by Kathryn Carley, Commonwealth News Service
The Commonwealth could lose up to $600 million in annual revenue meant for public schools and transportation if lawmakers fail to close a tax loophole tied to the recently enacted “millionaires tax,” according to a new study.
The Massachusetts Budget and Policy Center said extremely high-income tax filers could file their federal taxes jointly with a spouse, but file their state taxes separately to maximize their exemption from the new law.
Phineas Baxandall, policy director for MassBudget, explained the problem is easily fixed.
“All we have to do is require the same safeguards that lots of other states do, which is just say, ‘Be consistent,’ ” Baxandall contended.
Baxandall noted other states with millionaires taxes require state tax status match a filer’s federal status. Lawmakers have already introduced “An Act to Prevent High-Income Tax Avoidance” in the Massachusetts House and Senate.
Voters approved the Fair Share Amendment last November, to ensure people with the highest incomes pay a larger share in taxes. The idea was to address widespread needs in Massachusetts public schools, as well as the roads and rail lines used to get there.
Baxendall thinks lawmakers should follow through with the voters’ intent.
“There’s a long list of unmet needs that people are hoping to use this money for,” Baxendall pointed out. “It’s really going to make a difference.”
He added if left unaddressed, about one-fifth of the revenue voters chose to invest back into the Commonwealth could be lost. He stressed the state may also find itself needing to audit more tax filers.