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MA House Rejects Higher Taxes on Wealthy


Wednesday, November 11, 2020   

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.

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