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Senate Democrats appear not to be pursuing a cut to the state’s short-term capital gains tax rate, a House- and Gov. Maura Healey-backed tax relief measure popular with businesses that has earned the scorn of progressives.
The Senate Ways and Means Committee on Thursday advanced a long-awaited tax relief package, which according to a summary sent out by the committee would increase rent deductions, Earned Income Tax Credits, the senior circuit breaker tax credit cap and the annual cap for the Housing Development Incentive Program. The proposal also exempts estates valued under $2 million from the estate tax and seeks to eliminate the “cliff” from estate taxes.
Altogether, the tax changes carry about a $590 million total annual cost to the state, the committee said.
The summary makes no mention of the short-term capital gains tax cuts that both the House and Healey proposed in their own tax plans.
Both the House and Healey have said that slashing the tax on capital gains will make Massachusetts more competitive, at a time when there is fear of businesses and people leaving the state, while progressives have slammed the cuts as an unnecessary “tax break for the rich.”
The Senate’s version of the estate tax, also controversial with progressives, carries a total cost of $185 million to the state. It aligns with the House’s proposal to double the threshold at which the estate tax kicks in, from $1 million to $2 million, and seeks to eliminate the so-called cliff effect, by allowing a uniform credit of $99,600.
Other provisions include:
- Increasing the rental deduction cap from $3,000 to $4,000
- Increasing the maximum available Title V septic system tax credit from $6,000 to $18,000 and the annual ammount claimable from $1,500 to $4,000
- Extending the brownfields redevelopment tax credit through 2028 and increase the size of grants and loans from the Brownfields Redevelopment Fund
- Tripling the Housing Development Incentive Program to $30 million, providing gap-filler financing for market-rate housing projects in Gateway Cities
- Raising the annual state low-income housing tax credit from $40 million to $60 million
Following the closing of the poll, the Ways and Means Committee said 15 members voted to advance the tax relief plan, no one voted against it, one senator reserved his or her rights, and one senator did not take action.
The Senate’s agenda for its Thursday session indicates that leaders plan to propose an amendment deadline of 5 p.m. Monday.
With question marks hanging over state finances after a dip in April and a surprise $2.5 billion bill courtesy of mis-allocated federal funds used to pay unemployment benefits during the pandemic, the Senate’s decision to move forward with a tax cut plan of its own earned praise from Greater Boston Chamber of Commerce President & CEO Jim Rooney.
“We are pleased to see meaningful efforts from the Governor, House, and Senate to move forward tax relief to benefit Massachusetts residents and businesses. Following our recommendations on a tax relief package to policymakers earlier this year, it is encouraging that all three branches are aligned on the substantive value – for competitiveness, affordability, and equity – of tax relief,” Rooney said in a statement emailed to reporters shortly after the Senate released a summary of its proposal. “The $590 million Senate tax relief plan is a crucial step forward, and policymakers must continue the work to make sure that Massachusetts is not a negative outlier for employers and job creators compared to other states.”
Banker & Tradesman staff writer James Sanna contributed to this report.
