The revival of the long-dormant tax cap after 35 years was enough to end the legislature’s $1 billion tax break initiative. Now some are wondering if the cap may also dampen the momentum behind a constitutional amendment that appears at the November election to introduce a millionaire tax.

The tax cap limits how much tax revenue Massachusetts can collect and requires the state to return to taxpayers any amounts collected in excess of the cap.

The cap will be triggered this year for the first time since 1987, and some analysts say a millionaire tax that could boost tax revenues by up to $2 billion a year could help trigger it again in years to come.

Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, said she thinks it’s possible. And she questioned whether it made sense to impose what she saw as a politically risky tax on millionaires when the cap simply returns a large part of the revenue the tax will bring back to taxpayers.

“If the state is able to give back billions of dollars, then it probably has enough revenue,” she said. “Is the millionaire tax really necessary?”

Andrew Farnitano, a spokesman for the Fair Share coalition, which is working to pass the millionaire tax, said the group has been looking into the issue. “We’re trying to figure out exactly what that means,” he said.

But Farnitano said the tax cap isn’t a big issue because the millionaire tax is a long-term initiative. He said the aim is to allocate more revenue to education and transportation in the state and to make the tax system more progressive by imposing a 4 percent surtax on income over $1 million.

“The fair share change is not about a budget or an economic cycle. It’s long term,” he said.

Budget analysts aren’t sure the tax cap will become a recurring phenomenon, but the cap’s formula offers some clues.

The upper tax limit results from multiplying the average increase in wages and salaries over the last three years by the “creditable income” of the previous year. If actual tax revenue exceeds this amount, the excess must be returned to taxpayers pro rata, meaning those who pay more tax get more back.

The tax cap was triggered this year as capital gains and corporate taxes soared while wage and salary growth lagged, largely due to the impact of COVID in 2020. With inflation rising and a recession looming, it’s difficult to calculate how tax revenues will react.

Phineas Baxandall, a senior policy analyst and advocacy director at the Massachusetts Budget and Policy Center, said he thinks the tax cap is unlikely to be triggered again anytime soon.

“By fiscal 2024, the first year in which most fair share earnings first appear, the calculation of allowable earnings will account for much of the inflation experienced in 2021 and 2022, as well as people’s return to work and reflecting income from capital gains should come in slightly lower due to the correction in the stock market,” he said in an email. “All of this is quite speculative, but some provide reasons not to expect the cap to have that much bite by 2024.”

Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University, agrees.

“I actually modeled this quickly, and I think that despite the millionaire tax, it’s a lot more likely that we’re going back to the world where that law doesn’t matter (almost),” he said.

Bruce Mohl


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Political force: Unitarian universalists Susan Frederick-Gray and Jo Murphy say progressive people of the faith can be a powerful political force across the country. Continue reading.



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US Senator Elizabeth Warren endorsed Andrea Harrington, District Attorney for Berkshire County, in the Democrat district attorney primary. (Berkshire Eagle)

A Democrat and a Republican challenging State Rep. Ann-Margaret Ferrante participate in a forum, but Ferrante is absent after testing positive for COVID-19. (Gloucester Daily Times)


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A federal appeals court fired a lawsuit challenging UMass’s COVID vaccine mandate because both students contesting the law have since left UMass. (MassLive)


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gannett reported posted a $54 million loss in the second quarter and warned of more layoffs. (Poynter) Here it is more by Dan Kennedy on what he calls an “ongoing tragedy”. (media nation)

About 300 US-based reporters for Reuters carried out a 24-hour strike from Thursday morning to protest deadlocked contract negotiations. (pointer)


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