A group of progressive lawmakers is pushing legislation to limit what taxpayers could receive under a round of automatic state tax refunds slated to start going out next month, arguing the disparity between what the state’s top earners and some of its poorest could receive is “unconscionable.”
The bill, filed by state Representative Mike Connolly, would limit refunds to $6,500 and redistribute any excess someone would have received over that amount equally among other taxpayers. The goal, Connolly said, is to cap what those making $1 million would receive and ensure others receive more, through an unprecedented return of money under a 1980s-era law.
The Baker administration last month said it planned to begin sending millions of taxpayers their share of a $3 billion refund starting in November after a windfall of tax collections triggered a 1986 tax-cap law for just the second time in nearly four decades.
The law, known as Chapter 62F, is intended to limit state tax revenue growth to the growth of total wages and salaries and return any excess to taxpayers. State Auditor Suzanne Bump’s office in mid-September certified that number as $2.94 billion, and Governor Charlie Baker’s office the next day estimated that eligible taxpayers will get back about 13 percent of their personal state income tax liability from tax year 2021 — nearly double what officials had initially projected in July.
To be eligible, taxpayers must have filed a 2021 state tax return by Oct. 17. State officials said someone’s refund could be reduced if they have unpaid taxes, unpaid child support, or other debts.
Some of the state’s highest earners stand to be among those who benefit most. The law stipulates that any credit is applied on a “proportional basis,” meaning the more someone owed in income taxes, the higher the refund they’re due.
Connolly’s bill, which as of Wednesday had four co-sponsors, would ensure the state would “craft better economic policy” while also honoring that taxpayers are legally due the money, the Cambridge Democrat wrote in a blog post.
The Legislature’s Democratic leaders, however, have not signaled they have any appetite for changing the law just weeks before the money is due to be returned. House Speaker Ronald Mariano last month applauded Baker for having “quickly laid out plans to distribute the money back to taxpayers” and suggested he would not seek changes that could impact it.
“I look forward to see its implementation,” the Quincy Democrat said then.
Connolly wrote that nearly one-quarter of the excess is slated to go to taxpayers who earned more than $1 million in income in 2021. He also cited research from the left-leaning Massachusetts Budget & Policy Center, which said households making at least $1 million — and an average income of nearly $3.7 million — stand to receive more than $22,000. Meanwhile, the bottom 20 percent of the state’s earners average $67 in income taxes, meaning they stand to receive roughly $9 on average, according to the think tank.
Connolly called his proposal a “modest” way to reshape how the money is distributed that “does significantly more for a lot more of our constituents.”
“Several of my constituents have suggested they would rather see us direct the 62F money toward fixing the MBTA and addressing the housing crisis. Others have suggested we should scrap the law altogether,” Connolly wrote. “While I can agree with each of these sentiments, I also recognize the Auditor has certified the $2.9 billion excess and the Governor has created an expectation for advance refund checks for the current tax year.”