) Any law imposing
any direct service or cost obligation upon any city or
town shall be effective in any city or town only if such
law is accepted by vote or by the appropriation of money
for such purposes, in the case of a city by the city
council in accordance with its charter, and in the case
of a town by a town meeting, unless the general court,
at the same session in which such law is enacted,
provides, by general law and by appropriation, for the
assumption by the commonwealth of such cost, exclusive
of incidental local administration expenses and unless
the general court provides by appropriation in each
successive year for such assumption....
(e) Any city or own,
or ten taxable inhabitants of an city or town may in a
class action suit petition the superior court alleging
that under the provisions of subsections (a), (b) and
(c) of this section with respect to a general or special
law or rule or regulation of any administrative agency
of the commonwealth under which any city or town is
required to expend funds in anticipation of
reimbursement by the commonwealth, the amount necessary
for such reimbursement has not been included in the
general or any special appropriation bill for any year.
. . . [MORE]
It's
satisfying to see so much of what CLT has provided
to millions of Massachusetts taxpayers over its 48
years of battles on their behalf continues bearing
fruit, is still recognized and respected as law.
But it reminds me of Benjamin Franklin's sage
response to a woman outside Philadelphia's
Independence Hall upon completion of the U.S.
Constitution in 1787.
As he was departing,
Mrs. Powell asked “Well, Doctor, what have we got, a
republic or a monarchy?”
Franklin responded
without hesitation, “A republic, madam, if you can keep it.”
|
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Chip Ford
Executive Director |
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State House News
Service
Wednesday, October 12, 2022
New Bill Would Limit Refunds Under 1986 Tax Cap Law
By Chris Lisinski
A group of progressive Democrats will push to set a $6,500
limit on the maximum tax credit high-income earners in
Massachusetts can receive under a mandatory refund law known
as Chapter 62F, taking aim at the policy less than a month
before the Baker administration expects to begin shipping
out cash.
Cambridge Rep. Mike Connolly filed a bill Wednesday (HD.5394) that would reshape the 1986 voter-approved law
requiring the state to return excess tax collections on a
proportional basis equal to the amount of income tax they
paid. The law has only been trigged twice since its passage.
The legislation would cap any 62F credit at $6,500, roughly
the amount a taxpayer who earned $1 million in 2021 will
receive in the current batch of refunds. If any taxpayer who
earns $1 million or more is due a larger amount, the bill
would require the administration to slice off the overage
above $6,500 and redistribute it equally to all other
taxpayers whose credits do not hit the cap.
Critics of the law, which was last triggered in 1987, argue
that the formula puts the state's richest taxpayers in line
to receive checks worth tens of thousands of dollars while
offering lower-income earners, for whom the refunds would
make more of a difference, insignificant amounts.
"62F delivers a huge cash windfall to the state's top income
earners and very little to lower-income workers. If we don't
act, roughly 26% of the $2.9 billion excess will go to
taxpayers who earned more than $1 million in income in
2021," Connolly wrote in a blog post, linking to research by
the left-leaning Massachusetts Budget and Policy Center.
"Taxpayers with incomes of $1 million or more will get
refunds of about $22,000 on average. On the other hand,
taxpayers in the bottom 20% of incomes will get refunds of
about $9 on average. In this time of economic hardship for
so many, this sort of disparity is unconscionable."
The bill would also make explicit the executive branch's
authority to deliver refund checks "to all eligible
taxpayers on or after the 2021 tax return filing extension
deadline of October 17, 2022." Connolly said that move will
align Gov. Charlie Baker's plan with the exact text of
Chapter 62F, which calls for excess tax revenues to be
returned as a "credit" against tax liability.
Democrat legislative leaders have signaled they do not have
much appetite to intervene and change the 62F process before
money begins to flow in November -- a step that would be
challenging to accomplish since a single objection can stall
any bill during the informal sessions on deck for the
remainder of the term -- but might be interested in
rethinking the formula for future years.
