The state needs to move forward with a tax cut package this year if lawmakers hope to keep the commonwealth competitive, Gov. Maura Healey said in Andover on Monday.
“I think the three tenants of our administration have been affordability, competitiveness, and equity,” she said. “It is really important we get tax relief for our competitive advantage and for making life more affordable for more people around the state.”
Speaking shortly after announcing millions in workforce development grants aimed at helping the state’s employers find skilled talent from within the Commonwealth, Healey was responding to a question about a weekend television appearance by House Speaker Ron Mariano, in which the latter seemed to express concern over the fate of a proposed cut to the short term capital gains tax rate.
A plan to slash the tax from 12% to 5%, bringing Massachusetts more in line with surrounding states, was included in tax reform proposals offered by the House and the governor.
However the proposal offered by the upper chamber of the Legislature does not include any alteration to the capital gains tax rate and is more in keeping with Senate President Karen Spilka’s often made calls for “progressive” changes to the tax code.
With both the House and Senate tax cut bills already approved by lawmakers, a joint conference committee composed of three members from either body is currently working out the differences between the plans.
According to Mariano, a compromised piece of legislation returned to the House by the committee absent the cuts to the short term capital gains tax might meet his approval, but that it remains to be seen what else his colleagues manage to add to the bill.
“It depends on what other things are in the compromise that we reach,” Mariano said during an interview with WBZ’s political analyst Jon Keller. “I really do think the competitive issue is something that we have to deal with.”
Healey, in speaking with reporters Monday, stressed that both her proposal and the House plan aim to help prospective residents choose Massachusetts and to keep people here.
“I believe that everything we put forward is something that should happen for the state, that is very important for our competitive advantage, particularly as you look at Massachusetts compared to other states,” she said. “We are an outlier when it comes to short term capital gains. We are an outlier when it comes to the estate tax. I don’t want these things to hold us back. I don’t want people to leave Massachusetts because of these things.”
“So, as we work on driving down the cost of housing through increasing housing production, as we work on finding more resources and investments for workforce development, job training, and the like, know that the tax package is something that is very important to us as a matter of our competitive advantage as a state,” the governor said.
The approved tax bills each offer a doubling of the estate tax threshold, bringing it from $1 million to $2 million, and increases to the rental deduction cap, the Earned Income Tax Credit, and the senior circuit breaker tax credit cap. Both plans call for changes to the child and dependent tax credit.
The plans differ on housing tax credits and the short term capital gains tax rate.
It is unclear how long it might take lawmakers to iron out the differences between their tax cut plans, but both chambers are planning an August recess to close out the summer.