The House and governor’s plans to cut taxes may have met a wall in the Legislature’s upper chamber, after the Senate president reiterated her oft-made call for “progressive” reforms without endorsing either previously offered proposal.
“I said last spring, I said again in the summer, I said again in the fall and in January that I believe we should have permanent progressive tax relief that is smart and sustainable, and the Senate is taking a look at doing that,” state Senate President Karen Spilka said.
The Ashland Democrat, speaking alongside House Speaker Ron Mariano and Gov. Maura Healey, was the center of attention at a Monday press conference offered after the trio left one of their fairly regular leadership meetings.
Their last meeting came just before the House passed its response to Healey’s fiscal 2024 spending proposal and her plan to provide relief to a broad spectrum of taxpayers.
Progressive lawmakers and advocates were quick to sound the alarm after either tax cut package was presented. Too many of the included cuts, they said, targeted the state’s wealthiest citizens and largest corporations.
With the fiscal ball now firmly in her court, when members of the press were given the opportunity they peppered Spilka with questions, asking repeatedly about her intentions towards both tax cuts in general and the House and governor’s plans specifically.
The Senate President would not allow herself to be nailed down about whether the House plan currently before the upper chamber met her definition of “permanent, progressive tax relief that is smart and sustainable,” nor would she say when the public might see a Senate plan, except that it would come after they present their budget.
Senators are due to release their version of the budget Tuesday afternoon.
If Spilka, Mariano, or Healey were the least bit concerned by recent news that the state is running in the red on tax revenue for the year they certainly gave no indication, each offering instead assurances April’s unexpected about $1.4 billion shortfall, while not ideal, was entirely within the scope of the commonwealth’s contingency plans.
“We anticipated a potential downslope in the economy,” Mariano said. “That’s why we rolled in a few of our tax changes over two years.”
Building on the governor’s earlier offering, the House’s tax reform plan, as approved, would provide $654 million in tax relief in fiscal 2024 and $1.1 billion in relief through fiscal 2026 and beyond.
It would more than halve the short-term capital gains tax and double the death tax threshold while eliminating the so-called “cliff effect” whereby an entire estate is taxed when it’s made subject to the rule.
By 2027 the plan would allow parents and caregivers to claim a $614 credit per dependent child while immediately increasing the rental deduction from $3,000 to $4,000 and doubling the senior circuit breaker to $2,400.
Some parts of that plan met with the approval of House progressives, but some did not.
Specifically, changes to the estate tax and capital gains tax were called out as at odd with the will of the voters, who in November passed the Fair Share Amendment, a ballot question enshrining a 4% tax on incomes over $1 million in the state constitution
“There are real concerns about the parts of this bill that overwhelmingly benefit big corporations and the very wealthy,” Cambridge State Rep. Mike Connolly, one of three House lawmakers to vote against the plan, said before its bipartisan passage.
Despite the concerns of the more liberal wings of their party, both Healey and Mariano have insisted on the need to simultaneously provide support for the state’s most vulnerable residents while also making Massachusetts competitive against lower tax jurisdictions.
If all of this seems like déjà vu, it isn’t your imagination, but history repeating itself.
Last year’s tax cut proposal, about $750 million reform plan when originally offered by then Gov. Charlie Baker, was shelved after it was revealed about $3 billion in revenue would have to be returned to taxpayers and lawmakers waited out the impacts of inflation.