Fellow Democrats Reps. Jamie Belsito of Topsfield and
Lindsay Sabadosa of Northampton as well as Sen. Jamie
Eldridge of Acton cosponsored the bill. Belsito and Eldridge
plan to join Connolly at a press conference Thursday to
discuss the topic.
The Boston
Herald
Thursday, October 13, 2022
Lawmakers float plan to cap tax rebates under 1986 state law
By Matthew Medsger
It appears the state Legislature may not easily let go of
the excess taxpayer dollars taken in 2021 and due for rebate
under a 1986 law.
“This legislation caps Ch. 62F tax credits at $6,500 per
taxpayer, and it evenly redistributes the resulting excess
to all other eligible taxpayers,” state Rep. Mike Connolly
told colleagues seeking a co-sponsor for
HD.5394 or An Act
Putting More Money In More People’s Pockets.
Chapter 62F of the General Laws is designed such that when
the state takes too much in taxes, the Treasury is supposed
to send it back to taxpayers based on the amount of taxes
they paid. This year, according to math checked by the State
Auditor’s office, the Commonwealth took nearly $3 billion
too much.
That means that someone who made millions could be due tens
of thousands in returns. According to Connolly, there should
be a limit on how much someone gets back.
“$6,500 is proposed as the maximum because under Ch. 62F,
that is the projected credit for Tax Year 2022 that is due
to a taxpayer with $1 million in income in Tax Year 2021. By
limiting credits for those with incomes greater than $1
million, we can craft better economic policy while at the
same time honoring the fact that a $2.94 billion excess has
already been certified by the Auditor,” Connolly’s email
reads.
He’s apparently found some traction. Thursday morning state
Sen. Jamie Eldridge and state Rep. Jamie Belsito joined him
outside the statehouse to call for support of the bill.
“In this moment where so many people are feeling economic
hardship and economic strain, it’s unconscionable that the
average millionaire will see a refund check of approximately
$22,000, according to Mass Budget, and the average
low-income worker will see a refund check of $9,” Eldridge
said.
That’s exactly the point of the law, though, according to
Chip Ford, who leads the organization once chaired by
the law’s original proponent, the late Barbara Anderson.
“The law as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that which
was extracted from each taxpayer: The more you paid into the
state treasury the larger in dollars your refund would be”
Ford, executive director of Citizens for Limited Taxation,
said in a Thursday statement.
“CLT’s tax cap refund was never considered, never mind
intended to be nor become a revenue redistribution scheme.
It is and was intended to be a proportional refund of excess
revenue to those who paid it,” he said.
— Herald wire services
contributed.
State House News
Service
Thursday, October 13, 2022
Handful Of Lawmakers Join Bid To Redistribute Tax Relief
Eldridge Rips Plans For "Gross Transfer Of Wealth"
By Sam Drysdale
The day after progressive Democrats introduced a bill to
limit the size of tax refunds set this fall to flow back in
the largest amounts to the highest earners, bill sponsors
say five legislators have so far signed on but there's "no
indication" that top House or Senate Democrats are on board.
Cambridge Rep. Mike Connolly filed the bill (HD.5394)
Wednesday to set a $6,500 limit on the maximum tax credit
high-income earners in Massachusetts can receive under the
mandatory refund law known as Chapter 62F, which kicks in
when tax collections soar.
The Reagan-era 1986 voter-approved law requires the state to
return excess tax collections on a proportional basis equal
to the amount of income they paid. It has only been
triggered twice since its passage, but state Auditor Suzanne
Bump indicated there's a chance it could be triggered again
next year, Connolly said.
Bill sponsors held a press conference outside the State
House to promote the bill, saying it is "inequitable" for
the highest earners to get disproportionately higher amounts
back when the lowest-income earners are hurt the hardest by
inflation.
"We're here this morning to once again sound the alarm about
this gross transfer of wealth to the state's highest income
earners," said Sen. Jamie Eldridge of Acton. "In this moment
where so many people are feeling economic hardship and
economic strain, it's unconscionable that the average
millionaire will see a refund check of approximately
$22,000, according to Mass Budget, and the average low
income worker will see a refund check of $9."
