Massachusetts State House by Daderot is licensed under CC BY-SA 3.0 via Wikimedia Commons

On Wednesday, October 4th, Massachusetts’s new governor Maura Healy signed a tax relief bill valued at around $1 billion annually. The bill includes a modest capital gains tax decrease, minor reforms to boost housing supply, and, most notably, an increase in the child tax credit from $180 per dependent to $440 per dependent in 2024. 

Naturally, the bill presents a minor victory for advocates of lower taxes in Massachusetts. The housing reform in particular is a step in the right direction for a state mired in a government-caused housing supply crisis. The problem is that Massachusetts needs much, much more than this relief offers, and the bill itself is largely a compilation of calculated handouts masquerading as an economic stimulus.

Take, for example, the bill’s clause to raise the threshold for estate taxes to kick in from $1 million to $2 million. The state, which was previously tied for the most aggressive estate tax threshold, is now firmly in 48th place. The improvement is so small that it’s unlikely to have much of an effect on the concerning outflow of rich taxpayers from the state. The bill’s short-term capital gains tax reduction, another point of pride for Healy, still leaves Massachusetts in 8th place. The bill’s largest section, which combines significant property tax relief for seniors with a bolstered child tax credit, is less tax relief than politically savvy redistribution. Although the bill is touted as a business-friendly response to an increasingly murky economic environment in the state, it offers little in the way of real progress.

The bill also fails to address the more fundamental problems with Massachusetts’s tax system. The state ranks 34th in the Tax Foundation’s business tax environment rankings and is actually projected to fall, not rise, in the rankings next year. This is largely due to a near doubling of the state’s top marginal tax rate last November, along with Governor Healy’s inexplicable decision in March 2023 to expand COVID funding. Until the state begins to address this broader trend of ballooning taxation and irresponsible spending, Healy should refrain from christening herself a free-market warrior.