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Massachusetts House questions Senate numbers in proposed tax relief package

The Massachusetts Statehouse.
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House Democrats negotiating Beacon Hill's long-awaited tax relief package are seeking information from the Healey administration on how much the Senate's bill could ultimately cost, including an amendment that could pump hundreds of millions of dollars in additional surtax revenues into state coffers.

Hours after pressing for urgency to finalize a deal at the start of conference committee deliberations Monday, House Ways and Means Chairman Aaron Michlewitz and Rep. Mark Cusack, the House chair of the Joint Committee on Revenue, sent a letter to Department of Revenue Commissioner Geoffrey Snyder asking him to calculate the "fiscal impact" of a bevy of relief measures in both branches' bills. The information is "essential," they wrote, to advance tax relief negotiations.

Cusack, in an interview with the News Service, said the thrust behind the letter is to pinpoint a dollar figure for new tax policies that lack a "measure" for now — namely an amendment from Sen. Jason Lewis, a primary backer of the income surtax, that would require married couples who file a joint federal income tax return to file a joint state tax return. Senators adopted the amendment in a 33-5 vote earlier this month.

The new surtax applies to all income exceeding $1 million. But a married couple earning more than $1 million could file jointly at the federal level while opting to file separately at the state level in what critics say is a tax avoidance strategy.

The approach from high-income households could cost Massachusetts between $200 million and $600 million, the Massachusetts Budget and Policy Center says.

The Lewis amendment represents a "major change" that would affect over 90,000 taxpayers, Cusack said.

"We're looking for hard numbers or as close to numbers we can get on that because we don't want to rely on outside interest groups who play fast and loose with the facts that we've seen," Cusack said. "You can't dismiss it as a small thing or a loophole to close."

As state officials wait to see the full impact of the surtax, Cusack said House conferees want to be responsible to voters — who approved the tax in November — by ensuring they have the "best information and the most up-to-date information" for the committee.

The two-page letter to Snyder contains an extensive list of Senate tax relief measures to be evaluated. Michlewitz and Cusack are seeking costs tied to the Housing Development Incentive Program tax credit, student loan payment assistance, dairy farmer tax credit, cider tax, commuter deduction, rental deduction, child and dependent tax credit, senior circuit breaker, estate tax, earned income tax credit, and low-income housing tax credit, among others.

On the House side, they want Snyder to calculate the financial impact of relief policies tied to rental deduction, capital gains, earned income tax credit, senior circuit breaker, child and dependent tax credit, single sales factor apportionment and the estate tax, according to the letter.

"This information will ensure the conferees will be able (to) assess the fiscal impact of each policy while balancing the current economic climate, the cost, and the ability to achieve a more competitive, affordable, and equitable commonwealth," the letter, which was shared with the News Service, said. "We understand your department is extremely busy at this time, but we ask that you please prioritize assessing the fiscal impact of the bills to ensure that the conference committee can move forward with these time sensitive negotiations as quickly as possible."

After nearing agreement on tax relief last session, lawmakers nixed their plans as they grappled with unexpectedly needing to return nearly $3 billion to taxpayers under Chapter 62F. But on Monday, Michlewitz urged his colleagues to get this bill over the finish line to ensure their work to maintain a steady fiscal climate in recent years doesn't "go to waste."

Cusack told the News Service he's confident that Snyder will respond quickly.

"We're confident the Healey administration wants the tax package done, too," Cusack said. "Step one here is to make sure we have all the numbers in front of us as we begin negotiating."

DOR is slated to review the letter Tuesday morning and then provide an update to Michlewitz and Cusack, a spokesperson said.

Sending a finalized bill to Gov. Maura Healey's desk this summer is "absolutely the target," Cusack said.

House and Senate Democrats are also working behind closed doors on a final fiscal 2024 budget for the fiscal year that begins July 1. On Monday, Acting Gov. Kim Driscoll signed a $6.66 billion interim budget that will enable budget talks to stretch into July without affecting state services.

The Senate approved its nearly $590 million tax relief package on June 15, just slightly above the $575 million placeholder from the chamber's fiscal 2024 budget. Cusack said House members took time to review the bill before sending their letter to Snyder on Monday.

"At the end of the day, you want to say, how is their bill actually balanced?" said Cusack, as he broadly referenced Senate amendments that altered the bill's bottom line. "I don't know that $575 (million) is still the right number."

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