MA House Pushes Regressive Tax Cuts

Last November, voters sent a message by voting for the Fair Share Amendment: the rich should pay their fair share so that we can invest in public education and infrastructure. For years, the Legislature has used the line “We don’t have the money” to justify inaction and underinvestment; we got them the money.

But, yesterday, the House, in unveiling their tax package, said that they plan to give money right back to the rich and large corporations.

Almost half of the cost of their tax proposal comes from the three regressive tax cuts:

  • A $231 million cut to the estate tax designed to disproportionately benefit the wealthiest estates
  • A $130 million cut for day traders and speculators by cutting the short-term capital gains tax
  • A $79 million tax cut for the state’s largest corporations through what is called “single sales factor apportionment”

Think of all that we could do with $440 million if instead we invested it in our public transit systems, in education, in child care, in climate resilience, in affordable housing, or in health care. Indeed, tackling our housing crisis should be the #1 priority if legislators actually cared about the goals of “affordability” and “competitiveness.” Indeed, even the less regressive parts of the tax package could go further if invested in a robust social programs. By proposing such regressive tax cuts, the House is disrespecting the will of the voters, and they are setting Massachusetts up for brutal cuts when the next recession hits.

Disappointed too? Let your state representative know.

You can also let your state representative know (on phone or in person tomorrow) that you want them to support two amendments filed by Rep. Mike Connolly:

  • #5 (Establishing a Tiered Corporate Minimum Tax), which ensures that large corporations pay their fair share [When corporations, through accounting wizardry, secure a $0 tax liability, the minimum tax they have to pay is $456. That tax should be based on the size of the corporation.]
  • #11 (Maintaining Some Degree of Short-Term Capital Gains Equity) to blunt the cut to the short-term capital gains tax

PM in the News: Globe on “Maura in the Middle”

Joan Vennochi, “When it comes to issues facing the state, it’s Maura ‘in the middle’ Healey,” Boston Globe, April 10, 2023.

“To progressive Democrats, the answer is not enough. Pointing out that Healey’s tax reform proposal is basically the same as Baker’s, Jonathan Cohn, policy director of Progressive Massachusetts, said, “Her instinct has been to give that money back, weakening our state’s ability to deliver on the promise of investment.” On housing and transit, he added, “I think we need to see more from her administration about what their major goals are and how they would track their own success. There isn’t enough communicated urgency about what is needed for the affordability crisis and the crisis of the MBTA.” Cohn also flagged Healey for a “wait-and-see” attitude on zoning changes that are aimed at increasing affordable housing.””

Action: Finish and Protect Last Year’s Wins in This Year’s Budget

Protect & Complete Last Year's Wins

This spring, the Massachusetts House and Senate will be voting on their budgets for the next fiscal year, and it’s critical that they make sure to complete and protect last year’s victories when doing so.

What does that mean?

First, that means protecting last year’s win on the ballot for the Fair Share Amendment. Voters were clear about wanting the rich to pay their fair share and for us to invest in our public education and infrastructure. However, Governor Healey’s proposed budget would give away almost as much in tax cuts as is estimated to be raised by Fair Share, undermining the hard work that went into that campaign. In particular, almost $400 million of her tax package consists of regressive tax cuts that will go to speculators and major estates. We need to make sure to protect the revenue we raised so that we can realize the vision of better schools, better roads, and better transit for all.

Second, last summer the MA House and MA Senate both included language from the No Cost Calls bill in their budgets, but a veto from Governor Baker doomed its fate. The Legislature needs to complete the No Cost Calls win by including language to permanently guarantee that neither state nor county prisons or jails will continue the predatory practice of charging incarcerated individuals and their loved ones for phone calls.

Can you write to your legislators today?

Voters Wanted Fairness and Investment, not Tax Cuts for the Rich

Roslindale Canvass for Fair Share

Testimony to the Joint Committee on Revenue on Tuesday, March 28, 2023 by Nina Lev of Roslindale

I am Nina Lev, a retired Physician Assistant. I have lived in Massachusetts for over 50 years and in Boston for 40 years. I am testifying in support of S.1784, a fairer and less costly proposal to reform the estate tax threshold without giving a tax break to multi-million dollar estates.

