BOSTON — Rep. Donald Wong (R-Saugus) and members of the House Republican Caucus voted across party lines to support a sweeping $1.1 billion tax relief package put forward by House Democratic leaders.
House Bill 3770, “An Act to improve the Commonwealth’s competitiveness, affordability, and equity,” was engrossed by the House of Representatives by a vote of 150-3 last week. The wide-ranging bill consists of a series of tax relief provisions that would double the Senior Circuit Breaker tax credit, increase the rental tax deduction, reform the estate tax, provide a higher state match on the federal Earned Income Tax Credit, and phase in a reduction in the short-term capital gains tax over two years.
The approved bill is similar to a proposal floated by Gov. Maura Healey, who pitched a $742 million tax relief package in February.
The bill calls for changes to the voter-approved Chapter 62F law, which was passed in 1986 but has only been triggered twice in the last 37 years, first in 1987 and again in 2022. Chapter 62F ensures that excess tax revenues are returned to the state’s taxpayers whenever revenue collections in a fiscal year exceed an annual cap tied to wage and salary growth, which resulted in nearly $3 billion in excess revenues being returned to taxpayers last year in the form of a rebate.
Wong and other members of the Republican Caucus sought to eliminate that provision of the proposal, putting forward an amendment that ultimately failed by a vote of 26-128.
Wong, in a statement, said that under the current Chapter 62F law, the amount of money returned to taxpayers corresponds to a percentage of their individual tax liability. The proposal includes language that proposes any future 62F payouts instead be distributed to all taxpayers in an equal amount, regardless of their income or tax liability.
Wong said he remains strongly opposed to making any changes to the voter-approved law, but acknowledged that the proposed changes will likely result in more lower- and middle-class taxpayers receiving a larger 62F refund than they did last year, if and when the law is triggered again in the future.
Despite his opposition to the proposed changes to Chapter 62F, Wong ultimately voted to support the bill, citing the benefits of the tax relief it would provide to both residents and business owners. The relief would be phased in over the course of three years.
The proposal now moves to the Senate, where legislators will again have the opportunity to scrutinize it and propose amendments, before sending it to Gov. Maura Healey to sign into law. Wong and the rest of the Republican Caucus said they will petition Healey to veto the provisions of the bill that amend the Chapter 62F law.
Specifically, the bill would double the Senior Circuit Breaker tax credit from $1,200 to $2,400, increase the tax deduction available to renters from $3,000 to $4,000, and lower the tax on short-term capital gains from 12 percent to 8 percent in the first year of implementation and then to 5 percent in year two.
The bill would also raise the estate tax threshold from $1 million to $2 million, and eliminate the “cliff effect” by making the tax applicable only to the value of the estate that exceeds $2 million.
The proposal seeks to reduce corporate excise taxes for companies that operate in more than one state by assessing the tax using a single sales factor, rather than the current assessment that is based on in-state sales, local payroll, and property holdings; expand the state match on the federal Earned Income Tax Credit from 30 percent to 40 percent; and provide for a combined child care and dependent care tax credit totaling $310 per dependent in the first year, $455 in the second year, and $600 beginning in the third year, while also eliminating the current cap on the tax credit.
