It took 20 years of tiny decreases — but now Massachusetts is just days away from a 5% income tax. What will you do with the little bit of extra money in your pocket in 2020?
The vintage measure didn't come by way of lawmakers in the traditional sense.
Matt Murphy joins us from the State House News Service to talk through how we got here — and what's in store in state politics and government.
Carrie Healy, NEPR: Policies don't usually take this long to enact. How did we get here?
Matt Murphy, State House News Service: They don't usually take 20 years after a law is passed. But this was not your traditional law.
This was approved by the voters way back in 2000. They voted for a 5% income tax rate, which was a cut at the time. And we started on that path.
The income tax rates started to get phased in until 2002, when Speaker Tom Finneran and others got together and decided to freeze the schedule for lowering that. And they implemented some economic triggers — that if the state's economy was doing well, revenues were coming in sufficiently to fund state government services, and they hit certain benchmarks — then the income tax rate would slowly tick down. Which is why we took so long to get here today.
But with the income tax rate currently 5.05%, and the economy still humming along in this boom periodthat we've been in for quite some time now, we are on pace. The administration has certified the last final decrease, and we will be at 5% starting in January.
Lawmakers are always looking for more revenue. So now we have this 20-year-old effort played out. Will we see a push to increase the income tax rate?
I don't think you're going to see that, at least not right away. The only tax debate that we're looking at right now seems to be one focused on transportation.
And the speaker has been clear that he wants that money to come from transportation sources, which is why we've been talking a lot about the gas tax, and Uber and Lyft ride fees, and other things.
The buzz phrase that they've been using is "for transportation from transportation." So I don't think you're going to see them dip back into the income tax well, just yet.
But if 5% — you know, it is relatively a low, flat rate, compared to other states in the Northeast. You could eventually see them look to that for additional revenue if it's needed.
When lawmakers return in 2020, they won't have too long to tackle some big issues before their attention will turn to the election season. From your vantage point, what should we look for in the coming months?
Some big pieces certainly got done in the first year of this two-year session.
Education, of course, comes to mind, but there are still some major initiatives and policies that the leadership here on Beacon Hill — from the speaker to the Senate president to the governor — put on the table that is still hanging out there.
Housing comes to mind. We saw the speaker and the housing committee advance a slew of legislation just last week, including the governor's bill, which would make it easier for local cities and towns to ease zoning restrictions to encourage more housing development. But where that goes from here, we're not quite sure. It's gotten this far before and it's stalled out. But housing is a big issue.
We're watching the sports-betting front, and climate change will be a big issue. The governor is pursuing this — a regional pact to drive down carbon emissions from vehicles — while the speaker, the governor and others are talking about finding a way to infuse climate-resiliency programs, building structures and things to ward off the effects of climate change with $1 billion or more.
These will all be up for debate in the new year.
