House Democrats estimate their new tax rebate plan would help more than 2 million Massachusetts residents, and the half billion-dollar program might only represent an opening salvo of tax relief proposals.
The program legislative leaders placed on the table Thursday would offer one-time, $250 payments to middle-income taxpayers across the state, a move lawmakers pitched as a more targeted way to relieve the pressure of crushing inflation and soaring gas prices than temporarily lifting the state's gas tax.
House Speaker Ronald Mariano and his top deputies said they expect the proposal would steer rebates to more than 2 million taxpayers with a total cost of about $510 million. That price tag appears likely to bite off only a portion of a historic surplus, which one group estimated last week will total $3.6 billion by the time all the numbers are finalized.
Like their counterparts in the Senate, top House Democrats said Thursday they have not ruled out other tax relief measures that Gov. Charlie Baker and others have pushed for months. Still, with lawmakers adding to their to-do list faster than they cross items off it and only 24 days left to get a bill to the governor's desk, they declined to offer any specifics about what else their tax plan would feature.
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"Everything is on the table, and until we quantify it, I think that I wouldn't want to start making guesses about what's going to be in that," Mariano replied when pushed for examples of other tax changes he has in mind.
The latest proposal, which top House and Senate lawmakers announced with a three-paragraph joint statement earlier on Thursday, would offer one-time rebates of $250 to eligible individual taxpayers and $500 to married taxpayers who filed jointly.
To qualify, individual filers must have reported between $38,000 and $100,000 in income in 2021, while married joint filers must have reported an annual income between $38,000 and $150,000 last year.
Lawmakers expect the rebates would be issued to qualifying taxpayers by Sept. 30.
The income floor attached to the plan would effectively block the state's lowest earners from receiving the one-time payments.
"This proposal EXCLUDES the state's lowest-income residents. That's it. That's the tweet," Massachusetts Budget and Policy Center President Marie-Frances Rivera tweeted after Democrats announced the measure.
Mariano said Democrats felt they already steered assistance toward Bay Staters on the bottom rung of the income ladder with a pandemic-era premium pay program, which sent $500 checks to workers who earned between $13,500 and roughly $38,600 in 2021 and did not receive unemployment benefits in that span.
"We just spent $500 million on low-income folks who were adversely affected by the COVID loss of jobs, so we felt we had addressed a lot of the needs there," Mariano said. "The next step was to move up and take care of the folks who are in that middle income area that so often is neglected."
He described $500 million as a "safe number" to spend on rebates for a broad batch of taxpayers.
The Massachusetts Taxpayers Foundation projected last week that the Legislature will have a $3.6 billion budget surplus available once final accounting is complete for fiscal year 2022, which ended June 30. The state Department of Revenue has not yet reported how much the state collected in taxes in June, the final month of fiscal year 2022.
"I don't take my financial information from the Mass. Taxpayers (Foundation). I'm dealing with what Ways and Means in the House and the Senate are dealing with," Mariano said.
Some details about the rebate proposal remain unclear, including a timeline for legislative action. Mariano said lawmakers could "use any one of a number of vehicles to move things very, very quickly" as the July 31 deadline to wrap up formal business approaches.
Senate Ways and Means Committee Chair Michael Rodrigues said earlier on Thursday the proposal would draw from the fiscal year 2022 budget surplus, but his peer in the House was less clear.
"We have, obviously, a number of options here of additional revenue to use, so we're still going to explore exactly which is the exact way we're going to use it," Michlewitz said. "(The surplus) is going to be one of those buckets that we have available to us."
Lawmakers are also sitting on roughly $2.3 billion in American Rescue Plan Act money they need to obligate by the end of 2024. Baker sought to spend the entire pot in an economic development bill, and representatives on the Economic Development Committee voted last month to strip out all federal dollars and advance legislation focused only on borrowing.
Mariano, who previously said the two Ways and Means chairs are already negotiating how to spend both surplus and ARPA funds, did not say Thursday if he planned to bring forward a bill using those federal funds by the end of the session.
"We have a lot of surplus. We have some surplus monies and I think we'll use them as effectively as we can," he said. "It's going to be very difficult to sit here and say what's going to be ARPA and what's going to be surplus."
Beacon Hill for months has faced calls from across the political spectrum to put surplus tax dollars and unspent federal relief funds to work.
Baker, a Republican, filed a $700 million package of tax reforms in January that would offer breaks to renters, seniors and low-income earners and overhaul the state's capital gains and estate taxes. The Revenue Committee last week advanced a slightly slimmer version without any capital gains tax changes, though the bill could evolve before the House and Senate take it up.
Asked for comment on the new proposal from top Democrats, a Baker spokesperson referenced his plan instead.
"Governor Baker and Lt. Governor Polito filed a $700 million tax relief plan in January to give the people of Massachusetts a break from rising costs but more importantly, the governor's plan makes these tax cuts permanent," said Baker deputy communications director Anisha Chakrabarti. "Cutting these taxes is the only way to deliver a real break to the seniors, renters, low income workers and parents who more than deserve it. The Administration will carefully review any tax relief proposal the Legislature sends to the Governor's desk."
Mariano said he expects "people are going to be upset no matter what we do."
"If we gave all the money back, they'd be complaining that we didn't do enough for roads and education," Mariano said. "It's a balance, and we've tried to listen to the complaints. Having the surplus allows us some freedom to do a rebate system like this that we think puts money into the pockets of the folks who are being adversely impacted by the inflation rate, by the gas pump."
His prediction about complaints came true within hours.
The right-leaning Massachusetts Fiscal Alliance, which has repeatedly called for lawmakers to suspend the state's gas tax, quickly slammed the rebate proposal as "a poorly thought-out gimmick being done right before the election simply to score points with voters."
"Meaningful relief should be broad based and focused on lowering taxes on the people they most effect (sic). Picking winners and losers through arbitrary brackets, as well as penalizing married couples more likely to have families depending on them, is a poor way for our out of touch legislature to show solidarity with the privations their ill-conceived economic policies are currently forcing Massachusetts families to contend with," MassFiscal spokesman Paul Craney said in a statement. "The Speaker and the Senate President need to go back to the drawing board, but if this is the best plan they can come up with it should be rejected."
Rep. Brad Jones, the House's top Republican, took a less critical tone, though he said he "only learned of the proposal today after seeing details in the media."
"I appreciate this first step towards providing modest one-time relief in recognition of the difficult financial times high inflation is causing far too many of our state's citizens," Jones said in a statement. "I hope we can also find ways of providing permanent and meaningful tax relief to taxpayers in the days ahead as we race towards the end of our formal sessions. The tremendous surplus we are enjoying needs to be shared with the hardworking citizens of the Commonwealth."