Middleboro Review 2: POLITICO Massachusetts Playbook: Tax relief winners and losers

Wednesday, September 27, 2023

POLITICO Massachusetts Playbook: Tax relief winners and losers

YOU GET A TAX BREAK AND YOU GET A TAX BREAK — In the end, almost all the major players in the tax-relief saga will get to walk away winners.

Gov. Maura Healey got lawmakers to meet her most of the way on some of her signature promises in the pared-down deal they filed Tuesday . That includes overhauling the child and dependent tax credit, raising the estate-tax threshold and cutting the short-term capital gains tax rate.

Top House Democrats got their Senate counterparts to agree to change how Massachusetts’ corporate taxes are calculated — another win for the business community — and to make future rebates under Chapter 62F equal for all taxpayers .

Senate leaders secured expansions to two programs aimed at boosting market-rate and low-income housing production, the Housing Development Incentive Program (which Healey also wanted) and the Low Income Housing Tax Credit.

Senate President Karen Spilka hailed the deal as the "largest bipartisan legislative tax relief proposal in over a generation." House lawmakers will take up the $561 million package — which will eventually cost the commonwealth more than $1 billion a year — this afternoon. Senators will follow suit tomorrow. Let’s break it down:

From left: Senate Ways and Means Chair Michael Rodrigues, House Ways and Means Chair Aaron Michlewitz, House Speaker Ron Mariano and Senate President Karen Spilka discuss their tax-relief deal on Tuesday, Sept. 26, 2023, at the State House. | Lisa Kashinsky/POLITICO

WHAT HEALEY WANTED — A $600 child and dependent tax credit, a $3 million estate-tax threshold (up from $1 million) and a 5 percent short-term capital gains tax rate (down from 12 percent). She also wanted to raise the annual cap on HDIP to $50 million in the first year and $30 million thereafter.

WHAT SHE GOT — The child tax credit will rise to $310 in the first year and $440 afterward. The estate-tax threshold will rise to $2 million. The short-term capital gains rate will fall to 8.5 percent. HDIP will grow to $57 million in the first year and $30 million after.

Some of this was predictable. Lawmakers weren't going to go for a $3 million estate-tax threshold after all-but agreeing to $2 million last year before talks fell apart when Chapter 62F was triggered. They proposed the same again this year.

Some of it was surprising. Resistance among senators and progressives to any form of a short-term capital gains tax cut was fierce.

And while they gave the governor plenty to tout , top Democrats still denied one of their own what would have been her biggest win: delivering the full $600 child and dependent tax credit she pitched early in her gubernatorial campaign . Lawmakers said they were being realistic about what the state can afford. And they insisted their version will be the "largest" universal child and dependent tax credit in the country.

Healey’s still pleased. “This is a comprehensive package that delivers relief to families and businesses, including through our proposed child and family tax credit,” she said in a statement.

So, who lost here? Hundreds of thousands of renters, seniors and families who've had to wait 20 months for relief. Republicans and conservative groups that didn’t want changes to Chapter 62F. Housing advocates who were lobbying lawmakers to hold off pouring more money into HDIP until they tackled existing concerns with the program, including the unequal distribution of credits. Massachusetts Law Reform Institute housing attorney Mark Martinez, for instance, called additional funding for HDIP "offensive."

But progressive lawmakers and activists who fought the more business-friendly measures saw their losses tempered by the deal's compromises. And they notched a win in language that requires married couples to file their federal and state taxes the same way, which proponents believe will close a "loophole" wealthy couples could use to avoid paying the so-called millionaires tax.

GOOD WEDNESDAY MORNING, MASSACHUSETTS. Another winner in this all: Charlie Baker , who proposed many of the ideas that are now just a few steps away from becoming law all the way back in January 2022. Dive deeper into the tax deal with the Boston Globe and GBH .

TODAY — Healey, Lt. Gov. Kim Driscoll and AG Andrea Campbell speak at a Law Enforcement Memorial Foundation event at 1 p.m. at Ashburton Park. Healey meets with Polish Ambassador Marek Magierowski at 4 p.m. at the State House. Driscoll speaks at Philanthropy MA’s meeting at 10 a.m. at WBUR’s CitySpace. Campbell addresses the New England Council at 10:30 a.m. at the Seaport Hotel. Boston Mayor Michelle Wu helps announce Sail Boston at 10:30 a.m. at the Boston Harbor Hotel.

Tips? Scoops? Budget takeaways? Email me: lkashinsky@politico.com .

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MIGRANTS IN MASSACHUSETTS

THE NATIONAL TAKE — Massachusetts isn't the only Democratic stronghold where leaders are struggling to keep up with a surge of migrants. And as their frustrations with the Biden administration rise, it’s sparking anxiety in the party about potential fallout heading into the 2024 election cycle. More from me and Shia Kapos for POLITICO's The Fifty .

DATELINE BEACON HILL

FIRST IN PLAYBOOK — As gun owners lobby against temporarily shelved House legislation that would overhaul the state’s firearms laws, Everytown for Gun Safety is out with a new poll that shows majority — and bipartisan — support among Massachusetts voters for prohibiting the sale and possession of “ghost” guns and banning carrying firearms in schools, polling places and other sensitive locations.

The latter was part of the House bill, the former goes beyond what lawmakers proposed for regulating homemade firearms. Everytown commissioned the SurveyUSA poll of 1,017 registered voters in Massachusetts that was conducted in mid-September. Read the polling memo .