The amount of each refund under 62F is designed to be scaled
based on how much someone paid in state personal income
taxes in 2021. Gov. Charlie Baker's budget office estimated
the refunds will total about 13 percent of how much a
taxpayer owed to Massachusetts in personal income tax.
Rep. Jamie Belsito of Topsfield, another cosponsor of the
bill, echoed Eldridge's sentiments.
"When I'm in my own kitchen in my own home with my mother
who lives in senior housing, and she's telling me that her
friends in her housing complex can't even buy food that they
normally could have bought six to 12 months ago because of
inflation - we're not going to cut a $25,000 check for top
earners in our state and turn around and say to our seniors,
who are barely keeping it together, here's a $9 check for
you," she said.
Belsito called the 1986 law, which legislators were
blindsided by in the last hours of formal sessions in July
and derailed a substantial economic development bill that
still hasn't regained any traction, "a Reaganomics,
trickle-down, Voodoo-economics hangover from 1980s hicks."
She, and fellow cosponsors of the bill, said they are
determined to get this bill passed to reform 62F by the end
of this session, to affect the tax return checks that are
set to start going out in November. However, without support
from legislative leaders or Gov. Baker - who legislators
said also gave no indication of supporting the bill - they
have a steep hill to climb before they get there.
"It's clear the governor would like to continue with his
scheme of issuing advanced tax refunds," Connolly said.
Former state representative and current president of the New
England Legal Foundation Daniel Winslow turned out for the
press conference and said 62F cannot be changed at this
point in the session "without just compensation under the
Constitution."
"Going forward, the legislature can do whatever it wishes to
do and answer to the voters, but if they try to change this
law and take away the $3 billion, they would have to answer
to the Constitution," he said.
Connolly said during the press conference that the bill does
not seek to take away any of the $2.9 billion owed back to
taxpayers under the law, just redistribute part of the money
going to high-earners.
Winslow said the legal foundation is "prepared to go to
court" if the 62F is not followed as written.
"If they change the law retroactively, they would have to
answer to the courts," he said.
Massachusetts Fiscal
Alliance
Thursday, October 13, 2022
Joint News Release
Lawmakers Seek to Break the will of the Voters by Changing
1986 Ballot Question
Warning to Voters Ahead of Question 1
Boston – The Massachusetts Fiscal Alliance issued the
following statement in response to a group of left wing
Democratic and Democratic Socialists lawmakers holding a
press conference this morning announcing their bill to
change the 1986 voter approved tax rebate law. The 1986
voter approved law was sponsored by Citizens for Limited
Taxation (CLT) and the Massachusetts High Tech Council.
These lawmakers proposed legislation that would directly
change the will of the voters as approved in 1986 by
redistributing taxpayer money based on fabricated reasoning
rather than correlated to how much one paid in. A similar
debate is taking place with Question 1 aka the Tax Hike
Amendment, which would allow the legislature to spend
additional taxpayer money collected by an 80% income tax
hike however they wish, despite the proponents of Question 1
claiming it will result in additional revenue for
“transportation” and “education.”
The claim of increased spending for transportation and
education was debunked when the proponents went before the
state Supreme Judicial Court in 2018 and lost. Similar
ballot questions that earmark revenue toward popular causes
have been undermined by the legislature once authorized by
the voters. Simply put, the legislature cannot be bound by a
ballot question for spending and these lawmakers this
morning proved once again that they are willing to break
promises made to voters when a ballot question is concerned.
“The voters in 1986 sent a clear message to State House
politicians that when the state collects too much money from
its taxpayers, the state is obligated to refund the money
collected from each taxpayer in a fair and even amount.
Despite this clear message, our modern-day left-wing
politicians want to break with the will of the voters so
they can redistribute the money the way they see fit. The
same politicians who are promising the 80% income tax hike
will be spent on transportation and education are attempting
to subvert the will of the voters who passed the 1986 rebate
law. It’s deceptive and dishonest and the public needs to be
wary. The contradiction could not be any clearer. Don’t
trust these politicians, or their promises on Question 1. If
this tax hike passes, they will do whatever they want with
the money,” stated Paul D. Craney, a spokesman for the
Massachusetts Fiscal Alliance.
