#2022-21 October 7, 2022

Association Reiterates Opposition to “Millionaire’s Tax” Ballot Question in Press Release; Shares Resources with Member Banks

Earlier this week, the Association issued a statement reiterating its opposition to Question 1, the so-called “Millionaire’s Tax” that will be on the ballot in November, citing recent studies that analyze its effect on small businesses, homeowners, and others throughout the Commonwealth.

According to the release, “MBA remains deeply concerned the impact Question 1 will have on the customers our member institutions serve – local small businesses, homeowners, retirees, and many others.  If passed, the Millionaire’s Tax’s impact will be felt far beyond the wealthiest citizens of the Commonwealth,” said MBA President and CEO Kathleen M. Murphy.

Further, according to a recent study by the Massachusetts Taxpayers Foundation, because the wording of the Millionaire’s Tax initiative subjects all income taxable in Massachusetts, wages & salaries, capital gains, interest and dividends, rental real estate, royalties, estates, trusts, and others that exceed $1 million will be subject to the 4 percent surtax.  This is especially harmful to many unincorporated businesses, such as sole proprietorships, partnerships, and S-corporations, which pay taxes under the personal income tax code.  This will cost jobs and reduce investment in these businesses, which are the core customers of local banks and the lifeblood of cities and towns throughout the Commonwealth.

In addition, many others will be subject to the tax on a one-time basis, including retirees, and sellers of homes and other real estate.  The Center for State Policy Analysis at Tufts University found that “half of all million-dollar earners between 1999 and 2007 were one-timers…It’s much more common for families to experience a one-time million-dollar windfall than to make $1 million year after year…If Massachusetts passes a millionaires tax, such households will pay the surtax in their one high-earning year and then likely never again.”

The Center also notes that due to high-income households moving out of the state or engaging in tax avoidance strategies, the amount of revenue generated by Question 1 could be 35 percent less than proponents assert, leaving far less funding for transportation infrastructure and education.

“With so many unanswered questions regarding Question 1’s impact and the potential broad implications for Massachusetts families and businesses, MBA urges voters to oppose the “Millionaire’s Tax” in November,” added Kathleen Murphy.

In addition to the press release, as part of our efforts to educate our members regarding the impact of the Millionaire’s Tax, we also shared resources from several organizations in a bulletin to member banks.  These include analysis from the Massachusetts Taxpayers Association and the Center for State Policy Analysis.  We also encourage bankers to share information from the No on Question 1 Coalition such as the fact sheet available here, with their customers, employees and directors to help them understand the effect the Millionaire’s Tax will have on their businesses and families and learn more about the work of the Coalition.

Members are asked to contact Kathleen Murphy or Jon Skarin with any questions regarding Question 1.

Dems Hoping to Revive Economic Development Bill, Tax Relief Provisions

As Election Day draws closer, House and Senate Democratic leadership continue to work to revive their stalled economic development and tax relief plans, pointing to rampant inflation and rising interest rates as factors complicating the delay.

As we have reported previously, it has been approximately 70 days since Governor Charlie Baker announced he expected that the state government needs to return $2.965 billion to taxpayers under a decades-old law tying allowable state tax revenues to the growth in wages.  Auditor Suzanne Bump certified the amount as $2.94 billion approximately 20 days ago and the Baker administration outlined its plans to ship out checks and direct deposits starting in November with individual refunds.

Although state tax revenues greatly exceeded expectations - soaring more than 20 percent in one year and producing a surplus north of $5 billion - lawmakers did not provide a timeline for action on the Economic Development bill that stalled at the end of session.  The bill included billions of dollars for local projects throughout the Commonwealth as well as a number of tax relief provisions.

The bills, H. 5034 & S.3030, which the House and Senate approved in July before Governor Baker announced his expectations about the mandatory 62F relief, featured about $500 million in permanent tax breaks for renters, seniors, parents and caretakers, plus Association-supported changes to the state’s archaic estate tax structure.  The bills would have also spent $500 million on one-time rebates for middle-income earners, providing $250 checks to qualifying single taxpayers and $500 checks to qualifying married filers.

With taxpayers across the commonwealth now in line for payments of varying size under Chapter 62F, legislative leaders have not made clear if they plan to also recommend sticking with the rebates they previously approved as a way to help Bay Staters manage the pressures of inflation and high gas prices.

Quarterly Tax Take Surpasses Record FY 2022 Pace

The Department of Revenue (DOR) received $4.187 billion in tax revenue last month, putting the state more than 5 percent ahead of the pace that led to a massive surplus in the last budget year, with one quarter of fiscal 2023 now in the books.  September receipts came in $194 million or 4.9 percent higher than actual collections from September 2021, and $224 million or 5.7 percent above DOR's September benchmark of $3.963 billion.

Through the first quarter, fiscal 2023 collections have totaled about $9.194 billion -- $443 million or 5.1 percent ahead of fiscal 2022 collections over the same period of time and $224 million or 2.5 percent higher than DOR’s year-to-date benchmark.  After adjusting for a pass-through entity excise that officials have said has affected comparisons, year-to-date tax collections are $231 million or 2.6 percent greater than collections in the same period of fiscal 2022 and $169 million or 1.9 percent more than the year-to-date benchmark, DOR said.

While DOR has now established monthly revenue benchmarks for September through June 2023, the agency may adjust those expectations as the budget year goes on.  The benchmarks are based on the assumption (agreed to by legislative leaders and the Baker administration) that fiscal 2023 revenue will total $39.618 billion.  That would be a drop of almost 4 percent from the $41.105 billion that was collected during fiscal year 2022, a year in which surging state revenue triggered the 62F provisions in state law.

Estimated payments are required from many corporations and individuals in September, DOR said, which makes the month a significant one for state tax collections.  The month generally accounts for 10 percent of the annual haul, making it the “third or fourth largest revenue month of the year,” DOR said.  Looking forward, the benchmark for October collections has been set at $2.066 billion and are due from DOR on Thursday, November 3.

89th Annual New England Trust and Wealth Management Conference -- Members Encouraged to Attend

The Association is proud to host the 89th annual New England Wealth Management and Trust Conference on Friday, October 28 at the Westin in Waltham, MA.  This year’s conference features an informative, timely agenda developed by our members with speakers discussing a broad range of topics, including hot button subjects such as ESG and Cryptocurrency sessions, facing fiduciaries and money managers in today’s turbulent markets.  All member banks offering trust and investment services are encouraged to attend.

For those interested in exhibiting or sponsoring the event, please click here.