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What the Mass. income tax ballot question would do for your wallet — and the state budget
Editor's Note: This is an excerpt from WBUR's daily morning newsletter, WBUR Today. If you like what you read and want it in your inbox, sign up here.
It's official: Foxborough's Select Board voted last night to issue the license needed to host World Cup games at Gillette Stadium later this year, after weeks of brinkmanship over who would pick up the tab for security costs. Now that that's out of the way, let's get to another issue that's making many local officials nervous.
Tax math-achusetts: Experts say the potential ballot question this fall to slash Massachusetts' state income tax from 5% to 4% would put a $5 billion dent in the state budget, if passed. But how much would you save?
A new analysis released this morning from Tufts University's Center for State Policy Analysis looks at who benefits from the question — and how much. When factoring in the state's personal income tax exemptions, the analysis found that the tax cut would have a "mildly regressive" impact, giving middle- and higher-income households slightly more of a proportional benefit.
In simple dollars, the difference is more dramatic. Here's a look at the report's projected annual savings for households up and down the income ladder:
- For those making under $25,000 a year, the average tax cut would be $69.
- For those making between $25,000 and $75,000 a year: $474.
- For those making $75,000 to $200,000 a year: $1,267.
- For those making between $200,000 and $500,000 a year: $3,155.
- For those making between $500,000 and $1 million a year: $7,341.
- For the Bay Staters who make over $1 million a year: $37,421.
- The big picture: While it's a 20% cut to the state income tax, it's still just a 1% overall tax cut. For that reason, the report found it would be "unlikely to have a significant impact on private spending or the overall state economy."
- On the other hand: Where the report does expect a significant impact is on the state budget. If voters pass the question in November, the tax cut would result in a $5.1 billion annual loss for the state by 2030 (when it is fully phased in). That's about 10% of the state's tax revenue. Evan Horowitz, the center's director, said that would more than offset the additional revenue from the state's millionaire's tax and require cuts to " core" programs. (As Gov. Maura Healey recently noted, $5 billion amounts to two-thirds of all state education funding; it's also more than the entire budget for the MBTA.) " It's really just the magnitude of the change that I think is most important here," Horowitz told WBUR's John Bender.
- Ultimately, Horowitz said the proposal asks voters a "values" question: "Are we better off if this $5 billion is in the hands of state legislators who are crafting public programs ... or in the hands of households who might have an additional $1,250 a year to maybe make charitable contributions, or maybe go gambling."
Meanwhile: It appears top Democrats on Beacon Hill, who pretty much universally oppose the income tax cut ballot question, are already working on a contingency plan. The House plans to vote today on a spending bill that includes language to opt the state out of certain federal corporate tax changes — if the state income tax rate ever falls below 5%. Supporters of the decoupling move say it could save Massachusetts hundreds of millions of dollars in tax revenue.
- Of course, hundreds of millions isn't $5 billion. In a statement yesterday, House Speaker Ron Mariano and House Ways and Means Chairman Aaron Michlewitz said the move would "help soften the blow" if the tax cut ballot question passes, but added that "budget cuts will be unavoidable."
Debt relief: Roughly 27,000 Bay Staters are getting their medical debt fully or partially erased, thanks to a national nonprofit effort. All in all, the initiative by the Atrius Health Equity Foundation, Undue Medical Debt and the Massachusetts Health & Hospital Association is wiping away over $42 million in medical debt in the state.
- Look for a letter in the mail: The foundation says the debt cancellation will happen automatically — no application required. Individuals were selected if their medical debt is at least 5% of their annual income or if they earn at or below four times the federal poverty level.
- Nearly 20,000 of the 27,000 people selected live in Barnstable County, with the rest scattered across eastern Massachusetts. It comes after a previous round of debt relief last year for people in eastern Massachusetts.
A second mortgage (in a good way): Healey's administration launched a new statewide loan program yesterday for accessory dwelling units. The program allows residents to take out a second mortgage of up to $250,000 for detached ADUs and up to $150,000 for ADUs attached to their existing home. It comes after Massachusetts legislators passed a law in 2024 making ADUs legal to build as of right across the state, as part of a larger strategy to address the state's housing shortage.
- The fine print: The ADU mortgages are available to residents making up to 135% of the area median income and come with a 5.25% interest rate.
P.S.— The northern lights could be visible tonight across northern New England. The NOAA's Space Weather Prediction Center put out a watch this week for a moderate G2 geomagnetic solar storm, and the view line runs through Vermont, New Hampshire and Maine. Keep an eye on the center's 30-minute forecast page tonight and on our website this afternoon for viewing tips from meteorologist Danielle Noyes.
