Analysis: Was the Tax Bill Quest the Last Gasp of Bakerism?…
BOSTON—Nearly ten months into her administration, amid the strain of supporting migrants and an ever-imploding transit system, Governor Maura Healey finally got a major legislative win. Before legislators, advocates and state officials, she signed a tax cut bill, with a value of upwards of $1 billion, to great acclaim.
Well, not from everyone. The bill, whose roots predate her election last year, has attracted savage critiques from the left. The full span of these complaints vary in accuracy and relevance, but they do channel a deeper concern that Massachusetts is not moving on from Healey’s predecessor: Charlie Baker.
While tax cuts themselves need not inherently identify with right or left nor neoliberalism, the (false) occupation with Massachusetts as a high-tax hellhole arises from the commonwealth’s right. This package has its origins with the last governor. To that end, it fits into Bakerism, a personalist form of austere visions of government doing more (read: less) with less, which rose in the 80’s and 90’s.
The final product diverted enough from Baker’s proposal to doubt this bill would have earned his unqualified support. But on a rhetorical basis, critics could charge that the ethos underpinning Bakerism, has yet to be fully shunted out the door.
“Tax cuts are here in Massachusetts, they are here for everyone and they are going to save you money,” Healey said at the bill signing.
Speaking in the dignified, almost restrained milieu of the State House library, Healey quickly pivoted to note the child and dependent care credit was the nation’s most generous. Lieutenant Governor Kim Driscoll highlighted incentives to build housing—something legislators from Gateway Cities note are all but a prerequisite for any housing development.
It contains many features for parents, caregivers and seniors on fixed incomes. The benefit to tax credit to caregivers alone is $310 million annually once fully implemented.
The most Bakerist and most condemned features benefit the wealthy, though. Previously, estates valued at a million or more were subject to tax. It was also a cliff tax, meaning qualifying estates paid taxes on the whole value, not just that over a million. Now, it will apply only to each dollar over $2 million of an estate’s value. Short-term capital gains taxes also fell. Corporate tax calculations changed, too, resulting in modest net savings.
In a statement, a spokesperson for Healey rejected the idea that the bill was a giveaway to the well-off.
“The tax cuts signed into law by Governor Healey will make Massachusetts more affordable, competitive and equitable, and they are for everybody. Parents, caregivers, seniors, renters, homeowners and businesses will all save under this package of tax cuts, with more than half of the relief reflected in the creation of the most generous child and family tax credit in the country, tax breaks for renters and seniors to stay in their homes, incentives to develop affordable housing and breaks for dairy farmers, cider makers and others,” the spokesperson said in a statement. “Our businesses that employ residents in all corners of the state will also save, and that makes our economy and our state stronger.”
The bill also changes Chapter 62F to make any disbursements more equal and less contingent on taxes paid. When high revenues last year triggered 62F and required refunds to residents, Baker was able to throw money at residents like a billionaire in a Zeppelin, if not totally legally. The law, as previously written, allowed Baker to gift the greatest boon to the wealthy. But inflation and other gyrations in revenue which triggered 62F do not look likely to reoccur soon.
Furthermore, the law limits how much wealthy couples can dodge the Fair Share amendment. The state constitutional amendment, which passed last year, taxes income over $1 million four percent to fund education and transportation.
Perhaps a bigger concern is the tax cut, whomever it benefits, wipes out Fair Share amendment revenue. In January, the Department of Revenue estimated that in the first full fiscal year Fair Share exists—the one that began this past July 1—the surtax will yield between $1.455 billion and $1.766 billion. That means that even when fully implemented the tax cut bill does not exceed current Fair Share projections.
The constitutional amendment requires funds only go toward education and transportation. Yet, there is no way to ensure it never backfills reductions in preexisting education and transportation spending.
Spokespersons for Senate President Karen Spilka and Healey did not comment on whether net spending on education and transportation has increased under the budget. However, the FY2024 budget directs Fair Share funds into a special account. It also created a process for determining how to use it.
Legislators also seem to be under the impression there has been no net reduction in education and transportation funding in the budget funded outside of Fair Share. The tax bill is a spending choice, electeds and the administration insist, but not something competing with Fair Share or its intent.
The tax bill passed with only two no votes between both legislative chambers. Advocates feting the provisions for children and seniors undercuts the perception the bill is a monocle and top hat party.
While the mere emphasis on tax breaks on Beacon Hill may be neoliberalish, Bakerist sensibilities were palpable outside the State House, too. Both do-gooders and the rich themselves have wrung their hands raw about rising costs. Of course, this is largely due to housing scarcity not [scare quotes] “Taxachusetts.” Tax relief was the way to go, averred elite voices such as The Boston Globe, in both its news and its opinion pages.
Baker opposed Fair Share, but most suspected it would pass. Amid last year’s inflation, they sought to get ahead of its impact by lessening tax burdens. Baker’s original proposal last year reflected this. The legislature ostensibly acquiesced. The project only ran aground when 62F was triggered, turning over billions to residents in a one-time, fiscally incontinent deluge.
Yet, the legislature never said “No.” It said “Not now.” Healey promised to revive the bill and decided to keep that commitment. It took 10 months, consuming Beacon Hill’s already diminished attention span. When it finally passed, elites, personified in The Globe joyously praised the arrival of widespread tax cuts. It lamented that nothing like this had come in 20 years and only at voter insistence.
Of course, that tax cut would prove imprudent, if subtly. The decline of state function since is the proof. Smart, targeted tax policy can be good—even if American electeds generally rely too much on tax expenditures—but the presumption that any cut is good and bereft of consequence is itself bad.
Compare this to Connecticut’s recent dalliance with tax cuts. The Nutmeg State had to enact heavy, broad tax hikes to make it through the Great Recession and address a monstrous pension deficit. With better times afoot, some relief may be in order. Tax relief is a sign of improvement, not an inherit virtue. To be fair, such cavalier attitudes differ from the tour Healey is beginning to highlight her bill’s virtues.
Bakerism in Massachusetts extends beyond revenue and tax policy. On other fronts, it is dying a slow, if quiet death under Healey. The administration has stopped trying to sell everything that wasn’t nailed down. The commonwealth has the money to rebuild some of its depleted workforce. While transparency at the Massachusetts Bay Transportation Authority could improve, knee-jerk public relations stunts appear to be gone. The demand to do more with less feels to prevail, well, less.
But the damage to the ship of state runs deep. Fixing it will take more than one gubernatorial term. Ultimately the ambition for government as a force for good must return. Though then-Governor Michael Dukakis presided over some renaissance of this ambition, the die was cast with the tax revolts, Bay State Reaganism, and a string of Republican governors since 1980. The legislature resisted until it didn’t, save health care reform with Mitt Romney of all people.
When Deval Patrick was governor, personality clashes and then the Great Recession buried the legislature’s appetite for reinvention and revival. After him came the deliberate long winter of performative good government papering over accelerating institutional rot.
Back at the State House Library, there is reason to celebrate. There are millions going to commuters and renters, if in modest amounts, and a boon for caregivers. The tightening of 62F and closing a loophole on millionaire couples are modest progress. But these two issues date back to ballot questions, speaking to something deeper in Massachusetts politics.
Beacon Hill hems itself in on revenue thanks to now-ancient ballot questions. Meanwhile, only voters have the intestinal fortitude to damn the Massachusetts High Technology Council’s torpedoes and raise taxes broadly. This is not a tenable situation nor is it an inevitable one.
On so much, Massachusetts does lead. The commonwealth is not alone in atrophying government. Still, the reach of its politics should exceed the sickly grasp of recent decades. If it did, alongside fellow New England states, we could model a new era of effective government.