“CLT's 1986 tax cap law can cynically be termed 'flawed'
only by a Democratic Socialist such as self-avowed state
Rep. Mike Connolly. The law as drafted and adopted was
specifically intended as a tax refund of excess revenue in
proportion to that which was extracted from each taxpayer:
The more you paid into the state treasury the larger in
dollars your refund would be; not 'from each according to
his ability to each according to his need,' said Chip
Ford, executive director of Citizens for Limited
Taxation. Ford added, "The Merriam-Webster dictionary
defines 'refund' as 1) the act of refunding; 2) a sum
refunded. Words it lists as synonymous to refund are
'reimburse' or 'repay.' CLT's tax cap refund was never
considered, never mind intended to be nor become a revenue
redistribution scheme. It is and was intended to be a
proportional refund of excess revenue to those who paid it.”
###
New England Legal Foundation
(NELF)
Thursday, October 13, 2022
Press Release
Statement by New England Legal Foundation (NELF) President
Dan Winslow in Response to Legislators’ Efforts to Limit
Size of Tax Refunds Due to be Distributed to Massachusetts
Taxpayers, Starting in November
BOSTON - New England Legal Foundation (NELF) President Dan
Winslow attended the press conference held earlier today
regarding a new Massachusetts House bill filed by State
Representative Michael Connolly and others that would change
the allocation of the nearly $3 billion tax credit owed to
taxpayers under the surplus tax refund law, chapter 62F.
Under current law, taxpayers will receive a credit based on
the amount of state taxes they paid. Connolly’s bill seeks
to change the law so that more money is paid to people who
paid fewer taxes.
Winslow today said. “Chapter 62F was enacted by the voters
and not the Legislature. The Legislature can, of course,
change the law going forward and be accountable to the
voters. But the Legislature cannot change the existing law
retroactively without being accountable to the Constitution.
The statutory right to an apportioned share of the surplus
tax vested as a matter of law on June 30, 2022 cannot be
altered under the Constitution without just compensation.”
The New England Legal Foundation has represented 24
taxpayers with standing to enforce any violation of the law.
###
Beacon Hill Roll
Call
Volume 47-Report No. 41
October 10-14, 2022
Change Distribution Formula For $2.9 Billion In Tax Relief
(HD 5394)
By Bob Katzen
Rep. Mike Connolly (D-Cambridge) has filed a bill that would
change the formula for how $2.9 billion in tax refunds will
be distributed 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 on a proportional basis equal to the amount of
state income tax they paid the state in 2021. Auditor
Suzanne 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.
Connolly’s measure would establish a $6,500 limit on the
maximum tax credit an individual taxpayer in Massachusetts
can receive under the mandatory refund law.
Gov. Charlie Baker's office has estimated that individuals’
refunds will total about 13 percent of how much a taxpayer
paid to Massachusetts in personal income tax in 2021.
MassBudget says that the average millionaire will get a
refund check of an estimated $22,000, while the average
low-income worker will receive a mere $9.
“In this time of soaring inflation and economic hardship for
so many of our constituents, the goal of this bill is to
limit Chapter 62F tax credits for those with million-dollar
incomes and then redistribute the resulting excess to
taxpayers who have incomes under one million dollars,” said
Connolly. “Under our proposal, 99.4 percent of Ch. 62F
refund recipients would see an additional $200 included in
their refund checks next month. That’s why I’ve dubbed the
bill ‘Putting More Money In More People's Pockets.’ The
fastest way to get this bill approved would be to include
its concepts in the pending economic development bill or the
closeout supplemental budget. For my part, I am advocating
for a return to formal sessions if necessary because we
understand many residents are being crushed by the rising
cost of living and these bills could offer some additional
relief.”