I voted and worked to pass the Fair Share Amendment because I am strong supporter of public education and transportation. As a single mom earning minimum wage I was able to complete my BA at U. Mass in 1978 because the tuition was so reasonable. My daughter received an excellent education in Mass Public school and is thriving in her career as an educator. As a senior citizen, I hope to age in place in Boston and be able to depend on public transportation. But I’m concerned that the current state of the MBTA will make that difficult. The T will need a lot of resources to make up for years of neglect.

I also voted for the Fair Share Amendment because I believe in Tax Fairness. As a member of Progressive WROX/ROZ I talked to hundreds of neighbors about the Fair Share Amendment at the farmer’s market and canvassing door to door and a vast majority of those I spoke with supported the amendment because they wanted to make the Massachusetts tax code fairer. Giving multi-million dollar estates a six figure tax cut is the opposite of what we wanted.

Lastly, I am retired from a successful career, which I attribute, in part, to the public education I have received. My estate could potentially be subject to an estate tax. If so, I will consider myself and my beneficiaries fortunate and hope that the funds go to create opportunities for the the next generations. As you consider reforms to the estate tax, please don’t give the largest estates a tax break.

“We voted to have those who have a little more to pay their fair share.”

Malden Fair Share

Testimony from Keith Bernard before the Joint Committee on Revenue on Tuesday, March 28

Honorable chairs and members of the committee,

My name is Keith Bernard from Malden and for transparency, while I am an elected member of the Malden School Committee, I am not representing them and I am testifying on behalf of Mystic Valley Progressives, a chapter of Progressive Mass. I am also testifying because I am father and as of a month ago a grandfather. Our group supports favorable reporting of S.1784 and H.2960, a fairer and less costly proposal to reform the estate tax threshold without giving an enormous tax break to multi-million-dollar estates.

In November, I voted for the Fair Share Amendment because I believe that our public school systems as well as our transportation network had been underfunded for a long time. I saw my neighbors, and the children in my neighborhood not getting the services they needed to thrive. Educational professionals could not afford to work at a job that many of them loved. I saw my city having to make difficult choices to make our budgets work and I know that Malden is not the only municipality that faces these hard decisions.

You may know Malden, because of our recent teacher strike. I was happy to vote to approve raises for our teachers and especially our educational professionals. I have neighbors that work for the Malden Public School but were not being paid a living wage, and we fixed that. I do not want to look them in the face when we lose other programs that the working families of Malden because we now have a revenue gap.

We voted to have those who have a little more to pay their fair share. We asked for revenue to be generated in a fair manner so we could invest in our children and our workers. We need well-funded schools, and we need trains and buses that run on time and and regularly. However, I and our members do not support giving multimillion dollar estates a six-figure tax cut. As you consider reforms to the estate tax, please respect the will of the many who voted Yes on 1, and do not give the largest estates a tax break. Thank you for your time and we look forward to seeing S.1784 and H.2960 be reported out favorably.

Fair Share was a Transformative Win. Let’s Protect It.

Fair Share

Tuesday, March 28, 2023

Chair Moran, Chair Cusack, and Members of the Joint Committee on Revenue, 

My name is Jonathan Cohn, and I am the policy director of Progressive Massachusetts, a statewide, multi-issue grassroots advocacy organization with chapters across the commonwealth committed to fighting for a more equitable, just, sustainable, and democratic Massachusetts. 

Because of our commitment to a vision of shared prosperity, we have been involved with the Fair Share Amendment campaign from the start, and last year, we knocked over 100,000 doors for Question 1 — not to mention the work of phone banking, text-banking, tabling at community events, and talking with friends and neighbors. Everyday people around the commonwealth got involved with the campaign because they realized the need for a fairer code and the transformative potential of the investments we could make with new revenue. 

