Massachusetts must try to compete with New Hampshire and Florida
Recently the Massachusetts Fiscal Alliance (MassFiscal) announced the launch of their second grassroots advocacy campaign of the year, which is aimed at influencing Beacon Hill to support broad-based tax cuts and eliminations this legislative session. The campaign will run on social media pages and urge constituents to contact their lawmakers and Governor Maura Healey.
While a candidate for Governor, Healey repeatedly promised to cut taxes as her way to help voters deal with inflation and the high cost of living and doing business in Massachusetts. The November Election also saw the narrow passage of Question 1, which increased the state income tax rate by 80 percent on some small businesses, home sales, retirees and high-income earners. Governor Healey announced this week that her tax cut plan includes a reduction in the state’s short-term capital gains tax rate and easing the harm of the estate tax. While these measures would be beneficial, they are not enough to undo the damage of Question 1 or help us to compete with states like New Hampshire and Florida.
Reportedly, the Commonwealth’ economic competitiveness has declined due to Question 1’s passage. Massachusetts tax collections were 5 percent lower in January 2023 than in January 2022, and Massachusetts has lost over 100,000 residents and small businesses since the beginning of the pandemic. Those reports show that the taxpayer-friendly states of Florida and New Hampshire were the top destinations to which Massachusetts residents were escaping. Beacon Hill politicians must compare Massachusetts tax policies to those of states like Florida and New Hampshire if Massachusetts ever wants to be economically competitive.
The Tax Foundation, a nonpartisan, nonprofit tax organization in Washington, D.C., warned Massachusetts that after the passage of Question 1, our economy and competitiveness will suffer unless significant tax reductions and eliminations are made. The Tax Foundation warned, “Massachusetts’ tax competitiveness is expected to fall from 34th to 46th in 2023, there is little reason to believe that trend will slow down – especially as New Hampshire continues to phase out its tax on interest and dividends by 2027.”
The Tax Foundation urged Beacon Hill to cut broad-based taxes and eliminate other taxes, to benefit all taxpayers and not just specific groups. To read their warning, please click here: https://taxfoundation.org/question-1-massachusetts-millionaires-tax/
“It’s always welcomed news to see Beacon Hill politicians embrace tax reductions as a way to grow the economy. However, now is not the time for modest reforms. Our state lost over 100,000 residents and small businesses since the beginning of the pandemic and we are among the least competitive states in the entire county,” stated MassFiscal Spokesperson/Board Member Paul Diego Craney.
“If the goal is to undo the damage associated with the narrow passage of Question 1 or to be competitive with states like New Hampshire and Florida, the top two destinations for where Massachusetts residents fled, these modest measures will not be enough. If Massachusetts wants to compete with New Hampshire and Florida, it’s worth remembering that these states don’t even have a state income tax or an estate tax,” continued Craney.
“The Governor made a promise during the campaign and as Governor, she needs to deliver on those promises. The only way to contend with the most economically competitive states in the county is for Beacon Hill politicians to cut the state income tax rate for everyone, reduce the capital gains tax, reduce the corporate tax rate, eliminate the estate and inventory tax, and make it so municipalities have the resources they need to cut local property taxes. MassFiscal will be urging constituents to contact Beacon Hill politicians and ask them to put forward broad tax cuts and eliminations in order to compete with other states like New Hampshire and Florida,” continued Craney.
“MassFiscal appreciates any reduction in taxes proposed by Beacon Hill politicians, however, now is not the time for modesty. The reality is the pandemic changed the landscape and Massachusetts cannot afford to lose another 100,000 residents and small businesses. Bold, broad based tax cuts and eliminations must be adopted otherwise the revived moniker ‘Taxachusetts’ will stick to our state for a long time,” concluded Craney.