Analysis: A Mass. tax giveaway to the rich threatens support for all -

2022-10-08 15:15:07 By : Ms. Cherry Tao

The end of the legislative session early this summer was a mess as usual, with legislators scrambling to shore up last-minute negotiations on a number of extremely important bills. With inflation raging and lower- to middle-income households struggling under the weight of two years of a pandemic, none was more consequential than a tax relief measure that was supposed to include tax rebate checks for exactly those households.

As it happened, those negotiations were upended at the literal 11th hour with the revelation that lawmakers had overlooked a 1986 Massachusetts law — called Chapter 62F — requiring state income over a certain threshold be returned to taxpayers.

The issue, as MassLive reporter Alison Kuznitz recently reported, is that the law distributes the money largely to the highest earners.

The way that 62F works — and the Reagan-Era “trickle down economics” year that the law was implemented tells is a big part of the story — is that every eligible taxpayer is set to receive approximately 13% of what they paid in taxes in 2021.

A report from the Massachusetts Budget & Policy Center shows that nearly three-quarters of the approximately $3 billion in tax revenue set to be returned to taxpayers through 62F is going to the top 20% of earners.

While those in the top 20% stand to get an average refund check of $1,921, those in the bottom 20% average just $9. The middle 20% would get $208 on average, according to the report.

Those who reported more than $1 million in income in 2021 would get an average check of $22,378.

Meanwhile, the implementation of 62F is endangering the initial tax rebate policy the Legislature had been debating at the end of the session, which would have been more equitably distributed.

A major negotiator of the initial tax refund bill derailed by 62F, Senate Ways and Means Chair Michael Rodrigues, recently told radio station WBSM as much during an interview.

When asked whether relief checks originally proposed in the legislation would move forward, Rodrigues said, “probably not.”

“Because $3 billion worth of checks are going out,” he added.

The original legislation had $250 checks for single filers and $500 for those married filing jointly targeted to people meeting a certain income threshold.

Response to a MassLive survey on tax relief, again reported by Kuznitz, showed residents frustrated by the dynamic of the higher checks going back to the wealthy.

“I’m going to spend my $23 back on groceries knowing how ridiculous it is that the richest people in this state are going to get millions back,” wrote Auburn resident Pat Murray in response to the survey. Another responded stated simply: “It’s expensive to be poor. I want lawmakers to tax the rich as much as they tax us poor.”

Lawmakers are still negotiating what will go in the ultimate tax relief package, and House Ways and Means Chair Aaron Michlewitz said last month that all possible tax relief measures were, “still on the table,” Kuznitz reported.

When he first learned that the economic relief package the Legislature was negotiating was in danger, Rodrigues said he and other lawmakers were “committed to getting some real, long-term permanent tax relief done.”

The original proposal — beyond the relief checks — included nearly doubling the child and dependent care credit, increasing the earned income tax credit, raising the cap on the rental deduction and bumping the maximum of the senior circuit breaker credit for seniors whose rent or property taxes exceed a certain portion of their yearly income.

A remaining obstacle to those plans could be 62F in its present form. While the law has not been invoked since 1987, and the Massachusetts Fiscal Alliance has threatened legal action if the Legislature attempts to change the law before checks go out, future applications of the law as written will continue to funnel money to the state’s highest earners.

It is yet to be seen how lawmakers interpret their commitment to tax relief that would benefit those who need it most, and whether a short-term bump largely for the state’s wealthiest derails that effort.

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