Senate Democrats rolled out a $586 million tax relief proposal Thursday that boosts several housing-related initiatives but steers clear of significant changes to Massachusetts’ tax-cap law and short term capital gains tax.
Tax relief has been one of the few major talking points on Beacon Hill this legislative session after efforts to push a bill forward fizzled out last year when the state was required to send billions back to taxpayers under the state’s tax cap law known as Chapter 62F.
Senators plan to debate their proposal on June 15. Amendments are due Monday by 5 p.m.
Senators proposed increasing the cap on rental deductions from $3,000 to $4,000 and initially boosting the statewide Housing Development Incentive Program (HDIP) cap from $10 million to $57 million before settling on $30 million annually.
HDIP provides a real estate tax exemption and tax credits for building new housing or rehabilitating old properties in gateway cities. It was one feature of Healey’s $750 million tax proposal she released in February.
The Senate opted not to take a swing at lowering the short term capital gains tax from 12% to 5%, a measure both Healey and the House have floated in their respective plans that has generated support from the business community.
Senators also did not include a House-backed change to the tax cap law that would require any excess tax revenue returned to residents be equal payments regardless of how much they paid to the state. Healey did not include that change in her tax proposal.
House Speaker Ronald Mariano previously said the adjustment to repayments allows for everyone to share in the success of the state’s economy.
“We felt after watching the way the checks were made out and sent out, I think [Michlewitz, Cusack and I] sort of agreed pretty early on that there are fairer ways to do this,” he told reporters in April.
Senate leadership are proposing to require the Department of Revenue update on monthly net state revenues and estimate if, and when, net revenue may exceed the allowable state tax revenue for the fiscal year.
Senate Democrats proposed excluding estates valued up to $2 million from the estate tax, $1 million lower than Healey proposed but on-par with what the House approved.
Sen. Ryan Fattman, a Sutton Republican, said the Senate tax relief proposal is “underwhelming.” He criticized Democrats for not proposing a larger threshold for when the estate tax kicks in.
“I think what I’m struggling with on this is you earn income, you’re taxed on it. You spend it, you’re taxed on it. You invest it, you’re taxed on it. And in Massachusetts, when you die, your family is taxed on it,” Fattman said. “And if you truly look at trying to become a competitive place for people to live, raise a family, build a business, spend the rest of their life, the estate tax at $2 million as a proposal is just a ridiculous notion.”
The housing provisions of Senate leadership’s tax relief proposal “are a strength,” said Massachusetts Taxpayers Foundation Executive Director Doug Howgate.
“However, its exclusion of capital gains tax reform and more limited estate tax and child and dependent tax credit relief undercut our collective ability to meet two key goals: promote Massachusetts’ competitiveness and address high costs of living,” he said in a statement.
Raise Up Massachusetts, a progressive group, said the proposal “strike the right balance of targeted cuts for low-income families and middle-class homeowners, without giving away hundreds of millions of dollars to the ultra-rich and large multinational corporations.”
“Ultimately, the Senate’s tax proposal addresses issues most important to working families – like the need for more affordable housing – while sustaining the critical funding we need to fix our roads and public transit, expand access to childcare, and make our public colleges and universities more affordable,” the group said in a statement.
Herald wire services contributed.
This is a developing story.