Council in the News
Biz groups caution against tax law update
BOSTON — Business groups say proposed changes to a voter-approved tax rebate law being considered by the state Legislature would be unconstitutional, signaling a possible legal fight over efforts to equally distribute excess taxes.
In a letter to Gov. Maura Healey and legislative leaders, the Massachusetts High Technology Council warned that a legal analysis suggests the proposed change to Chapter 62F to allow equal tax rebates when the law is triggered would be a “clear violation” of the constitution.
“This change (which was not subject to a public hearing) would not only alter a law that was passed by the voters, it would also violate the state’s Constitution by effectively taxing income at different rates for different taxpayers,” wrote Elizabeth Mahoney, the group’s vice president of policy and government affairs.
The letter includes a memo from Boston attorney Kevin Martin at Goodwin Procter explaining that if the amendment is approved by the Senate and signed by Gov. Maura Healey, it would be “a clear violation of the ‘uniformity’ requirement of Article 44 of the Massachusetts Constitution.”
Last week, the House of Representatives approved proposed changes to the so-called 62F law by requiring tax rebates triggered by the law to be equally distributed among the state’s taxpayers.
Currently, the credit is applied to the personal income tax liability of all taxpayers on a proportional basis, resulting in bigger refunds for those who paid more in taxes.
The law, which was overwhelmingly approved by voters in 1986, requires the state to return money to taxpayers when state tax revenues grow by more than wages and salaries.
It was triggered last year when the state’s actual revenues exceeded “allowable” revenues by more than 20%, requiring nearly $3 billion in rebates to taxpayers.
Some Democratic lawmakers and liberal groups argue that the new millionaires’ tax — which sets a 4% surtax on incomes above $1 million — could trigger rebates again this year that would benefit wealthy households subject to the new tax. That, in part, prompted the House’s changes to the tax rebate law.
But the Massachusetts Fiscal Alliance, a conservative pro-business group, called the House’s amendment to the tax law a “trojan horse to eliminate one of the few protections taxpayers have from Beacon Hill taxing and spending.”
“If the Speaker’s proposal is passed, taxpayers will never again receive a rebate from Beacon Hill or if they do, it will be negligible,” MassFiscal spokesman Paul Craney said.
The proposed changes are part of a broader tax relief package, backed by Healey and legislative leaders, that calls for expanding tax credits for housing, child care, renters and senior citizens, while cutting business taxes and overhauling the estate tax, among other changes.
The plan would cost $654 million in the next fiscal year and $1.1 billion per fiscal year beginning July 1, 2026, according to legislative leaders.
MassHigh Tech said it supports several provisions in the tax relief package, including a proposal to cut the short-term capital gains tax from 12% to 5% and update the estate tax, which will improve the state’s competitiveness.
“These are all steps in the right direction, although they should be viewed as a downpayment on the further and necessary reforms to improve our competitive position relative to other states and rehabilitate Massachusetts’ declining business climate,” the group said in a statement.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.