The state Senate unanimously approved their version of a tax cut plan last night, a significantly pared down set of reform proposals than that which was previously offered by the House, setting up a second summer of conflict over how the Commonwealth can balance competitiveness and the cost of living.
Coming in at around $590 million, the Senate’s “An Act to improve the Commonwealth’s competitiveness, affordability, and equity” offers the sort of progressive tax cuts that Sen. Pres. Karen Spilka has maintained for years she would support, without including some changes sought by the business community.
“The scope of the House bill is more responsive to the cost of competitive challenges,” Doug Howgate, president of the Massachusetts Taxpayers Foundation, told the Herald. “We’re still going to crunch the numbers, but the hope would be that the final package would include good ideas from both proposals.”
The Senate opted against lowering the short term capital gains tax from 12% to 5%, a measure both Gov. Maura Healey and the House have offered. Senators agreed with an increase to the estate tax the House approved, though their $2 million cap is a full $1 million less than the plan offered by Healey.
The plan ups the rental deduction from $3,000 to $4,000, doubles the senior circuit breaker credit from $1,200 to $2,400, raises the child and dependent tax credit from $180 to $310, and increases the earned income tax credit from 30% to 40% of the federal credit.
Republican members of the Senate, outnumbered 12 to one by their liberal counterparts, offered dozens of amendments to the tax cut bill which would have brought it into line with the larger proposals offered by the lower chamber and Healey.
Those bills, the governor and House leadership have maintained, aim toward keeping the state competitive while making living here more affordable for middle and low income families.
“Are we doing enough to be competitive,” Minority Leader Bruce Tarr asked his colleagues. “We want to make sure that the lofty goals incorporated into the title of this bill are in fact reflected in the substance of this bill.”
Democrats were not moved by Tarr’s speeches or amendments. Sen. Michael Rodrigues, who chair’s the committee responsible for the bill, said that Tarr’s assertion that people are leaving the state because of its taxes simply does not hold water. They are leaving, he told his colleagues, because it is too expensive to raise a family here.
“They are leaving this state because they can’t afford to live here. They can’t afford to raise their children here. Housing and education and childcare are the biggest driving forces behind that demographic leaving and it’s concerning,” he said.
Sen. Paul Feeney concurred, saying that trickle down style economics, which favors letting the wealthy keep more of their money, is “for dogs and fire hydrants.”
Being competitive, he said, “certainly isn’t taking care of millionaires and billionaires” but is a matter of making the state affordable for working class and middle class people.
That’s a message Spilka was selling to the Greater Boston Chamber of Commerce Thursday morning, telling the business community that lowering taxes for the wealthy was not the solution to Massachusetts’ problems.
“When we drill down on who is currently leaving the state according to recent data, the largest demographic of people is those aged 26 to 35. I don’t know about you, but that statistic definitely gives me pause,” she said. “We desperately need the smarts, energy and creativity of these young people.”
The pair of tax cut proposals now approved by the Legislature’s two chambers will head to conference committee, where three members from each body will hammer out the differences before sending the package back.
Last year’s tax cut plan, very much the same as this years, made it just as far but never left conference committee and died with the end of the legislative session.