Public Statement on the House’s Proposed Tax Reform and Budget
BOSTON — Pioneer Institute applauds key tax reform provisions in the budget proposal advanced by the Speaker and House leadership. In particular, we believe the proposals to phase in a reduced short-term capital gains tax rate and to implement a single sales factor apportionment would bring Massachusetts to a mainstream position nationally on these policies.
Importantly, the proposals send a signal that the House and the governor are allies in their concern about risks to the state’s economic competitiveness. Governor Healey has repeatedly recognized that out-migration of wealth and business owners endangers the commonwealth’s economic future. Several House budget proposals are merit-worthy but only incrementally beneficial.
Leadership must do more.
A recent poll from UMass-Amherst/WCVB should be a wake-up call to Beacon Hill. Though the Boston Globe buried the lede by focusing on Republican attitudes on out-migration, the larger and more important story, in a state where 3 in 5 voters are unenrolled, is that a whopping 40 percent of all Massachusetts residents have considered leaving the state because of the high cost of living, taxes, and other policies.
Less than a quarter of states have estate taxes; of those, in Massachusetts and Oregon the tax is triggered at the lowest estate value. There is little doubt that the current $1 million threshold in Massachusetts is an incentive for retirees to move elsewhere. The House proposes to increase the amount to $2 million. Though a step in the right direction, the hike does not materially change the disincentive to remain in Massachusetts.
Finally, the proposed changes to Chapter 62F, which was established by popular referendum in 1986 as a safeguard to outsized state budget growth, skirts the popular will and is potentially unconstitutional. We strongly object to those proposals.
Pioneer urges state leaders to value the talent of our residents, many of whom have chosen to work or establish businesses here because of the state’s focus on moderation in tax and business policy proposals for more than three decades.
- Read Pioneer’s book Back to Taxachusetts?
- See our recent policy briefs on out-migration here and here.
- Read our analysis of Governor Healey’s budget.