Keller @ Large: House plan hopes to slow exodus of people from Mass. to lower-tax states
BOSTON – Then-Gov. Charlie Baker said last year as he promoted a sweeping tax cut plan, "We can't just close our eyes and pretend that we're not competing with other states because we are." And when new Gov. Maura Healey unveiled a notably similar plan last month, she explained it was "in an effort to make Massachusetts more competitive."
The Senate was ready to pass a comparable proposal last year. And with Tuesday's release of a House tax cut plan that echoes the others, it appears tweaking tax policy to slow the exodus to lower-tax states has been a shared priority.
Baker wanted to double the amount you can exempt from estate taxes from $1 million to $2 million. Healey wanted even more exempted, $3 million. The House went with Baker's figure.
And while Baker took heat from the left for proposing a deep cut in our sky-high short-term capital gains tax rate, Healey agreed with him and so does the House, with a two-year phase in.
Liberal analysts have disputed the notion of wealth and investment fleeing the state over tax policy. But the House speaker made it clear he's not buying their argument.
"Let's hope it makes us more competitive and with that people will hesitate before they think about moving," Speaker Ron Mariano said.
Still, there was a victory for the left in the new House proposal.
Remember how a 35-year-old law requiring income tax rebates when state revenues exceeded certain limits kicked in last year? Mariano and others didn't like the fact that the more you paid the more you got back, so his plan calls for everyone to get the same amount if it happens again.
And if that move will generate a big backlash, you wouldn't know it from the reaction of the business-backed Massachusetts Taxpayers Foundation.
"The most important thing is that as we collect more tax revenue than any reasonable person would have expected, we're giving back that tax revenue to taxpayers," MTF president Doug Howgate said.
After the millionaire's tax was passed last fall there was some concern about the old "Taxachusetts" tag making a comeback, and to some extent this House plan is a reaction to that.
But after backing that tax hike the governor and legislative leaders are likely in no mood to be lectured by the left about being too generous with tax cuts, or by the right for potentially tweaking the tax-rebate law.
They're all trying to get a handle on what the shift to remote work and the continuing housing crisis mean for the local economy long term. This emerging tax cut plan is a sign of our political leaders trying to find the right balance.