Co-sponsor Rep. Jamie Belsito (D-Topsfield) said, “When I am
at home talking with my mother who lives in senior housing,
and she's telling me that her friends in her housing complex
can't even buy food that they normally could have bought six
to 12 months ago because of inflation—we're not going to cut
a $25,000 check for top earners in our state and turn around
and say to our seniors, who are barely keeping it together,
‘here's a $9 check for you.’”
"CLT’s 1986 tax cap law can cynically be termed 'flawed'
only by an avowed member of the Democratic Socialists of
America like state Rep. Mike Connolly,” said Chip Ford,
executive director of Citizens for Limited Taxation
who called the measure absurd and dubbed it as “Revenge of
the Socialists.”
“The law as drafted and adopted was specifically intended as
a tax refund of excess revenue in proportion to that which
was extracted from each taxpayer. The more you paid into the
state treasury the larger in dollars your refund would be …
CLT's tax cap refund was never considered, never mind
intended, to be nor become a revenue redistribution scheme.
The Merriam-Webster dictionary defines 'refund' as 1) the
act of refunding; 2) a sum refunded. Words it lists as
synonymous to refund are 'reimburse' or 'repay.' It is and
has always intended to be a proportional refund of excess
revenue to those who paid it.”
“The voters in 1986 sent a clear message to Statehouse
politicians that when the state collects too much money from
its taxpayers, the state is obligated to refund the money
collected from each taxpayer in a fair and even amount,”
said Paul Craney, a spokesperson for the Massachusetts
Fiscal Alliance. “Despite this clear message, our modern-day
left-wing politicians want to break with the will of the
voters so they can redistribute the money the way they see
fit. The same politicians who are promising the 80 percent
income tax hike will be spent on transportation and
education are attempting to subvert the will of the voters
who passed the 1986 rebate law. It’s deceptive and dishonest
and the public needs to be wary. The contradiction could not
be any clearer. Don’t trust these politicians.”
State House News
Service
Friday, October 14, 2022
Baker Administration Repeals Rule Governing Tax Cap Law
By Colin A. Young
The Baker administration on Friday made official its repeal
of the regulation that governs how a taxpayer obtains a
credit when the state auditor has determined under Chapter
62F that excess tax revenues for the previous fiscal year
exist, as Auditor Suzanne Bump has done for the most recent
budget year.
Though the fact that the 1986 voter law known as Chapter 62F
would require about $3 billion in excess fiscal year 2022
state revenue be returned to taxpayers was not clear until
July, the Department of Revenue began the process of
repealing the "obsolete" regulation in April when it posted
notice of a May hearing on the little-known rules.
"If a credit becomes available, DOR will issue guidance and
update forms specific to the year the credit is allowed,"
the administration said at the time.
The Baker administration told the New Service in August that
it got no public comments on its plan to repeal the
regulation (830 CMR 62F.6.1) stemming from the May hearing.
On Friday, DOR sent a notice saying that the regulation had
officially been
repealed "because it is out-of-date."
The regulation that was repealed described a process under
which a taxpayer "may claim an excess revenue credit toward
personal income tax liability for the current taxable year
equal to the taxpayer's personal income tax liability for
the previous taxable year multiplied by the excess revenue
percentage."
But with nearly $3 billion due back to taxpayers, the
outgoing governor has said he wants the money to go out as
rebate checks in the coming weeks rather than as a credit on
next year's taxes.
It is unclear whether the administration has prepared a new
regulation to guide the distribution of Chapter 62F money
this time around. A spokeswoman for the Executive Office of
Administration and Finance was out of the office Friday and
the person she directed media inquiries to did not
immediately respond to News Service questions.
The administration appears ready to move ahead with its own
plan. An
FAQ page hosted by DOR tells taxpayers "If you are
eligible for a refund, you 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."
The Boston
Globe
Saturday, October 15, 2022
A Boston Globe editorial
Give Beacon Hill time to rework tax refund law, Governor
Baker
Unless lawmakers revise the 1986 law, the biggest
beneficiaries of Massachusetts’ tax refunds will be the
state’s wealthiest households — while the poorest residents
stand to get nothing.