— “Cambridge picked as a national hub for new federal health research agency,” by Jon Chesto and Robert Weisman, Boston Globe: “The Advanced Research Projects Agency for Health, or ARPA-H, said Tuesday that Cambridge will host the agency’s ‘investor catalyst’ hub, which will work with researchers, entrepreneurs, and financiers to speed the transition of basic research into new technologies and medicines. The announcement follows an intense lobbying effort by Governor Maura Healey’s administration and the state’s congressional delegation, as well as local business and academic leaders.”

— “Despite rules feud, lawmakers predict energy/climate bill will pass, ” by Bruce Mohl, CommonWealth Magazine: “The House and Senate chairs of the Legislature’s energy committee aren’t talking to each other, but in separate interviews they both seem confident lawmakers will pass another climate and energy bill this session."

— “At a fiery hearing on Beacon Hill, calls for reforms linked to children and families abound,” by Adam Reilly, GBH News: “At a sprawling, fiery State House hearing Tuesday, critics of the state’s Department of Children and Families backed an array of proposals aimed at reforming a system they say is failing too many children and young people."

— More: “‘A true scandal’: Legislature considers bill to protect benefits owed to kids in foster care,” by Samantha J. Gross, Boston Globe.

— “Lawmakers urged to hike minimum wage,” by Christian M. Wade, Eagle-Tribune.

— “Healey blasts Republicans for being ‘hell bent’ on making political statements as [federal government] shutdown looms,” by Chris Van Buskirk, Boston Herald.

— “State funds Mass. hotline to reduce risk of fatal overdoses,” by Martha Bebinger, WBUR.

ROE FALLOUT

REGIONAL REACH — Reproductive Equity Now is expanding into New Hampshire and Connecticut as the abortion-rights advocacy group aims to turn New England into a bastion for those seeking reproductive care.

“We really believe that state-by-state work to build power is how we win in a post-Dobbs world,” REN Executive Director Rebecca Hart Holder told Playbook. The group plans to focus on education and legislative advocacy in all three states (Massachusetts included).

The expansion comes at a pivotal political moment in New Hampshire, where abortion is quickly becoming one of the biggest issues in the state's open gubernatorial race. Democrats are hammering Republican contenders for supporting the state's near-total ban on abortions after 24 weeks of pregnancy and, in Kelly Ayotte ’s case, for supporting a near-blanket 20-week ban on abortions as a U.S. senator.

Hart Holder said Ayotte "poses an existential threat" to reproductive care in New Hampshire and that her group plans to educate voters there on abortion rights and where candidates stand on them.

Ayotte campaign spokesperson John Corbett said the “majority of Granite Staters agree” with the state’s current abortion law and that the former U.S. senator “won’t change it.”

Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of the first episodes in September – click here .

FROM THE HUB

FIRST IN PLAYBOOK — State Rep. Chynah Tyler has endorsed William King for District 6 Boston city councilor. King faces Ben Weber in November for Councilor Kendra Lara ’s seat.

— “Boston councilors blast Wu administration for skipping Mass and Cass hearing,” by Gayla Cawley, Boston Herald: “Four city councilors seeking a state of emergency declaration in the Mass and Cass zone were incensed when the Wu administration blew off a Tuesday City Council hearing on the matter. The snub was largely shrugged off, however, by many other councilors who either left immediately after stating that they, like the mayor’s team, were prioritizing a Thursday hearing on Michelle Wu’s anti-encampment ordinance, or chose to skip out on the day’s session entirely.”

THE RACE FOR CITY HALL

MAYORAL ROUNDUP — November mayoral matchups are set in two more cities after yesterday’s preliminary elections. Beverly Mayor Mike Cahill will face political newcomer Jamie Zarella in the North Shore city’s general election . In Fitchburg, it’s Mayor Stephen DiNatale versus City Councilor Samantha Squailia , who was the top vote-getter per unofficial results.

PLANES, TRAINS AND AUTOMOBILES

— “New Green Line extension already so defective that trains are forced to move at walking pace,” by Taylor Dolven, Boston Globe: “Less than one year after the final branch of the much-heralded Green Line extension opened for business, the MBTA said a problem with the tracks has reduced train speeds to just 3 miles per hour along stretches that add up to more than a mile.”

— “Express train from Worcester to Boston? Not so fast,” by Veer Mudambi, Telegram & Gazette: “The trip to and from Boston for commuters will take longer soon, with the latest schedule changes on the Worcester/Framingham commuter rail line to include more stops.”

MARIJUANA IN MASSACHUSETTS

— “Cannabis control commission hits back at ‘endless string of scandals’ accusation,” by Matthew Medsger, Boston Herald: “In a letter sent to the Joint Committee on Cannabis Policy and shared with the Herald, Chief Communications Officer Cedric Sinclair says he would like to ‘respectfully reject’ the notion the [Cannabis Control Commission]’s work has been clouded with controversy.”

FROM THE 413

— “Chicopee City Council considers putting referendum question about 4-year mayoral and council terms on November ballot,” by Jeanette DeForge, Springfield Republican.

— “Report sets reparations framework for Amherst; calls for BIPOC youth center, housing help, entrepreneurship program,” by Scott Merzbach, Daily Hampshire Gazette.

HEARD ‘ROUND THE BUBBLAH

SPOTTED — Rep. Alexandria Ocasio-Cortez (D-N.Y.) having quiet cocktails and dinner with John Kerry at the St. Regis bar in D.C. last night.

HAPPY BIRTHDAY — to Jack Eccles, Robert Cohen , former secretary of veterans affairs Francisco Urena, Nick VanSant, Misha Hyman and Abby Curran .

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