State Auditor Suzanne Bump her office determined that $2.94 in state tax revenue must go back to taxpayers.
It seems that Massachusetts taxpayers will be getting $2.94 billion back from the state thanks to an obscure 1986 law that limits how much money can be held in the state’s coffers, The Boston Globe reported.
State Auditor Suzanne M. Bump said Thursday that her office certified that the state is required to return the money to taxpayers.
The voter-passed measure is meant to limit state tax revenue growth to the growth of wages, but many important details about how this money will be returned are unclear.
Taxpayers are still in the dark about how, when, and who will receive the money, as well as how much money they receive.
The Globe reported that Gov. Charlie Baker’s office said it would share more details about the cash return soon, and that he told reporters before the announcement that he wants to get the money out to people “sometime this fall.”
“Given the difficulties associated with inflation, which continues to rage, we would like to get that money back to people sooner rather than later,” Baker said.
The state reached a nearly $5 billion surplus this year when the fiscal year ended in June after receiving nearly over 20% more tax revenue than it did the prior year.
Baker’s aides confirmed to the Globe that even with the revenue return, the state would have about $2 billion in surplus dollars in its bank account.
The 1986 law was triggered once before in 1987 when state coffers exceeded the allowed amount by $29.2 million, according to a previous report from Bump’s office.
In response, the state added a line to the 1987 individual income tax return form where taxpayers could “insert his or her individually calculated share.” The state ended up allocating $16.8 million of the revenue in credits and leaving nearly $12.4 million unclaimed.
“Our tax cap was intended as an automatic release valve for when revenue surpluses reach an unnecessary level, especially such an extraordinary level as recently,” Chip Ford, executive director of Citizens for Limited Taxation, which helped pass the original ballot initiative, told the Globe. “It was meant as a check on unlimited taxation and unsustainable spending.”
Baker suggested in July that the money could be distributed via tax rebates, in the form of a direct payment instead of a credit which would effectively discount what residents pay in taxes.
But it’s unclear whether the governor’s office has the power to do that.
Kurt Wise, a senior policy analyst at the Massachusetts Budget and Policy Center, told the Globe that the law clearly calls the refund a “tax credit,” placing a limit on how this money can be returned. He also pointed to the fact that Bump called it a “form of a credit” in her announcement.
But, the law also says that the state revenue commissioner will create the rules for implementing the law, which Dept. of Revenue advisory council member Leanne Scott told the Globe could allow Baker’s administration more options.
The law states that any credit must be issued on a “proportional basis.” The Baker administration said previously that more than three million taxpayers could get back about 7% of the income taxes they paid in 2021, the Globe reported.
But some lawmakers say such a distribution would be regressive, as the people who pay the most in taxes, i.e., the wealthiest, would gain the most from this revenue return, the Globe reported.
Cambridge Democratic Rep. Mike Connolly, has said he would like to see the amount of revenue returned to high-income earners limited so that a greater share of the money goes to middle- and low-income earners, especially when inflation is hitting these groups harder, the Globe reported.
“I certainly don’t think that someone like Patriots owner Bob Kraft should be getting back tens of thousands of dollars when someone working at minimum wage would only see a minuscule return,” he said.
Stay up to date on all the latest news from Boston.com
Denial of responsibility! Planetcirculate is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.