It’s raining money on Beacon Hill, with unexpectedly high
revenue streaming in from all manner of taxes. Now, because
of an obscure 1986 law, the state is poised to send some of
that back to residents. But unless the Baker administration
gives the Legislature time to revise the law, the money will
go back in an unfair way that stiffs the state’s poorest
residents.
We all pay state taxes: sales taxes, gas taxes, and of
course, the income tax. Under the 1986 law, the result of an
ill-advised ballot question, when the state collects more
tax revenue than allowed, it must send it back. The law has
only been triggered once before, and only for a relatively
small excess of $29.2 million; this time, there’s nearly $3
billion to send back to taxpayers.
So who gets what? The Baker administration proposes to
direct-deposit refunds to taxpayers; following the law, the
exact amount taxpayers receive will be in proportion to what
they paid in income tax. Under the terms of the 1986 law,
the state will make no effort to factor in the other types
of state taxes residents paid, even though unexpectedly high
sales and gas tax receipts are one reason the state has such
a surplus to begin with.
But because poor people tend to pay a greater percentage of
their overall tax burden in those taxes, while sometimes
paying no income tax, the refunds will have a regressive
impact.
The biggest beneficiaries of this tax rebate scheme will be
the state’s wealthiest households; the poorest residents
stand to get nothing. In fact, according to the
Massachusetts Budget and Policy Center, households that make
over $1 million could receive over $28,000, while the bottom
20 percent of households could get a rebate as low as a
paltry $9. People making under $25,000 will not receive any
relief at all.
This outcome would be a major fiscal policy failure on the
part of the Legislature. Since when is it a good idea to
send billions of dollars primarily to wealthy residents when
both a recession and budget shortfalls are in the forecast?
The good news is that it doesn’t have to be this way. State
Representative Mike Connolly introduced legislation that
would cap the tax credits at $6,500 for the wealthiest
households, allowing the state to more fairly redistribute
the $3 billion among the rest of Massachusetts’ taxpayers.
But time is growing short. Last month, Governor Charlie
Baker announced that millions of residents will start seeing
refund checks or direct deposits in November, and as soon as
that happens, it’ll be too late to adjust how the rebates
are calculated and distributed. But while Connolly’s
legislation faces an uphill battle, there’s no reason for it
to be constrained by the timeline Baker imposed.
In fact, some legal experts have raised questions about
whether Baker’s method of distributing the rebate actually
complies with the state constitution. The law requires that
residents would be given a tax credit when they file taxes
next year rather than a direct cash payment, as Baker plans.
The reason that potentially poses a problem is that a direct
cash payment can, in legal terms, be viewed as an
appropriation rather than a credit, and only the Legislature
is authorized to appropriate state funds. Indeed, the
Supreme Judicial Court upheld the law in 1987 because it
established a tax credit and did not appropriate money.
The Baker administration ought to stop these checks from
going out next month and allow the Legislature to consider
Connolly’s bill. After all, if Baker had not created the
unprecedented refund check plan, then residents would have
only seen the credits on their 2022 tax forms next year — as
they did the last time the law was triggered. There’s no
reason to rush the process now.
What the governor and lawmakers on Beacon Hill should take
into account is that the reason that this tax law was
triggered this time around was not because Massachusetts
raised taxes at a higher rate than wage and salary growth —
something that this law intended to prevent. (State income
taxes actually steadily declined for 20 years until they
reached 5 percent in 2020.) Rather, more regressive taxes,
like sales and gasoline taxes, have brought in higher
revenue, and the bulk of the nearly $3 billion excess
revenue — $2.25 billion, according to the state auditor —
can already be claimed through other tax credits and
deductions.
Unless the Legislature changes the law, the result will be
an absurdity. The poorest residents of Massachusetts might
not pay income tax, but the tax they pay on the goods and
services they purchase will be added to the pot of money
that will now be redistributed to people far wealthier than
them. With high inflation and a looming recession, that’s
not only unfair; it’s reckless policy. And what voters
should know is that both the governor and the Legislature
can do something about it if they actually wanted to.
