House Democrats have come around on the idea of slashing Massachusetts' short-term capital gains tax rate after opposing it under Gov. Charlie Baker, now pushing to cut it from 12 percent to 5 percent over a two-year period in a $1.1 billion tax relief package they unveiled Tuesday.
The tax relief bill that the House Ways and Means Committee is voting on would also gradually roll out a $600 child and dependent tax credit alongside a string of other measures lawmakers initially approved last year before abandoning targeted tax relief.
Speaker Ron Mariano's office estimates the bill, which will hit the House floor for a vote Thursday if the committee advances it as expected, would cost $654 million in fiscal year 2024 and rise to an annual price tag of $1.1 billion in fiscal year 2026 and beyond. His office issued a press release summarizing each of the reforms.
The bill also makes a change designed to make Massachusetts more attractive to multi-state companies, which are subject to a three-factor apportionment based on location, payroll, and receipts. The proposal would establish a single sales factor apportionment based solely on receipts, matching what 39 other states currently do, according to House leaders.
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The bill is emerging as a House Ways and Means Committee amendment in part to a spending bill Healey filed Jan. 31 (H 47), most of whose contents have already become law via separate legislation.
The governor's nearly $1 billion tax relief bill (H 42) generated lots of testimony during a public hearing of the Joint Committee on Revenue, but that panel has held on to the bill and does not appear to be playing any formal role in the bill that the House will consider.
The bill would also significantly change the 1986 voter-approved tax cap law that last year required state government to return nearly $3 billion to taxpayers. The law generated small rebates in 1987 and was triggered for only the second time in 2022.
"Currently, the credit is applied to the personal income tax liability of all taxpayers on a proportional basis, resulting in higher credits for those who paid more in taxes," Mariano's office wrote in the summary. "The bill proposes adjusting the credit to an equal amount per taxpayer, rather than a rebate based on a percentage of what taxpayers paid the Commonwealth."
Mariano plans to discuss the proposal alongside House Ways and Means Committee Chair Rep. Aaron Michlewitz and Revenue Committee Co-chair Rep. Mark Cusack at 11:30 a.m. Tuesday.