Considering his Republican status in a state whose Legislature is overwhelmingly Democratic, Governor Charlie Baker enjoys a reasonable amount of goodwill on Beacon Hill.
He may need all of it to persuade lawmakers to support a tax cut proposal the governor says he’ll roll out in this, his final year of office.
Baker supports raising the estate tax threshhold and lowering the short-term capital gains tax from 12% to 5%. In many states, tax cuts would attract strong support, but it may be a tough sell in Massachusetts, where the 2022 ballot will include a referendum not to lower taxes, but to add a 4% surtax on household income above $1 million.
Baker’s plan and the referendum, which calls for a constitutional amendment to allow the so-called “Millionaires Tax,” are not in direct competition with each other. In theory, they could live side-by-side within Massachusetts tax law.
A governor promoting tax cuts and a ballot question about raising taxes, though, represents the existing dichotomy in philosophy. According to one report, the millionaires’ tax would bring in an estimated $1.3 billion, to be earmarked by law for two areas, education and transportation.
Opponents say that assumes the millionaires will remain in Massachusetts and pay the tax - and that, they say, is a false assumption. Instead, they predict higher-income earners will leave for states with less tax burden, costing the state a portion of what it is receiving already.
Baker’s proposal directly addresses the issue of people leaving Massachusetts, especially as they near or reach retirement. His $700 million package of tax cuts for seniors, renters, low-income families and investors embraces some groups whose plight might carry weight with Democrats.
“Our economy has dramatically overperformed ... we think it’s important we give some of that back to the people who made that possible,” Baker said. It would be a winning argument in many states, whose lighter tax burden is exactly why ballot question opponents say it’s time to ease tax demands, not add to them.
Democratic legislators have the numbers to easily override Baker’s vetoes, so he’ll need bipartisan support. Politically, that’s nothing new for the governor, but the future of state tax strategy could produce some of the liveliest debate on Beacon Hill in his final year of office.
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March 28, 2022 at 04:03PM
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Baker’s tax cut plan figures to provoke lively debate (Editorial) - MassLive.com
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