Mass. House approves unaltered tax plan

The House of Representatives voted overwhelmingly on Thursday to pass its $1.1 billion tax relief bill exactly as pitched earlier this week. A provision that would adjust an obscure tax giveback law dominated most of the tax plan debate but ultimately made it through to the final bill unchanged.

The mid-afternoon vote, which approved the package, 150-3, advances a measure that top House Democrats say will bolster the state’s competitiveness and affordability and bring tax rates in line with those in other states. Its top-line features are cuts in the short-term capital gains tax from 12 percent to 5 percent and raising the estate tax exemption from $1 million to $2 million, along with tax deductions targeting parents, caregivers, seniors, and lower income renters. 

“Let’s hope it makes us more competitive and people will hesitate before moving,” House Speaker Ron Mariano said earlier in the week about the tax package. “We don’t want you to leave. We want you to stay here.”

The tax debate will now move to the Senate.

Though lawmakers initially proposed more than two dozen amendments to the plan, most were withdrawn over the course of the day without votes on the House floor. 

A pair of amendments filed by Minority Leader Brad Jones, of North Reading, targeted the state’s “rainy day fund” and a law that triggers tax givebacks, the latter of which sparked the most forceful back-and-forth of the afternoon.

Chapter 62F, a tax-cap law passed by voters in 1986, is triggered when the state brings in revenue over a certain benchmark. Last year, the law caught Beacon Hill by surprise and triggered nearly $3 billion in rebates, which were dispensed proportionately to taxpayers based on their income tax payments.

But the House plan would change that, returning the same amount to all taxpayers, regardless of how much they paid in taxes for the year. 

“We are keeping the law intact,” said Rep. Mark Cusack, of Braintree, the House co-chair of the Legislature’s joint revenue committee. “What we are doing is changing the way it is distributed,” he said, adding that “all people should share in our economic success.” 

Jones’s amendment, backed by the chamber’s tiny Republican caucus, would have eliminated the change to Chapter 62F disbursements.

Jones said the Legislature should respect the will of voters who enacted the tax cap in 1986, and ask them to ratify any changes to it. “We can revisit it, we can debate it, we can have hearings, we can decide whether it should be modified,” he said. “You can put something before the voters again and say, hey, here’s a different alternative.”

After about half an hour of discussion, representatives voted down the amendment 128-26.

The conservative Massachusetts Fiscal Alliance condemned the move to change the tax-cap law, while suggesting the tax cuts passed by the House don’t go far enough. 

“The changes to the estate and capital gains taxes put forth by the House won’t cut it, and the Speaker’s attempt to gut the voter approved tax cap and rebate law known as 62F is nothing more than provocation to the taxpayers,” said Paul Craney, a spokesman for the organization.

Citing the net loss of over 100,000 people from Massachusetts during the pandemic, Craney said more aggressive tax cuts are needed to stem the exodus. 

Meanwhile, progressive lawmakers and groups have been agitating against the tax proposals put forward by Gov. Maura Healey and the House. Rep. Mike Connolly, a Cambridge Democrat, introduced – and then withdrew – several amendments to reduce the number of tax breaks targeting wealthier residents, including one to eliminate 62F entirely. 

“If we care about our economic outlook – which I know we all do – if we care about our competitiveness, then we have to care about the ever-growing wealth and income inequality here in Massachusetts and around the nation, and we have to be intentional about reducing it and not perpetuating it,” said Connolly, who voted against the final bill.

One major difference between the House tax plans and one proposed by Healey is that the legislators’ version phases in deductions. For instance, the short-term capital gains tax rate reduction would be phased in over two years.

Raise Up Massachusetts, the coalition behind the Fair Share Amendment tax on incomes over $1 million, which was passed by voters last year, said the House’s implementation schedule is telling.

“Compared to Gov. Healey’s plan, House leaders chose to phase their proposed tax cuts in over several years, in order to afford more spending in this year’s budget,” the group said in a statement. “They clearly understand that these tax cuts come at the expense of the new investments that are needed to solve the Commonwealth’s big challenges. If a recession hits Massachusetts soon, as is widely predicted, these tax cuts for the ultra-rich will lead to a budget shortfall that could cause cuts to critical programs.”

Along with Connolly, Democrats Danillo Sena of Acton and Erika Uyterhoeven of Somerville also voted against the tax package.