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Quintupling the estate tax threshold, slashing the capital gains tax rate, and expanding use of a single sales factor apportionment led the tax reform ideas embraced Wednesday by one of the region’s leading business groups and an organization representing public accountants. But one of the most powerful Democrats on Beacon Hill remained noncommittal about any tax cuts, citing changing economic conditions.

The Greater Boston Chamber of Commerce and Massachusetts Society of CPAs rolled out an 18-page document containing their recommendations for lawmakers and Gov. Maura Healey to overhaul the state’s tax code, arguing that the Bay State needs significant changes to remain economically competitive amid widespread workforce shortages and the pinch of rising prices.

“This proposal for tax reform is exactly what the Commonwealth — its residents, families, and businesses — need right now. To compete and win today, we need to address and solve for the negative effects and unintended consequences that make it difficult to start and sustain a business in Massachusetts and to work, live, and be successful here,” Greater Boston Chamber of Commerce President and CEO James Rooney said in a statement, calling tax relief “urgently needed.”

Their proposal calls for raising the threshold at which the estate tax kicks in from $1 million to $5 million, then increasing it annually based on the Consumer Price Index, and eliminating the so-called “cliff effect” that subjects the entire value, not just the amount over the threshold, to the tax.

Former Gov. Charlie Baker had targeted the estate tax as a priority in his unsuccessful push for tax reform last year, and lawmakers gave initial approval to a new $2 million threshold that eliminates the cliff effect but ultimately shelved their plan.

Another idea the Chamber and CPAs backed include dropping the short-term capital gains tax rate from 12 percent to 5 percent, which they said would move Massachusetts from the second-highest rate in the country to one shared by about half of all states. They also called for either an outright elimination of or overhaul to the “sting tax” applied to S-corporations with gross receipts over $6 million.

They said other tax reform ideas the legislature initially approved but never finalized, including breaks for renters, seniors and caregivers, should be considered “in addition to, rather than in place of, this proposal.”

Healey described tax relief as a top priority while she was on the campaign trail, but has not laid out any specific plans more than three weeks into her tenure and top Democrats in the legislature have not been eager to roll out tax reform plans early in the new session.

When asked about the prospects for tax relief this session, House Speaker Ron Mariano said that things have changed since he and Senate President Karen Spilka agreed in July to a $1 billion package of permanent tax code changes and immediate relief measures.

Mariano said last month that he wanted to see what came out of the Jan. 24 revenue outlook hearing before making decisions about tax relief in the new session. After that hearing, the legislature and Healey administration agreed to the assumption that state tax revenues will hold at their significantly elevated levels and even grow by a modest 1.6 percent. The fiscal 2024 revenue estimate of $40.41 billion is more than $10 billion above the estimate top officials agreed to for fiscal year 2022.

Asked for his latest thinking on tax relief Wednesday, Mariano said he’d have to talk to the yet-to-be-appointed chair of the Revenue Committee and mentioned having “some hearings.”

The House and Senate last summer agreed to a $1 billion tax reform and relief plan, but later tabled it after a mostly-forgotten state law triggered nearly $3 billion in other one-time tax relief. Spilka and Healey have both said they are interested in resurrecting at least parts of that plan in the new session, but Beacon Hill leaders have not offered a new plan.

Mariano said Wednesday that it was “the uncertainty going forward that that made me reluctant to push forward” with last year’s agreement, and suggested that he’d rather start anew this time around.

“It’s a new session. We have a higher inflation rate, the revenue numbers are down, the economy has slowed a little bit. So it’s not the same situation as it was a year ago,” he said. While the projected rate of growth for state revenue next year is lower than in previous years, state revenues continue to grow and are ahead of expectation for the current budget year.

In July, Mariano and Spilka said their proposal was meant to “represent the Legislature’s commitment to delivering immediate financial relief directly to residents of the Commonwealth.” “Whether it is the rising price of gas, groceries, or summer clothes for kids, the Massachusetts Legislature has heard loud and clear that increased costs due to inflation have cut into family budgets,” the legislative leaders said in a July 7 joint statement.

Asked Wednesday whether the need for that agreed-to relief still existed, Mariano did not directly answer.

“Well, I think the situation has changed,” he said. “And we have to be a more vigilant supervisor of the Treasury. So I do think that we’ll go sit down with the chairman of Ways and Means and look at the numbers and what we have in reserves, and make some decisions.”

Biz Groups: Big Tax Law Changes Needed To Help State Compete

by State House News Service time to read: 4 min
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