Keller @ Large: Gov. Charlie Baker On Push For Tax Cuts

BOSTON (CBS) - "We can't just close our eyes and pretend we aren't competing with other states, because we are," said Governor Charlie Baker, making his case for tax relief at a legislative hearing on Tuesday.

Democrats in attendance applauded his cuts targeted at renters, seniors and low-income families. But a deep cut in the state tax rate on short-term capital-gains like stock market winnings, which is one of the highest in the nation? Not so much.

"What people in my district are talking about is how Wall Street is going through the roof and breaking records, and yet our food bank lines are going around the block," said the co-chair of the Joint Committee on Revenue, Sen. Adam Hinds (D-Pittsfield).

Baker argues that class-warfare-style politics shouldn't apply to our sky-high capital gains tax that bites well beyond the one percent. "That 12% short-term capital gains tax we have here in Massachusetts for thousands and thousands of people who just buy mutual funds and participate in aggregated equity programs, every time those things buy and sell on a short-term basis they pay a tax on it," he says.

And with the work-from-home boom brought on by the pandemic - even up at the State House, where several legislators heard his testimony Tuesday remotely - Baker claims we're at a crossroads when it comes to competing with lower-tax states for investment and jobs.

"If your Commonwealth is heavily dependent on tech companies and finance companies and medical companies and other innovation industries where a lot of the folks who work for those can be almost anywhere, we need to take seriously that our competitive position - our cost of housing, cost of doing business, tax policy and all the rest - will matter over time and probably more than it has over the past decade," Baker said.

Sounds ominous. So, could this be an election-year battle between the governor and the legislature?

Look for Baker to push on this one, in part because of the referendum on the ballot in November that would slap a surtax on incomes over a million dollars. Defeating that is going to be an uphill struggle, and when we asked the governor how hard he plans to fight it, he said this tax package is a higher priority.