Massachusetts Fair Share

We stand up for a Massachusetts where everyone gets a fair shot, does and pays their fair share, and plays by the same rules.

The Mass. Senate Talks Taxes

The Massachusetts Senate wrapped up day one of the 2016 state budget deliberations on Tuesday. The first order of business on the $38 billion budget: tackling tax measures. Hours were dedicated to debating tax proposals such as lowering the sales and income tax rates, increasing the EITC (Earned Income Tax Credit), and eliminating tax credits. The Fair Share-backed measure to end an offshore corporate tax loophole was also on the docked.

The Senate voted to halt a cut to the income tax and increase funding for EITC, one of the most popular anti-poverty tax programs.

After talking up its effect on growing income inequality in Massachusetts, the Senate voted 29-11 in favor of a budget amendment that would expand the EITC, a policy that benefits low-income families with children by reducing the amount of taxes they owe based on income and family size. In order to pay for the $145 million credit, the Senate decided to keep the state income tax rate at 5.15 percent, which was scheduled to drop to 5 percent this year.

Over the next three years, the EITC will increase by 50 percent, from the current 15 percent to 22.5 percent of the federal earned income tax credit. EITC recipients will see their state benefits boosted from $315 to $470 annually, and the maximum value of the EITC will be hiked from $937 to $1,405. The Center for Public Priorities often points to the EITC program as highly effective at relieving poverty, reporting that the federal program “lifted about 6.2 million people out of poverty, including about 3.2 million children” in 2013.

Governor Charlie Baker supports the expansion of the tax credit that benefits about 400,000 working families in Massachusetts. In order to pay for it, the governor called for eliminating the state’s 25 percent tax credit for film production and subsidies for Hollywood movie producers to pay for the proposal.

We’ve written previously about the Film Tax Credit, which the Globe reported cost taxpayers $108,000 per job it created, which hardly seems efficient.

Yesterday, the Senate voted to re-investigate the film production tax credit as a means to refocus the program’s benefits on the Massachusetts economy, after supporters and those in the film industry pressed lawmakers to reconsider.

Our measure to eliminate a loophole which allows corporations hide profits in tax shelters was not incorporated into budget, though the corresponding bill still moves ahead.

When all is said and done, all of the Senate’s tax amendments have the potential to be null and void. According to the House, any Senate action to raise or lower taxes in the budget amendments is unconstitutional. According to the Legislative Drafting Bill, “money bills,” a bill that imposes a tax, must originate in the House first. Senate legal analysts disagree.

With the approval of expanding the EITC in the Senate, a constitutional standoff is set to take stage any moment.

Author: Samantha Alper

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This entry was posted on May 20, 2015 by in Tax and Budget.
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