MassFiscal Opposes – The Bad Outweighs the Good

After waiting two long years, Speaker Ron Mariano and Senate President Karen Spilka finally made public the details of their tax relief package and it includes major tax hikes.

The Speaker and Senate President’s proposal includes a marriage penalty, applying the new income surtax to married couples who have a combined income of over a million dollars. Marriage penalties are bad policy, and offering ways to avoid one is not a loophole. Marriage penalties incentivize more high-income earners to relocate or domicile elsewhere and it incentives couples not to get married for financial reasons.

Senate President Spilka and Speaker Mariano’s tax package flies in the face of all common sense and will be a significant catalyst for further outward migration of taxpayers.

The economic harm in the legislative leader’s tax package was not limited to the marriage penalty. The duo also targeted a very popular voter approved law known as 62F, which caps the amount of tax revenue the state can collect each year and rebates the excess to taxpayers under unique circumstances. To the chagrin of legislative leaders, last year 62F rebated every state taxpayer who paid an income tax 14 percent of what they paid. In all, over $3 billion dollars were returned to approximately 3.2 million taxpayers. This bill, however, hijacks the law and turns it into a wealth redistribution scheme by giving back excess tax collections in equal allotments instead of proportionally to what one paid in.

Whatever minor tax relief is included in the legislative leader’s tax package, it is laughable to think it would address any sort of competitive disadvantage Massachusetts has economically. The good does not outweigh the bad. Even with a clean tax relief bill that hypothetically does not include the poison pills described above, the modest tax relief would not stop the outward migration of taxpayers, counter the economic damage from last year’s income surtax ballot question, or attract taxpayers to Massachusetts.

“Never before have so many waited so long for so little. Leave it up to two career politicians to not only deliver a two-year late tax relief package while almost every other state saw immediate relief, but include tax hikes in their relief package. A hypothetical clean tax relief package would have been merely an adjustment for inflation. Unfortunately for everyone, these career politicians somehow included harmful tax hikes in a “tax relief package.” Speaker Ron Mariano and Senate President Karen Spilka’s proposal includes poison pills which puts Massachusetts at odds with nearly 70 percent of the states that have a graduated state income tax like Massachusetts. How does further taxing married couples achieve tax relief for Massachusetts or make us more economically competitive? How can Massachusetts try to keep taxpayers here or attract new taxpayers when they can easily move to New Hampshire or Florida and not pay any state income taxes and not be penalized by the state for being married,” stated Paul Diego Craney, spokesperson for Massachusetts Fiscal Alliance.

“The Speaker and Senate President cannot justify how Massachusetts can compete with New Hampshire or Florida when they are trying to penalize high income Massachusetts couples for being married. New Hampshire and Florida will only benefit and more high-income married couples will become more wealthy simply by moving out of state,” continued Craney.

“In 1996, the voters of Massachusetts overwhelmingly approved a tax cap and rebate law known as 62F. In that election, 55 percent and 10 of the state’s 14 counties voted in favor of 62F. Last year, approximately 3.2 million state taxpayers benefited from the voter approved law when each and every taxpayer received a 14 percent refund for the money they paid in state income taxes. However, lawmakers are attempting to undo the will of 863,130 Massachusetts voters who voted in favor of 62F and against the 3.2 million state taxpayers who benefited from the taxpayer protection law by hijacking it and turning it into a socialist wealth redistribution scheme,” continued Craney.

“Speaker Ron Mariano and Senate President Karen Spilka should be ashamed of themselves. At a time when legislative leaders refuse to be audited by the state Auditor, it’s clear an audit is needed now more than ever. At a time when taxpayer money is flowing freely for the thousands of illegal immigrants coming to Massachusetts, they have the nerve to essentially raise taxes and turn a taxpayer protection law into a socialist state wealth redistribution scheme,” concluded Craney.