Boston's Morning Newsletter
Breaking down the Mass. House's tax reform proposal, from rebates to child tax credits
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Happy Big Wind Day to all who celebrate.
The Celtics officially have their first-round playoff opponent: the Atlanta Hawks, who won their play-in game last night. The series begins this Saturday at 3:30 p.m at the TD Garden.
But first, let’s get to the news:
Gov. Maura Healey kicked off this year’s tax reform discussion, but ultimately the details get decided in the State House. That process began in earnest Tuesday when House leaders unveiled their respective plan. It’s very similar to Healey’s proposal, but with some potentially big differences for your next return. Here’s a breakdown:
1. Not so fast: The House plan would phase in several parts of Healey’s tax plan, including the $600 child tax credit. The House’s plan would increase the credit to $310 per-child or dependent in the first year and to $455 in the second year — before fully implementing it in 2026. House Speaker Ron Mariano said the approach balances “permanent financial relief” with the state’s “long-term fiscal security.”
- The House would also phase in Healey’s proposed cut to the short-term capital gains tax over two years (sliding from 12% to 8% to 5%). And they’re scaling back her somewhat controversial plan to lift the estate tax threshold from $3 million to $2 million.
2. Mariano wants more: While the House tax bill starts out cheaper than Healey’s plan, it actually ends up being bigger by the time it’s fully phased in — at a cost of $1.1 billion a year. That’s in part due to the addition of a proposed increase in the state’s earned income tax credit (EITC), from 30% of the federal EITC to 40%.
- The House also wants changes to the 62F revenue cap law so that all taxpayers would get the same-sized rebate if triggered in the future. Last year used a percentage-based formula that sent high-earners thousands of dollars, while most residents only got several hundred bucks. (If the change was in place, everyone likely would have gotten upwards of $800 back last year.)
3. Where they agree: On a few items, Healey and the House are on the exact same page. Both plans would double a state tax credit that low-income seniors can claim on their property taxes or rent to $2,400. They would also both increase a state tax deduction for all renters from $3,000 to $4,000 (a difference of $50 a year).
- The reception: Business groups are largely applauding the proposal. It’s also getting a slightly warmer reception from progressives than Healey’s bill, though they remain critical of changes (like to the estate tax and capital gains tax) that would mostly benefit the well-off. Here’s a mini-roundup of the reactions.
- What’s next: This is hardly the final say. While the House plans to vote on — and all but certainly pass — the bill this Thursday, the Senate is also working on its own tax reform package. So, they’ll likely need to negotiate a compromise to send to Healey in the coming months.
Somerville has a new school superintendent. Ruben Carmona, an administrator in Salem Public Schools, was selected by the city’s school committee yesterday as the next leader. Carmona will replace Mary Skipper, who left to become Boston’s superintendent last year.
Another warm, dry and breezy day, another red flag warning. The National Weather Service is warning all of Massachusetts, Connecticut and Rhode Island against outdoor burning today. “Any fires that start today will spread quickly and will be difficult to contain,” the service tweeted this morning. So, no backyard bonfires!
- Heads up: Get ready for things to get even warmer tomorrow and Friday. According to the NWS, it’s not out of the question that some local spots could break the 90-degree mark Friday.
P.S.— The fourth episode of our podcast Violation just dropped this morning. In it, The Marshall Project’s Beth Schwartzapfel follows Jacob Wideman’s decades-long journey through the Arizona prison system and hears how he prepared to tell his life story to the parole board. Listen to the entire series wherever you get your podcasts.