#2022-22 November 4, 2022

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

On Friday, the Association issued an updated statement renewing its opposition to Question 1, the so-called “Millionaire’s Tax” that will be on the ballot next week, citing the state’s budget surplus and questions about its impact on small businesses and homeowners.

According to the new release, “MBA is urging member bankers to vote “no” on Question 1, which will have a negative effect on many of the customers our member institutions serve – local small businesses, homeowners, retirees and others.  At a time of record budget surpluses and the state refunding nearly $3 billion to taxpayers this month, the time is simply not right for a tax increase,” said MBA President and CEO Kathleen M. Murphy.

Further, “the Association also notes there are many unanswered questions regarding the Millionaire’s Tax, such as how much the surtax will actually raise – estimates vary widely – even though proponents say it will raise $2 billion every year.  And while quality schools and safe, reliable transportation options are vitally important to maintaining the state’s competitiveness, Question 1 does not address many other key issues in the Commonwealth such as the cost of living, lack of affordable housing and high energy prices, among others.”

As highlighted in each release, MBA remains concerned that others may 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.”

“With the state’s budget surplus exceeding estimates and many unanswered questions about the Millionaire’s Tax, MBA urges voters to oppose Question 1 on November 8,” added Kathleen Murphy.

In addition to our press releases, as part of our efforts to educate our members regarding the impact of the Millionaire’s Tax, the Association has 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.

House, Senate Pass Long-awaited Economic Development Bill; Cuts Tax Relief Plans– Including Estate Tax Reform

On Thursday, lawmakers sent a closeout budget and economic development bill to Governor Charlie Baker’s desk, winning support for the scaled-down measure from Republicans who agreed to the new spending while lamenting the death of tax relief top Democrats long promised.

A day after negotiators announced a resolution to their months-long impasse, both branches gave final approval to the nearly $3.8 billion bill that will deploy money remaining from an enormous tax surplus on health care, affordable housing, MBTA safety improvements and other needs.  The bill also allows the comptroller to close the state’s books for fiscal year 2022 as legislative leaders opted to weave the closeout components, which typically feature in a standalone budget bill, into an updated version of the economic development bill that cleared both branches unanimously in July.

Any objection from a single representative or senator could have halted the progress of the bill, H 5374, because lawmakers punted the measure into the election-season stretch of informal sessions, but the bill sailed through without protest over the course of the day.

In the end, the House and Senate opted to drop around $500 million in one-time tax rebates aimed at helping middle-income families deal with inflation and rising costs, and authorization for another roughly $500 million annually for MBA-supported estate tax reforms and permanent tax breaks for renters, seniors, caregivers and others.

Legislative leaders said they opted against keeping those measures due to “financial uncertainty in the year ahead” and the costs of nearly $3 billion in checks that started flowing out to taxpayers this week, as required under the 1986 voter-approved law setting a cap on allowable tax revenues.  While disappointed by this late change, the Association will continue to pursue long-overdue amendments to the Commonwealth’s estate tax code early in the upcoming session.

The bill approved Thursday combines spending measures that passed both branches unanimously in the earlier drafts of the economic development bill with some additions that neither the House nor Senate had previously debated or brought forward for a vote.  Its bottom line of nearly $3.8 billion uses $500 million in federal American Rescue Plan Act (ARPA) funds, less than half as much as both branches approved using in July and exhausts the rest of the massive tax surplus the state collected in the fiscal year that ended June 30.

Spending highlights include $350 million in aid for hospitals experiencing pandemic-influenced financial strain, $225 million for human service rate increases, $195 million for nursing facilities and rest homes, $540 million for clean energy and climate resilience programs, $409.5 million for affordable housing, and $112 million to help the MBTA make federally mandated safety fixes.

To review the economic development bill, click here.

October Tax Revenues Surge Above Projections

Department of Revenue (DOR) tax collectors raked in $2.359 billion last month, almost $300 million or 14 percent more than expected but a drop of $85 million or 3.5 percent compared with actual collections in October 2021.

Revenue Commissioner Geoffrey Snyder announced the DOR has collected $11.565 billion in tax receipts through four months of fiscal year 2023. That’s $369 million or 3.3 percent more than collections through the same period of fiscal 2022 and $529 million or 4.8 percent more than what the administration was expecting to have brought in by this point in the year.

October's results were marked by a year-over-year decrease in the non-withholding income tax, corporate and business tax, and “all other tax” categories, according to the Commissioner.  Further, there are no individual or business taxpayers that make significant estimated payments during October, DOR said, which makes the month a less notable one for state tax collections.  The month generally accounts for 6.5 percent of the annual haul.

A report about November revenues will be due from DOR on Monday, December 5.  The benchmark for November collections has been set at $2.161 billion, DOR said.