Healey Touts “Competitiveness” Angle In Budget, Tax Plan
Biz Leaders At Chamber Event Warm to Guv’s Proposals
BOSTON, MARCH 2, 2023…..Continuing a days-long pitch for her first annual budget and a major tax relief proposal, Gov. Maura Healey focused economic competitiveness and plans that have been unpopular among progressives while addressing more than 800 of greater Boston’s business leaders on Thursday.
“Our tax plan makes an effort to address competitiveness. Yes, I am a competitor. I hung it up a long time ago … but I remain a competitor and no one is going to compete harder as your governor than me, I promise you,” she said, referencing her time playing basketball, at an event organized by the Greater Boston Chamber of Commerce on Thursday morning.
Healey highlighted her proposed estate tax and short-term capital gains tax changes, policies that some Democrats and progressive activists oppose and view as giveaways to wealthier residents.
Currently, Massachusetts, Wisconsin and South Carolina are the only states that tax short-term capital gains at a higher rate than long-term capital gains, Healey said, and Massachusetts and Oregon share the lowest threshold to trigger a tax on estates upon property transfer after death.
The policy changes are intended to keep people in Massachusetts, Healey said on Thursday, at a time when people have been moving to other states and employers are having difficulty finding qualified people to fill open jobs.
According to U.S. Census estimates reported by UMass, 57,292 Bay Staters left Massachusetts to move to other U.S. states between July 2021 and July 2022, and the state’s population decreased by 45,194 people the year before.
“I don’t want to see people going to Texas or to — I mean, Austin’s cool, but whatever — or to Florida, you know, North Carolina. But this is the dynamic right now,” Healey said.
The governor’s proposal to triple the estate tax threshold is more moderate than a recommendation the chamber made last month to quintuple the value at which the tax kicks in, and her proposal to drop the short-term capital gains tax rate from 12 to 5 percent mirrors the Chamber’s recommendation. Business leaders said slashing the short-term capital gains tax rate would move Massachusetts from the second-highest rate in the country to one shared by about half of all states.
Healey’s recommended capital gains tax cut also mirrors a proposal former Republican Gov. Charlie Baker put forward last year. Democrat leaders in the Legislature spiked the measure from their final tax relief plan last summer, which they ultimately abandoned after learning Massachusetts owed nearly $3 billion in other mandatory rebates to taxpayers.
Healey’s plan to triple the estate tax threshold to $3 million goes beyond Baker’s proposal last year, which would have doubled the threshold to $2 million.
Chamber president James Rooney praised Healey’s tax cuts as a “good first signal that the administration will work with the business community, especially with the inclusion of capital gains and estate taxes.”
But while business leaders cheered, the Raise Up Coalition, which helped lead the successful campaign for a surtax on the state’s highest earners this fall, said earlier this week that changes to the estate tax and short-term capital gains tax rate would “deliver an enormous windfall to the richest members of our society.”
“The proposed changes to the estate tax would give a few thousand of the wealthiest families in the state a six-figure tax cut, while the cut to the short-term capital gains tax rate would reward wealthy day traders and real estate speculators for their risky financial maneuvering,” the coalition said in a statement.
In a question-and-answer session with Rooney following her prepared remarks, Healey said she “always appreciates input” and diverse perspectives on her policy proposals.
Among the business leaders who gathered to hear Healey speak Thursday morning though, there was only applause for her ideas.
Rooney told the governor that many of the chamber’s member businesses get calls from governors of other states telling them to think about moving their company to Texas, Florida or North Carolina.
When asked if she’s ready to take on the role of “chief salesperson” for Massachusetts, Healey responded, “I’ve never been a cheerleader, but I am ready to be a cheerleader now.”
“The fact is there are other governors, there are other mayors out there, hustling and competing hard. And we’ve got to do that and more. The good news is we’ve got a lot more to sell, we’ve got so much more to commend us,” she said.
Rooney and Healey joked about the governor’s background playing college basketball, which the governor says gave her the competitive frame of mind that she now plans to use in office.
“You have partners in the business community, and one of the things we’re not going to do is let you hang up those competitive sneakers,” Rooney said.
Later on Thursday when asked during an appearance spot on GBH’s “Boston Public Radio” how she “justified” the inclusion of the short-term capital gains rate cut and changes to the estate tax, Healey repeated her argument about making Massachusetts more competitive and “consistent with the rest of the country.”
“I just have come to a different view on the estate tax. We’re dealing with such a huge housing crisis right now. And part of it is of course the cost of housing. Property values have appreciated and the fact of the matter is the home that you bought 20 years ago, 30 years ago, 40 years ago, raised your family in has likely, no matter where you live in the state, has just really, really appreciated,” she said. “And so for middle-income families as well, you may well be facing the situation that that estate tax, which right now kicks in at a million dollars, is going to have an impact and people right now are making some decisions about that.”
