Amid some very concerning trends on outmigration — more than 110,000 people have left the Bay State for … well, somewhere else since early 2020 — Massachusetts House leaders have unveiled a tax-relief plan they believe will improve the state’s overall competitiveness.
The plan, which echoes much of what Gov. Maura Healey proposed in her own tax plan, would, among other things:
• Raise the estate-tax threshold from $1 million to $2 million and tax only the value of an estate that exceeds $2 million, and not the entire estate, as the law currently requires;
• Cut the rate on short-term capital gains from 12% to 5% in two years. During the first year, short-term capital gains would be taxed at 8%;
• Change how state corporate taxes are calculated to what is known as the ‘single sales factor,’ to line up with how most states tax companies now;
• Expand tax credits for seniors and renters; and
• Combine two existing tax credits — childcare and dependent care — to create one $600 credit per dependent, while eliminating the current cap.
The Senate has yet to release its tax plan, and there will be considerable debate before one plan — if there is one — eventually emerges.
But the House plan is cause for optimism in the Bay State. It shows that the chamber’s leaders get it when it comes to outmigration and the many ways in which this ongoing exodus is impacting the state and its business community.
This plan recognizes the need for Massachusetts to be able to compete for talent and then retain it, whether the employer is MassMutual, the University of Massachusetts, or even the New England Patriots.
The outmigration, as we’ve noted many times before, is a strong indicator that this state has become too expensive, both for individuals and the corporations that hire them.
There are many factors that go into this equation, including the skyrocketing cost of living, especiallly when it comes to housing. This is a problem that was many years in the making, and it will take many more years, and strong efforts to create more housing worthy of that adjective ‘affordable,’ before we can see any kind of relief.
But there are things this state can and should do now, such as raising the estate-tax threshold and cutting the rates on short-term capital gains, that can have more immediate results when it comes to making the state more competitive.
It is time to stem the tide, and this proposal is a step in that direction.