While states across the country are passing tax cuts, the Massachusetts Legislature remains keen on being the exception. After again making a bid to introduce a graduated income tax, the legislature just passed a budget with none of the tax cuts proposed by Governor Charlie Baker and the Republicans. This comes after Massachusetts Democrats repeatedly rejected calls from Senate Republicans for gas tax relief, even as gas prices soar to new highs weekly.
It is no secret that inflation is impacting Americans across the country. The consumer price index (CPI) rose by 8.3% in April. At the same time, inflation-adjusted earnings declined by 2.6% year-over-year as wages struggled to keep up with the surging cost of living. As a result, inflation is gouging Americans out of their purchasing power and forcing families nationwide to suffer.
State budgets across the board are experiencing massive budget surpluses, and Massachusetts is no exception. In April alone, the state collected more than $2 billion in excess of projections, and Governor Baker proceeded to push for a tax relief package. Specifically, his proposal sought “to double the senior circuit breaker credit from $1,170 to $2,340, increase the rental deduction cap from $3,000 to $5,000, double tax credits for dependents and child care, and raise the gross income threshold for no-tax status.” He also proposed reforming the estate tax and lowering the capital gains tax, changes that would put Massachusetts more in line with neighboring states. In promoting the proposal, Governor Baker pointed to the government’s massive surplus, noting that Massachusetts was in a “very unique and unusual position.”
“I think in many respects, these tax breaks are talking about millions of people, when you put them all together, who would benefit here in the commonwealth of Mass. — the vast majority of whom no one would ever describe as high-income,” Baker continued.
Governor Baker rightly understands that tax relief is not just a handout to the wealthy. His proposals would have put more money in the hands of families, the elderly, and low-income earners. Luckily for residents of other states, the country is seeing a broad shift toward tax reform as even states like Connecticut and California pass tax relief to help their residents stem the tide of rising costs. New Hampshire, Massachusetts’ neighbor to the north, is gradually phasing out its remaining income taxes and moving towards becoming a true no-income-tax state. In Rhode Island, Governor McKee is floating the idea of lowering their sales tax to compete with neighboring states. Massachusetts alone staunchly opposes tax reform and continues to propose tax increases in an environment where taxpayers have fewer and fewer dollars to spare.
Americans for Tax Reform commends Governor Baker and Republicans’ efforts to help taxpayers and urges the Massachusetts Legislature to hear the pleas of their constituents. American families need relief now more than ever. It is the right time for Massachusetts and other states to lower taxes as families struggle with inflation and state budgets soar.