Yesterday, the Massachusetts Legislature released their economic development bill, a mix of investments and tax reforms. While there are many parts of the bill that are welcome and overdue, the Legislature misses the mark on others.
No Excuse for Excluding Those Most in Need from Rebates
The economic development bill includes a provision to send one-time taxpayer rebates of $250 (or $500 for married couples) to individuals who reported between $38,000 and $100,000 in income (or up to $150,000 for joint filers) in 2021 as a way of blunting the impact of inflation on households.
But what about those with less than $38,000? Speaker Mariano argued that such individuals already received support through essential worker bonuses earlier this year, but if anyone could benefit from additional money right now in our increasingly unaffordable state, it is those who have the least.
Rep. Tami Gouveia’s Amendment #813 would eliminate this income floor.
Regressive Tax Cuts
All in all, the bill spends $523.5 million through tax policy changes. $207 million of that (almost 40%) will go to more affluent residents—an estimated 2,500 taxpayers.
That’s because of a change to the estate tax in the bill. Currently, the estate tax kicks in for estates valued $1 million or more (with a graduated rate above that), with a “cliff” effect leading to the whole value of the estate being taxed after that $1 million.
Cliffs can be bad policy designs, but what’s even worse is cuts to vital programs and services that would result from lost revenue. The Legislature could have chosen clear, readily available ways to fix this without costing so much money but chose not to.
Rep. Erika Uyterhoeven’s Amendment #621 would eliminate the estate tax language entirely and send the House back to the drawing board for a better proposal and Amendment #630 would would eliminate the cliff effect while preserving the progressive nature of the estate tax.
A Whiff on Housing Policy
In last year’s economic development bill, the Legislature included important zoning reforms and tenant protections. The economic development bill is one of the last chances for the Legislature to continue that work, and they missed that opportunity — a stunning decision as this state becomes increasingly unaffordable.
Rep. Mike Connolly filed several amendments to address this gap in the bill:
- Amendment #26: Increase rental deduction to $5,000, which increases the rental deductions from $4,000 to $5,000.
- Amendment #113: Simple-majority approval standard for inclusionary zoning ordinances, which would enable municipalities to approve inclusionary zoning ordinances by simple majority vote
- Amendment #176: Local Option Real Estate Transfer Fee for Housing Affordability, which would enable municipalities to pass locally appropriate transfer fees on high-end real estate transactions to create dedicated funds for affordable housing