They understood that more revenue could mean greater reinvestment in schools to ensure that buildings are safe, green, and healthy; to address the social and emotional needs of students coming out of a pandemic; to ensure that underpaid professionals get the compensation they deserve; and to deliver on the promise of the Student Opportunity Act. They understood that more revenue could mean changing course from our decades-long disinvestment from public higher education and instead guaranteeing better pay for faculty and staff and ensuring that students can graduate without debt. They understood that more revenue could mean finally fixing the MBTA so that the buses and trains run frequently, reliably, and safely — as well as to more places and at lower cost. They understood that more revenue could mean fixing our roads so that they are no longer ridden with potholes and upgrading structurally deficient bridges that plague so many communities. 

The voters understood too, delivering a win for Question 1 in November. Massachusetts voters were clear: make sure the rich pay their fair share so that we can invest in our education and infrastructure. 

Elected officials said that the barrier to doing important things was money, so we went out and made sure to organize and mobilize to get that revenue. And the Governor’s proposal would give it right back. 

Regressive tax cuts account for almost $400 million of Gov. Healey’s tax proposal. The proposed cut to the short-term capital gains tax would be bad for the economy, by encouraging more speculative activities such as rapid stock trading and “flipping” real estate, and it would be deeply regressive, as the highest-income 1 percent of households would receive almost eighty percent of the tax cut at an average of over $7,000 apiece.

The proposed cut to the estate tax is also deeply regressive. We can acknowledge that “cliffs,” as exists in the estate tax, are not good policy designs, but that should not lead to excluding estates up to $3 million and providing a $182,000 tax cut to estates even larger than that. There is no world in which a $10 million estate needs an extra $182,000. If the Legislature would like to update the estate tax, it should heed proposals like H.2960/S.1784: An Act relative to estate tax reform, which would only lift the exemption threshold to $2 million and would provide no tax breaks to larger estates. Such a proposal, in contrast to the Governor’s, would preserve most of the revenue-generation, inequality-reduction, and fairness benefits of the estate tax, while eliminating the current cliff effect.

Other parts of the Governor’s tax proposal are, fortunately, not so regressive, but they still do little to address the cost of living in Massachusetts. A child tax credit providing $600 per child under 13 would not even cover two weeks of child care. An expanded renters deduction would lead to merely $50 more for renters, if they even qualify. Tax credits are an inefficient way to meet the very real needs of caregivers and renters, and the Legislature must act swiftly to pass legislation to address the high cost of child care and the impact of escalating rents. If the Legislature would like to advance the Governor’s tax credits, they should be paid for with progressive, revenue-raising changes to the tax code, so that they do not drain down payments on transformative policy that actually addresses the high cost of living. 

Massachusetts needs robust state revenue if we want to take action to address the child care affordability crisis, the housing affordability crisis, growing student and medical debt, the climate crisis, and an often-malfunctioning transit system. Moreover, as the federal government seems headed for debt-ceiling brinkmanship, Republican-led austerity, and the sunset of COVID-era aid, Massachusetts will likely see greater need for state revenue to fill in the gaps. Now is not the time for permanent, regressive tax-cutting. 

Sincerely,

Jonathan Cohn

Action: Here’s How You Can Help Protect the Fair Share Win

Earlier this year, Governor Healey proposed a plan to cut state taxes by a billion dollars each year, including nearly $400 million in tax cuts for the very wealthy. This proposed billion-dollar permanent tax cut would directly undermine the goals of the Fair Share Amendment while placing the state at risk for catastrophic budget cuts in future years.

It’s important that legislators hear loud and clear that this is directly against the will of the voters.

(1) Write to your state legislators: Let them know that it’s not okay to undermine Fair Share by giving big tax cuts to the rich. Massachusetts voters were clear: we want the rich to pay their fair share so that we can invest in public education and infrastructure.

(2) Show up to the State House tomorrow: The Joint Committee on Revenue will be holding a hearing tomorrow (Tuesday, March 28) on the Governor’s tax proposal and related bills. Join us and other allies from Raise Up Mass at the hearing.