State House News
Service
Thursday, October 13, 2022
Auditor Flags $1.26 Billion Unfunded Mandates Gap
A new report identifies a $1.26 billion shortfall between
state appropriations and
actual municipal spending on existing programs that are
mandated by the state.
By Michael P. Norton
Auditor Suzanne Bump's report flags gaps in state aid for
school transportation, education, veterans' benefits, and
other services within cities and towns. The school
transportation gap was estimated at $448 million in the
report, which pegged the education aid gap at $711 million
and attributed $401 million of that gap to insufficient
special education assistance.
In a statement, Bump said the new report provides
legislators "with the information they need to address the
burden of unfunded mandates."
"The solution to the problem of unfunded mandates is to
prioritize funding of them. It is a simple solution, but it
may require some hard choices," said Bump, a former state
representative.
According to Bump's office, the new report also identifies
"inadequacies in existing formula distributions that result
in glaring unequal distributions to similarly-situated
communities."
The report commends the state for recent increases in local
aid to cities and towns, but provides a framework for debate
expected in 2023 over the adequacy of aid and the state's
local mandate law, which generally provides that post-1980
laws or regulations that impose new service or cost
obligations on cities and towns shall be effective only if
accepted locally or fully funded by the state.
"This report confirms that cities and towns are facing deep
financial pressures, and explains why our communities rely
so heavily on local aid and key municipal and school
reimbursement programs," Massachusetts Municipal Association
Executive Director Geoff Beckwith said. "Fortunately,
progress is being made, and it's important to underscore the
strong partnership that cities and towns have with the
Legislature."
Massachusetts Information
For Voters Booklet —
1980
Question 2 [also known as Proposition 2½]
An Act limiting state and local taxation and expenditures.
[. . .]
SECTION 2. Chapter 29 of the General Laws is
hereby amended by inserting after section 27B the following
new section:
Section 27C. Notwithstanding any provision of any special or
general law to the contrary:
(a) Any law imposing any direct service or cost obligation
upon any city or town shall be effective in any city or town
only if such law is accepted by vote or by the appropriation
of money for such purposes, in the case of a city by the
city council in accordance with its charter, and in the case
of a town by a town meeting, unless the general court, at
the same session in which such law is enacted, provides, by
general law and by appropriation, for the assumption by the
commonwealth of such cost, exclusive of incidental local
administration expenses and unless the general court
provides by appropriation in each successive year for such
assumption.
(b) Any law granting or increasing exemptions from local
taxation shall be effective in any city or town only if the
general court, at the same session in which such law is
enacted, provides by general law and by appropriation for
payment by the commonwealth to each city and town of any
loss of taxes resulting from such exemption.
(c) Any administrative rule or regulation which shall result
in the imposition of additional costs upon any city or town
shall not be effective until the general court has provided
by general law and by appropriation for the assumption by
the commonwealth of such cost, exclusive of incidental local
administration expenses, and unless the general court
provides by appropriation in each successive year for such
assumption.
(d) Any city or town, any committee of the general court,
and either house of the general court by a majority vote of
its members, may submit written notice to the division of
local mandates, established under section six of chapter
eleven of the general laws, requesting that the division
determine whether the costs imposed by the commonwealth by
any law, rule or regulation subject to the provisions of
this section have been paid in full by the commonwealth in
the preceding year and, if not, the amount if any deficiency
is such payments. The division shall make public its
determination with sixty days after such notice.
(e) Any city or own, or ten taxable inhabitants of an city
or town may in a class action suit petition the superior
court alleging that under the provisions of subsections (a),
(b) and (c) of this section with respect to a general or
special law or rule or regulation of any administrative
agency of the commonwealth under which any city or town is
required to expend funds in anticipation of reimbursement by
the commonwealth, the amount necessary for such
reimbursement has not been included in the general or any
special appropriation bill for any year. . . . [MORE]
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NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ (781) 639-9709
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