House Speaker Ronald Mariano pledged not to raise taxes on Massachusetts residents this year, but the appetite to boost taxes on the wealthy remains on Beacon Hill, lawmakers say.
“Right now, taxes are not on the table. We have no intention of raising taxes,” the Quincy Democrat said Sunday on WCVB’s “On the Record.”
Tax revenues have so far outperformed economists’ expectations, but the speaker said he worried revenues would still come up “short” next year. January tax collections came in a half-billion over the Baker administration’s forecast, at $3.35 billion, according to the state Department of Revenue.
Rep. James O’Day, D-Worcester, said many sectors of the state’s economy are struggling and new revenue generated through a “millionaire’s tax” he has championed is needed now more than ever.
“Look at the stock market, look at Wall Street — they’re killing it while middle America, main street America is definitely hurting,” O’Day said. “Who knows what absolute costs of having our children out of schools over a year … or of the pandemic as a whole will be.”
The so-called “fair-share” constitutional amendment aims to place a question on the 2022 ballot that would impose a 4% surtax on income above $1 million from a flat 5% rate up to 9%. Lawmakers estimate it could generate an additional $2 billion in annual revenues.
The measure passed by wide margins in a constitutional convention last session and will need to pass again in the current session before going before voters in November 2022. O’Day said he plans to file the legislation by the upcoming Feb. 19 filing deadline. The amendment is required because the state’s constitution currently mandates income tax be applied evenly to all residents.
O’Day on Sunday told the Herald he doesn’t expect any “roadblocks.”
Mariano’s pledge to avoid raising taxes mirrors the commitment Gov. Charlie Baker made last month in his $45.6 billion fiscal 2022 budget.
But the question of raising taxes on the wealthy could still come before lawmakers this cycle in the form of a budget amendment.
Rep. Mike Connolly, D-Cambridge, during the last budget cycle proposed hiking the tax rate from 5% to 9% on unearned income such as dividends, long-term capital gains and interest through a budget amendment that ultimately failed. The measure would not require a constitutional amendment.
The Massachusetts Budget and Policy Center estimated the change would generate an extra $465 million a year, but opponents warn higher taxes could stifle the economy and drive high earners to move out of state.
It’s unclear if Connolly plans to refile the amendment in the upcoming cycle. He was not available for comment on Sunday.
The House Committee on Ways and Means is expected to unveil its fiscal 2022 budget in the coming days.
Mariano said he is watching the progress of President Biden’s $1.9 trillion coronavirus relief package “with a high degree of intensity.”
“I’m not optimistic that tax revenues are going to match even with some surprisingly robust returns. I’m still afraid we’re going to be a little short,” he said, indicating budget figures are likely to change as the fiscal year wears on.
The federal package includes billions for coronavirus testing, vaccinations and up to $350 billion in direct aid to state and local governments that have so far been left to fend for themselves amid the pandemic. Should the aid fall short, Mariano hinted at “further discussions,” around raising taxes.
The state previously received $2.7 billion from the federal CARES Act.
Baker’s budget as proposed would draw $1.6 billion from the state’s rainy day fund and cuts $300 million from current year spending. The governor’s spending plan also counts on $35 million in new revenue from yet-to-be legalized sports betting — something he said he plans to pursue in separate legislation.