BOSTON -- A proposal to tax the wealthiest residents of Massachusetts was defeated in the state House of Representatives on Tuesday during a budget debate.

Budget Amendment 675, from Rep. Mike Connolly, D-Cambridge, would have raised the tax rate from 5% to 9% on unearned income such as dividends, long-term capital gains and interest.

Kurt Wise, a senior policy analyst for the Massachusetts Budget and Policy Center, said the state's current tax structure is lopsided -- skewed to benefit the rich -- and, for now, looks like it will stay that way.

"We describe it as being 'upside down' -- that folks at the very top of the income distribution are paying a significantly smaller share than folks down at the bottom," he said. "So, we'd like to turn that tax system 'right side up.'"

The Massachusetts Taxpayers Foundation and other opponents argued that higher taxes could stifle the economy and drive high earners to move out of state.

The House will continue working through hundreds of other amendments to its $46 billion state budget. The state Senate version comes out on Thursday and will be debated next week.

Wise said each percentage-point increase in the tax rate on unearned income would have generated $465 million a year for the state during periods of strong growth.

"There are many, many things that we can do to create a prosperous and equitable Commonwealth, but we need to invest in those things," he said, "and investing in those things is going to require additional revenue."

Gov. Charlie Baker has said he doesn't want to raise taxes during a pandemic and has called on lawmakers to pass a budget by Thanksgiving.


get more stories like this via email

This month marks 160 years since the first Medal of Honor was awarded by President Abraham Lincoln. More than a dozen of the 65 recipients alive today are in Washington D.C. to discuss a planned Medal of Honor museum in Texas and monument in the nation's capital.

Patrick Brady, a Seattle native and retired army general received the medal for his service piloting an ambulance helicopter in the Vietnam War, rescuing U.S. and Vietnamese soldiers wounded in battle.

He was in Washington, D.C. this week advocating for a Medal of Honor monument.

"The purpose is not so much to glorify those who have received the medal, but rather to emphasize the values that are embedded in the medal: courage, sacrifice, patriotism - which, of course, are the pillars of American excellence," he said.

Brady said he and his crew were able to rescue about 5,000 people wounded during the war, including civilians. In 2021, Congress unanimously approved the Medal of Honor museum for Arlington, Texas, and a monument in D.C.

The museum is slated to open late next year. Brady said he and other Medal of Honor recipients tour the country speaking to students about courage, sacrifice and patriotism, but added there is only so much you can convey in a school setting.

"The museum may be the best schoolhouse for values that we have, and so in that museum, we will show not just what these people did in combat, the recipients, but more importantly what they did as civilians," Brady said.

Chris Cassidy, Head of the Medal of Honor Museum and Foundation, said the museum bridges political disconnects.

"There's lots of stuff right now that divide people," Cassidy said. "There's very few things that bring people together. And this project is something that unites people. And that's why we're so proud to be part of it."

In 160 years, fewer than 3,600 people have received the Medal of Honor, the nation's highest award for valor in combat.


get more stories like this via email

Like others across the country, many Missouri families struggle with the cost of child care, and state lawmakers are proposing some relief.

Rep. Hannah Kelly, R-Mountain Grove, serves Webster County, where the average child care cost for a family with two young children is more than $12,000 a year a year. Kelly has introduced legislation to create a state child care tax credit for parents who qualify for the federal child care tax credit. As with the federal credit, it requires having earned income.

Kelly pointed out no one who's paying attention to "everyday reality" can miss the fact young families are struggling.

"Nobody wants to give a handout, we only want to invest and give a hand up," Kelly stated. "This is money that people have earned, and we're putting it back in their pocket, once we can verify that they're making responsible choices, for their family and for their businesses."

Under House Bill 1335, individuals earning up to $75,000 a year and couples earning up to $150,000 would be eligible for a tax credit toward their child care expenses. The amount would be $1,800 for children up to age two, and $1,200 for kids ages three to six, for a maximum of two children per family.

Kelly added the credit is nontransferable and nonrefundable, features which can make tax credits more expensive. She explained her bill allows parents to choose their child care provider, who does not have to be licensed, but it does include limitations.

"You cannot have your spouse qualify as a day care provider," Kelly noted. "You can't have an older child qualify. It's all very tightly run; it's all very accountable."

Kelly stressed she supports the governor's child care tax credits included in House Bill 870, sponsored by Rep. Brenda Shields, R-St. Joseph.

The credits in Shields' bill would go to child care providers, corporations subsidizing their workers' child care expenses, and donors to child care centers, whereas the credits in Kelly's bill would go directly to families. Kelly feels combining the tax credits in both bills would benefit people "in every corner of the state."

The Iowa Legislature's powerful Ways and Means Committee has advanced a measure to eliminate the state income tax. The move is the latest in a series of votes to reduce taxes in Iowa.

Senate Study Bill 1126 would lower Iowa's income-tax rate to flat 2.5% in five years.

Then in 2030, the income tax would be eliminated completely. This comes just after Iowa passed a 3.9% flat tax last year.

Executive Director of nonprofit, nonpartisan Common Good Iowa Anne Discher said - given that the state income tax accounts for 50% of the Iowa's budget - eliminating it would decimate crucial public services.

"State aid to public schools is 43% of our state budget," said Discher. "We could entirely eliminate state aid for our entire public school system and it wouldn't be enough to cover the kind of income tax cuts that we're talking about. So, the kinds of service cuts really would be draconian."

Republicans have said this bill, and the flat tax signed into law last year, are designed to give Iowans broad tax relief and also make the state attractive to businesses that may be considering locating in Iowa.

Discher pointed out that Iowa is already facing a revenue shortfall due to last year's tax cut.

She added that eliminating the income tax revenue would affect mental health, safety and other social service programs in Iowa. But she warned that it could have other consequences, too.

"It is certainly a shot across the bow against racial equity, as well," said Discher. "We are further advantaging the wealthiest Iowans - further advantaging, as a group, white Iowans. Iowans of color are over-represented at the lower end of the income distribution, because of longstanding discrimination in housing, education and employment."

The bill moves next to the full Senate.