A brand new report by the Massachusetts Taxpayers Foundation factors to large post-pandemic jumps in state income earlier than urging the Legislature to make use of the time left within the 12 months to lastly get their act collectively on tax cuts.
A pair of tax reform payments have been handed by both chamber lengthy earlier than lawmakers went house for his or her August recess, however the convention committee working to merge the differing proposals has but to point out any signal lawmakers are shifting nearer to a compromised piece of laws.
Last 12 months, a transfer to chop taxes by then-Gov. Charlie Baker was stopped quick in the identical committee.
According to the MTF, the ready routine is getting form of previous.
“Tax relief has been at the top of the Beacon Hill agenda for 20 months since Governor Baker kicked off discussions with his proposal in January of last year. In that time, the plan has been expanded and improved in light of increasing competitiveness and cost concerns that pose a real threat to the state’s economic outlook,” the group wrote. “Now, approaching two years since conversations began, it is time to put tax relief into law.”
Unfortunately for the tax coverage group, lawmakers are — once more — staring down a instantly altering fiscal atmosphere.
In 2022 it was a seldom enacted legislation requiring lawmakers to ship billions again to taxpayers that gummed up the works.
This 12 months, concern appears to be swirling round a greater than $600 million income shortfall to shut out fiscal 2023 and information that the Baker Administration mistakenly spent $2.5 billion in federal funds on unemployment advantages which ought to have come from state coffers.
The state can also be studying to grapple with a brand new constitutional modification enshrining a everlasting tax on incomes over $1 million an additional 4%.
Despite that, the Foundation writes, the state continues to be swimming in money.
“In fact, even though tax collections declined between FY 2022 and FY 2023, total tax collections remain billions ahead of pre-pandemic trends. In the five years prior to the pandemic (FY 2014 to FY 2019), tax collections grew at a rate of 4.9 percent. Since the pandemic, that rate of growth has effectively doubled to 9.7 percent,” they wrote.
Senate President Karen Spilka mentioned forward of the Legislature’s return to session she want to see her colleagues transfer on tax cuts this 12 months.
“As I said at the end of the session, we’ll pick that up immediately. I believe that we need to get that done,” she mentioned.
While our Legislature waits to behave, the Taxpayers Foundation wrote, different states are actively responding to the financial pressures felt by their residents.
“In 2022 and 2023 alone, 15 states reduced income and or corporate tax rates, while almost every state enacted some form of tax relief since 2021. Looking past the last two years and it is apparent that tax relief is a common tool for states to respond to changing economic circumstances,” they wrote.
Tax income for the primary two months of the brand new fiscal 12 months, which began in July, got here in half-a-percent underneath projections.
Herald wire providers contributed.
Source: www.bostonherald.com”