“Yesterday, Senate President Karen Spilka rightfully noted the need to balance “targeted spending investments to a number of crucial areas, such as housing, childcare and higher education” while responding to our state’s current revenue collections. As our analysis shows from the final Fiscal Year 2023 House budget proposal, our Legislature made a great first step in committing our public dollars to closing some equity gaps. We hope the Senate Ways and Means Committee will build on this and make the bold investments needed to further equity in Massachusetts.

“Proposed large tax breaks for the very wealthy would harm our long-term recovery at a time when we are relying on one-time federal relief funds to keep us afloat. We still need resources to make bold investments in public transportation, early education, safe and stable housing, as well as tax relief directed to those struggling to make ends meet. MassBudget stands with the calls for using targeted tax proposals to provide relief for low-to-moderate income individuals and families impacted both by the pandemic and rising costs.

“The Joint Committee on Revenue has a unique opportunity to make an equity-focused tax package happen before the end of our legislative session. As we’ve noted, providing help to those of us most in need such as our state’s lowest-income tax filers, or expanding the senior circuit breaker, can support our economic recovery. Tax cuts for the ultrarich don’t set the stage for progress, and the future of our communities relies on policymakers delivering equity to restore balance in the Commonwealth.”

Read our full FY 2023 House budget analysis | Visit the Budget Browser for detailed budget information

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FAS 109, Single Sales Factor Apportionment, and Deferred Corporate Tax Deductions

As the Legislature considers elements of a possible tax package, it is worth focusing on a number of interrelated corporate tax issues that are now – or may become – part of the mix. At the heart of these interrelated issues is a problematic, state-level corporate tax break referred to as FAS 109.

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When A Surplus Is Not Extra

Sometimes a “surplus” is not really a surplus at all, and the term “tax surplus” can be particularly misleading. A tax surplus occurs when tax collections come in higher than the amount expected when the state created its budget at the beginning of the fiscal year. When that initial estimate turns out to be too low, there is a “surplus.” It does not mean that the state budget has already met the needs of the moment or that there is extra unneeded revenue.

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Options to Adjust the Estate Tax While Retaining Revenue and Progressivity

The Massachusetts Budget and Policy Center was asked to outline options for changes to the estate tax that would preserve revenue, maintain progressivity, and also cut taxes on or exempt estates with a taxable value up to around $1.2 million. Since households subject to the estate tax are among the state’s wealthiest taxpayers, any reductions to revenue from the estate tax represent a transfer of wealth from the Commonwealth to its wealthiest families. Even so, some options are better than others.

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