Council in the News
House Speaker Ronald Mariano on Thursday committed to bringing forward a tax reform package this spring, after expressing doubts in recent months that the state could afford one.
After Governor Maura Healey last month filed a tax reform bill that could cost up to $1 billion a year, all eyes have been on Mariano to see what kind of reforms the House of Representatives would pursue, if any.
The House and Senate had been trying to reach an agreement on a tax package last summer before negotiations were upended by the news that an obscure state law would trigger nearly $3 billion in refunds to taxpayers. Since that time, Mariano has expressed concern about the state’s finances and the overall health of the economy, cautioning that the Legislature might not be able to afford tax cuts this year.
But in a speech to the Greater Boston Chamber of Commerce on Thursday morning, Mariano made it clear the House is ready to move forward with its own tax reform proposal.
Mariano told the crowd of business leaders at the Colonnade Hotel that the House “will soon release a comprehensive tax reform package aimed at providing responsible, permanent financial relief to all residents of the Commonwealth, regardless of income status.”
The ultimate goal, he said, is to make Massachusetts a more affordable and economically competitive state.
He didn’t get into specifics in the speech, other than to say the package will contain elements that were left on the table last summer, and that several reforms will be phased in over multiple years.
“I’m confident that our ultimate proposal, and its method of implementation, will appropriately balance our shared goal of making Massachusetts a more affordable and competitive state, with the ever-important responsibility of ensuring that the Commonwealth is prepared for an uncertain economic future,” Mariano said.
Healey’s recent tax proposal also includes many elements from last year’s talks, such as improved tax breaks for renters and seniors, as well as reforms to the state’s estate tax, which many consider overly burdensome compared to other states. In Massachusetts, the estate tax kicks in for estates worth $1 million or more, matching Oregon as the lowest threshold of any state. (Unlike in Oregon, the Massachusetts estate tax affects the entire value of the estate once it is triggered, not just the value above the $1 million threshold.) Healey also proposed reducing the state’s short-term capital gains tax, from 12 percent to 5 percent, something that state lawmakers did not embrace last year when then-governor Charlie Baker proposed it.
While Senate President Karen Spilka said she was “very pleased” with Healey’s proposal, Mariano appeared more circumspect at the time of its release in late February. So business leaders were cheered by his tone Thursday.
“That’s a positive development to hear the Speaker say he wants to do tax reform, and also hear him talk about competitiveness,” said Elizabeth Mahoney, vice president of policy and government affairs at the Massachusetts High Technology Council. “We thought the governor’s tax proposal was a good first step but we are concerned it doesn’t go far enough to address our position versus other states.”
Talking with Chamber chief executive Jim Rooney after the speech and with reporters after that, Mariano indicated that he wants to address the estate tax because it’s such an outlier. Last year, both the House and Senate had differing plans that would have raised the estate tax threshold to $2 million. Healey’s plan essentially brings it to $3 million.
Business groups are particularly eager to see some movement on the estate tax after voters approved Question 1, the so-called millionaires tax, in November; that surcharge imposes an extra 4 percentage points on the income tax rate for annual earnings above $1 million.
An estate tax adjustment is the most important tax reform for the Retailers Association of Massachusetts this year. President Jon Hurst said many RAM members are baby boomers eyeing potential retirements, and “they’re starting to look at exit strategies.”
This time around, Mariano isn’t ruling out a capital gains tax cut — another priority for the business community. “Everything’s on the table,” Mariano told reporters when asked about that.
The tax breaks for renters and seniors, concepts favored by lawmakers last year and included in Healey’s proposal, seem likely to return in the House plan. Another probable contender: an expansion of tax breaks for dependent care — another element Healey included in her plan.
It’s not clear whether the House’s tax package will exceed Healey’s $1 billion proposal in size. Mariano said the numbers are still in flux.
“We want to be competitive,” Mariano said after the speech. “We want it to come in at a meaningful number [but] there are still a lot of numbers to run.”
Regardless of what’s in and what’s left out, Mariano fully expects to get some flak when the House puts forth its tax proposal next month.
“You know, I’m going to get criticized no matter what I do,” Mariano told reporters. “I could give everybody free money and they’d complain people didn’t get enough free money.”