Massachusetts is moving in the “wrong direction” on tax policy compared to other states and state lawmakers can “no longer be complacent” as they negotiate tax relief proposals on Beacon Hill, local business groups said Tuesday.
A panel of six lawmakers has been negotiating a tax relief proposal since late June after the House passed its version on April 13 and the Senate on June 15. The legislation, which legislators have discussed in some form for more than a year, sat idle as Beacon Hill dealt with an overdue state budget.
The Greater Boston Chamber of Commerce and the Massachusetts Society of CPAs called on negotiators to “quickly finalize the first step in strategic tax reform that will benefit residents, families, businesses, and the economy.”
The two groups want reforms of the “archaic” estate tax, reducing the short-term capital gains tax, rejecting joint filing requirements “that raise taxes,” and increasing housing, family, and transit tax deductions and credits.
“To protect our tax base and attract the talent and businesses we need to thrive, we can no longer be complacent. Bold action is needed now to send a loud message that Massachusetts is serious about protecting our resources and competing in today’s global environment,” MassCPAs President and CEO Amy Pitter said in a statement.
Senators passed a nearly $590 million tax relief bill that increases housing-related initiatives like the cap on rental deductions, the cap on the Housing and Development Incentive Program, and creates a $310 million credit for all children 13 and under.
The Senate bill does not reduce the short-term capital gains tax, a measure both the House and Gov. Maura Healey lowered from 12% to 5%. That reduction is supported by the business community but criticized by some for giving breaks to the wealthy.
Senators also proposed excluding estates valued up to $2 million from the state tax, a move that was lower than Healey but equal to what counterparts in the House approved.
The House included in their proposal the implementation of a single sales factor apportionment for corporate excise payors, an idea that would base a corporation’s taxes only off a company’s in-state sales. Neither the Senate nor Healey included that in their bills.
The House bill has an annualized value of $1.1 billion compared to the Senate’s $644 million, according to the Massachusetts Taxpayers Foundation. Lawmakers set aside $581 million in the fiscal 2024 state budget to cover a tax relief bill.
The Greater Boston Chamber of Commerce and MassCPA recommendations “will take the first step in alleviating outlier tax policies that yield negative results,” said Greater Boston Chamber of Commerce President and CEO James Rooney.
“Now, it is time for the Commonwealth’s legislators to move forward with important tax reform to ensure that residents, families, and businesses can — and will — start, stay, and succeed in Massachusetts,” he said in a statement.
Materials from the State House News Service were used in this report.