Dear Chairpersons Moran, Cusack and members of the Joint Committee on Revenue,
Thank you for the opportunity to testify on these important matters.
My name is Marie-Frances Rivera, she/hers, President of the Massachusetts Budget and Policy Center. At MassBudget, our goal is to advance policies that achieve racial and economic justice. One of the most powerful tools we have is the state budget, an over $50 billion opportunity, each year, to recommit to our values. Budgets are moral documents, as are the taxes that fund them. They are down payments on a brighter future.
The passage of the Fair Share Amendment last fall is not only an incredible lesson in the power of inclusive democracy, it also paves the way for this brighter future. In every corner of our Commonwealth, people engaged with this important policy question and affirmatively stated they wanted greater public investments and a more just tax system.
Now, turning to Governor Healey’s tax proposal. There are three proposed tax credits which are progressive and would make our tax system more just. Notably, the newly-crafted Child and Family Tax Credit proposal would provide a $600 refundable tax credit for each eligible dependent and would provide outsized benefits to BIPOC communities. There would be no cap on the number of eligible dependents in a household and you don’t need to have a social security number to receive this credit – which would benefit our immigrant neighbors who file their taxes with ITINs. Ways to make this proposal even more progressive: increase the amount per dependent. Ways to bring down the overall cost, which sits at $458 million/year would be to include an income ceiling. For example, if you put the income ceiling at $400,000, we could cut down the cost by over $30 million while still reaching those who would need the most.
Governor Healey’s proposal also has two highly regressive tax cuts, meaning richer households would receive outsized benefits. Governor Healey’s tax package includes nearly $400 million in cuts to estate and short-term capital gains taxes that amount to a windfall for our richest neighbors. The estate tax proposal, in particular, proposes to provide a $182,000 tax credit to large estates. This proposal would create larger revenue losses than Governor Baker’s estate tax proposal or those debated in the Legislature last year. Bottomline is that any cut to the estate tax or short-term capital gains increases inequality by income and race. The bigger the cut, the more regressive and racially inequitable the impact.
In conclusion, while there are progressive elements in Governor Healey’s tax proposal which would drive forward equity in our state. But, the proposed permanent tax cuts for a small number of very wealthy families would increase inequality. And, the overall cost of the proposal would limit our ability to make critical investments by reducing state revenue available for future investments by $986 million annually. That’s nearly the exact amount being budgeted from the newly-passed Fair Share Amendment. This proposal is misaligned with the will of voters to make new and greater public investments.
Math is real. The cuts we make today will immediately impact our ability to invest in a brighter future tomorrow. Thank you for the opportunity to testify.