Revenue Hearing, Tuesday, March 28, 11 am, Room A-1, State House

(3) Share the message: Raise Up has a handy set of infographics here to illuminate what’s at stake.

What’s Progressive and What’s Not in Gov. Healey’s Tax Proposal

In her campaign last year, Governor Maura Healey touted a promise to cut taxes and address the high cost of living in Massachusetts. In her recently released budget, she offered her version of tax reform.

Before diving into it, any discussion of taxes must begin with a few acknowledgements:

(1) The “Taxachusetts” myth is just that: indeed, we are middle-of-the-pack when it comes to taxation levels compared to other states.

(2) We have long had a regressive tax code, with a flat income tax such — meaning that someone making $30,000 would pay the same income tax rate as someone making $3 million. Voters, fortunately, chose to take a step forward toward progressivity by passing the Fair Share Amendment last fall, creating a surtax on income over $1 million.

(3) If we want to invest in our collective well-being and our public infrastructure, we need revenue. If we want to maintain public goods and services, we need to invest in them.

Back to Healey’s proposal…

How much? The total tax package would cost $986 million each year. Notably, that is almost the same as the amount of money she plans to designate for Fair Share revenue and appropriations ($1 billion). Healey’s proposed use of Fair Share funds cover many important programs and initiatives, but if we raise $1 billion only to also spend $1 billion in tax cuts, we risk creating a situation where money is just being moved around. Fair Share funds should be truly additive to deliver on the intent of the voters. Moreover, spending so much on long-term tax cuts is also risky as increased federal funding for Mass Health, rental assistance, and SNAP is ending — and could be cut even further if Republicans in Congress get their way.

What’s Most Progressive? According to an analysis from MassBudget, the most progressive parts of Healey’s proposal are the doubling of the the Senior Circuit Breaker tax credit (which helps offset property taxes faced by seniors with modest incomes) and an increase in the Renters Deduction (which, in impact, ends up only $50 for renters who don’t already get a refund). An extra $50 in the pocket of renters ultimately won’t go very far, given escalating rents and costs in general. Combined, these proposals amount to $100 million.

MassBudget: https://massbudget.org/2023/03/16/gov-tax-plan/

What’s Somewhat Progressive? The largest part of the tax package is the child and family tax credit, which would amount to $600 per child under 13 or dependent adult and cost $458 million. It is unclear why parents of teenagers should not get the same benefit: any parent of a teenager will tell you how much it costs to feed a teenager. Families with low and middle incomes will certainly benefit from extra money in their pocket, but $600 will not last long given that two weeks of child care cost more than that. The credit thus does little to address the real drivers of the cost of living in Massachusetts, even if it can help around the edges.

What’s Regressive? Unfortunately, almost $400 million in tax cuts from the package are outright regressive in impact. That includes $117 million in a cut to the tax rate for short-term capital gains: the highest-income 1 percent of households would receive an estimated 77 percent of this – an average of over $7,000 apiece. Even more jarring is the cut to the estate tax, which would amount to $275 million. Healey’s proposal would create a $182,000 tax credit for large estates, wiping away estate tax for estates under $3 million and amounting to a $182,000 giveaway to estates over $3 million.

What Should Change? Any tax reform package should be progressive overall and should also be at least revenue-neutral (meaning that it raises back anything that it spends). Legislators should reject outright the proposed cut to the capital gains tax, as they did last year when Governor Baker proposed it. If legislators are committed to changing the estate tax, they can eliminate the cliff effect that currently exists at $1 million without giving away money to the largest estates. And if legislators want to pass the more progressive parts of Healey’s proposal, they should fund them by embracing progressive tax proposals like increasing the corporate tax rate, increasing the tax rate on offshored income, or creating a tiered corporate minimum tax (so that large corporations can’t get by with only paying $456).

What Can You Do? Write to your legislators! They need to hear from you while they are crafting their own budget proposals.