In The News

The House and Senate versions of the roughly $41 billion spending plan have similar bottom lines. But an analysis by the Massachusetts Taxpayers Foundation finds about $500 million in differences in how the money should be spent.

Capital gains taxes are assessed on investment gains and analysts have tied some portion of the spike in taxes to impacts of the new federal tax law. The Massachusetts Taxpayers Foundation this week cautioned that a surge in sales of capital assets is temporary and can't be counted on for ongoing revenue.

In a report released Tuesday, the Massachusetts Taxpayers Foundation (MTF) said revenue assumptions in the House and Senate budgets are similar, but there are “significant spending discrepancies between the two budgets.” If negotiators combined all new revenue sources from each budget, it would boost revenue by no more than $40 million — or about $228 million shy of the amount that would be needed to support all House and Senate spending priorities, MTF said.

“It’s a great development,” said Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation. “We need to replenish the stabilization fund because it will provide the cushion we need for the next economic downturn,” she said, using the formal name for the rainy day account.

According to a Massachusetts Taxpayers Foundation analysis, the two budgets are relatively similar in terms of revenue, although the Senate counts on getting money from taxing Airbnb and other short-term room rentals and also on taking money out of a horse racing fund, which the House does not.

“The income surtax petition has raised legal, fiscal and economic concerns for the Massachusetts Taxpayers Foundation,” said Eileen McAnneny, the group’s president. While the high court’s ruling addressed the legal concerns, she said, “the fiscal and economic ones remain as does our apprehension of embedding a tax in the constitution. Given that our infrastructure continues to deteriorate, waiting another 4 years to have the legislature amend the constitution as Senator Lewis proposes is not the best path forward.” Instead, she said, the difficult conversations about how to comprehensively address the needs of the state in a way that helps rather than hinders the economy should begin right now.

Those governments are now expected to swiftly start forcing online vendors to collect taxes. The Department of Revenue downplayed Thursday the potential impact on state revenues, but Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, said the additional tax collections now could reach “potentially in the hundreds of millions.”

‘Logrolling’ Argument: Representatives for the business groups—Associated Industries of Massachusetts, the Massachusetts High Technology Council, the Massachusetts Taxpayers Foundation, the National Federation of Independent Businesses, and the Massachusetts Competitive Partnership—had argued that the amendment paired an unpopular provision (the graduated income tax) with two popular ones (funding for education and transportation), a practice known as logrolling.

“We are not opposed to all taxes,” added Eileen McAnneny, president of the Massachusetts Taxpayers Foundation and whose group was a plaintiff in the SJC case. “In fact, we have supported new revenue for transportation and we will likely do so again.” But if Beacon Hill is going to raise taxes, McAnneny said lawmakers have got to build voter support and show why more money is necessary. “It’s never an easy task,” said McAnneny. “You have to lay the ground work.”

The Massachusetts Taxpayers Foundation was one of five plaintiffs that challenged the ballot initiative, finding it "unconstitutional." President of the Massachusetts Taxpayers Foundation, Eileen McAnneny, told 22News, "It went far beyond the policy question of whether we should raise taxes on a subset of taxpayers. We opposed that for a number of reasons, but this question was not about that."