The state Senate rose to the occasion on Tuesday, unveiling a thoughtful response to Governor Baker’s budget. In its plan, the Senate’s Democratic leadership preserved one of the Republican governor’s most important proposals, a boost in the earned income tax credit for the working poor, while offering a credible alternative funding mechanism. The plan has ruffled feathers on Beacon Hill because the Senate isn’t supposed to propose tax-law changes; it’s only by exploiting a loophole that the Senate was able to do so. But the chamber and Senate President Stan Rosenberg deserve credit for taking up the governor’s challenge to help the working poor in a financially responsible way.
The earned income tax credit puts money back into the hands of filers with low incomes, and is. The credit is among the most effective ways to help poor families. In addition to the earned income tax credit, the Senate would also raise the personal exemption for all tax filers.
Rosenberg splits with Baker on the funding side of the ledger. To pay for the tax cut, Baker proposed eliminating the film tax credit, a program meant to encourage productions in Massachusetts that doled out $80 million last year. Killing the credit would not have paid for the entire plan, but would have been a start. The Senate, in its budget, would pay for the earned income tax credit increase by freezing the state income tax rate at 5.15 percent, rather than allowing it to continue falling to the 5 percent mandated by voters in a referendum. Senators emphasize that all filers’ taxes would still go down; thanks to the change in the personal exemption, it is only taxpayers with very high incomes who’ll feel the 0.05 percent difference.
Given the choice, it seems better to help the poor in Massachusetts at the expense of Hollywood rather than Wellesley. But the Senate has politics to consider, and it’s clear that House Speaker Robert DeLeo doesn’t want to touch the film tax credit. Baker and Rosenberg have now put forward reasonable plans to help the state’s working poor, adding momentum to an idea whose time has come.
Correction: An earlier version of this editorial incorrectly described one of the policy changes proposed by the state Senate. The bill would raise the personal exemption.