work polo shirts Is the new federal tax law a good thing for Massachusetts
GOP lawmakers in DC and some local candidates are praising the law, while Democrats in states like New York, New Jersey and California are sounding the alarm and talking about restructuring their tax codes. According to the Associated Press, in Massachusetts, New Jersey, New York and California, the average state and local tax deduction on federal taxes is $15,000.
New York Gov. Andrew Cuomo, a Democrat, reportedly raised the possibility of shifting to a reliance on payroll taxes instead of state income taxes as a way to fight the federal tax changes.
A Baker spokesperson recently told MassLive the administration has no plans to include a significant tax code change in its upcoming state budget proposal. The spokesperson added that the other states talking of restructuring their tax codes have a set up that differs from the Bay State’s tax structure.
On Tuesday, Baker, a Republican, noted that the energy company Eversource is seeing tax savings under the new law and passing a rate break to customers. The company’s move came after Massachusetts Atorney General Maura Healey called on them to recalculate their planned electric rate hike, given their expected tax savings.
“I think it’s terrific that people have more dollars in their pockets. I think that’s a good thing,” Baker said. “But as is often the case with really complicated issues like this, the full impact of it’s not going to be known ’til you get several years down the road from that.”
Federal tax overhaul could lead to changes in some states, including New York
The Massachusetts Taxpayers Foundation, a business backed group, said the new federal law could bring “short term” benefits to the state and an increase in economic activity, but the long term revenue impact is “largely negative.”
The group, in an analysis released earlier this week, said the $10,000 cap on state and local tax deductions will make the state’s “tax burden much less competitive compared to many other states.”
When state and local tax deductions were uncapped, Bay State residents were able to deduct $19 billion from gross income before federal taxes in 2015, according to the foundation.
“Limitations on that deduction will mean that the income and property tax burden in Massachusetts got much more expensive relative to lower tax jurisdictions and could make Massachusetts a less attractive place to work and live,” the foundation’s analysis says.
Massachusetts senators exploring changes to state tax law due to federal overhaul
“The plan will also negatively impact many institutions of higher learning as the federal plan would tax many college endowments which will increase costs for one of the largest sectors of the state economy,” the foundation added.
Massachusetts voters could get their own chance to change the state’s tax code in November 2018.
Two questions are headed toward the ballot: A question creating an income tax surcharge on earnings over $1 million and a question on rolling back the state sales tax to 5 percent, from 6.25 percent, and creating an annual sales tax holiday weekend.
For his part, the governor said one of his “biggest concerns” is that the new federal tax law, signed by President Donald Trump at the end of 2017, could cost the US Treasury around one trillion dollars and affect federal funding that gets funneled into Massachusetts.
“We’ve had lots of very difficult conversations with our colleagues in the federal government about their role and responsibility in financing a variety of shared responsibilities here in Massachusetts, health care being the biggest priority I can think of,” Baker told reporters.
“And it’s going to be very important to me the feds continue to hold up their end on the things associated with those commitments that they’ve made to the commonwealth and to the people of Massachusetts on the spending side,” he added.