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Eliminating tax cap law among 70-plus amendments to Senate’s $586M tax relief plan

Senators plan to debate the bill during Thursday session

Barbara Anderson's 62F tax rebate victory is under attack, again. The onetime head of Citizens for Limited Taxation died in 2016. (Herald file photo)
Barbara Anderson’s 62F tax rebate victory is under attack, again. The onetime head of Citizens for Limited Taxation died in 2016. (Herald file photo)

A Marlboro Democrat wants to repeal the state tax cap law that sent billions in reimbursement checks to residents last year, filing the idea as one of the 70-plus amendments to the Senate’s tax relief proposal scheduled for debate later this week.

State Sen. Jamie Eldridge said he wants to scrap the voter-passed tax cap law known as Chapter 62F because it creates a layer of unpredictability with state spending. The law required state officials to send nearly $3 billion back to taxpayers in 2022, which threw last year’s tax relief talks out the window.

“I don’t think it really serves sound public policy,” Eldridge told the Herald. “I didn’t hear from anyone about ‘this made a big difference in my life to get this tax rebate.’ So I do think that it’s important to have this discussion to repeal it and make sure that we’re not worried about it being triggered in the future.”

Eldridge filed the repeal amendment to Senate Democrats’ $586 million tax relief plan they released last week. Senate President Karen Spilka said the bill looks to boost several housing-related initiatives and centers “equity while chipping away at the headwinds that threaten our competitiveness.”

Whether to address Chapter 62F in the tax relief bill could take time to negotiate when lawmakers from the House and Senate eventually sit down to hammer out a final tax relief bill.

House leadership proposed rewriting the law so any excess revenue is returned as equal payments to residents regardless of how much they paid to the state. That change drew legal scrutiny from a technology-focused business group.

House Speaker Ronald Mariano said in April the adjustment allows everyone to share in the success of the state’s economy.

“We felt after watching the way the checks were made out and sent out, I think (Rep. Aaron Michlewitz, Rep. Mark Cusack and I) sort of agreed pretty early on that there are fairer ways to do this,” he said, referring to the House chairs of the budget-writing and revenue committees.

Eldridge said the Baker administration’s erroneous use of $2.5 billion in federal funds to pay pandemic-era unemployment benefits could put the state in a precarious financial situation that could only get worse if the tax cap law is triggered again.

“I feel, at the end of the day, is it a sound tax policy, sound public policy to have a tax rebate trigger?” he said. “I think it’s quite unusual and I think it makes the commonwealth weaker.”

Among the other amendments filed to the bill ahead of the Thursday debate are Republican-led efforts to reduce the short-term capital gains tax and increase the estate tax exemption.

The House and Healey support cutting the short-term capital gains tax from 12% to 5%, which could become another sticking point during inter-branch negotiations.

The Senate opted not to include the reduction in their plan and Spilka said the chamber “pulled together a consensus bill.”

“This is what the senators wanted,” she said outside of her office on Monday. “The balance of the bill focuses on individuals and working families, low to moderate, middle income, support and help. There are some things for folks, whether it be the EITC, the rental assistance, the senior circuit breaker, child dependent care, that’s where the bulk of the relief was desired.”

Healey did not say whether she would sign a bill that does not include a cut to the short-term capital gains tax, offering only that she was “heartened” by both the House and Senate proposals.

“We’ll just see what comes out of conference committee but obviously, the team and I, the lieutenant governor and I are here and ready to work and collaborate on this and other issues,” she told reporters on Monday.

Voters approved 62F in 1986 after tax-cutting champions, including the late Barbara Anderson, pushed for breaks for taxpayers.