Governor Healey: Tax changes intended to keep residents in Massachusetts

By Chris Lisinski

FEB. 28, 2023…..Building out her budget-week media blitz, Gov. Maura Healey ventured before a new audience Monday night in her first appearance on WBZ NewsRadio’s NightSide with Dan Rea, where she discussed tax relief, problems with new Red and Orange Line cars and the state’s burdensome cost of living.

Healey pitched the tax relief proposal she unveiled earlier in the day, whose price tag could swell to nearly $1 billion on an annual basis, as a way to “give people reasons to stay here, to raise their families here, to settle here, to grow their businesses here.”

When Rea said he thinks the bill appeared to have something for everyone, Healey replied, “Exactly.”

And as she faces hesitation or criticism from some fellow Democrats over her embrace of a couple of business-backed tax code changes, Healey contended that her push to triple the estate tax threshold in fact would affect many middle-income families, not just wealthier Bay Staters.

“We’re talking about middle-income folks who have seen an appreciation of their property value, right?” Healey said. “That’s a good thing for some, but it also means you may get whacked later on. We don’t want that to be a reason for people to leave our state. We want people to stay.”

During last year’s campaign, Healey drew criticism for backing an income surtax on the wealthy that opponents say will cause people to leave the state.

The tax proposal Healey plans to file Wednesday alongside her first annual state budget bill would create a new estate tax credit of up to $182,000, a measure that would effectively eliminate the levy on estates worth less than $3 million and give relief to larger estates.

Her estate tax change would go beyond what Republican Gov. Charlie Baker, the House and Senate sought last year, when all three sought to double the estate tax threshold to $2 million before Democrats retreated from tax reform.

The idea, like another Healey proposal the House and Senate previously spurned to slash the short-term capital gains tax rate from 12 percent to 5 percent, has already drawn the ire of some influential progressive groups.

The Raise Up Coalition, an organization of labor and community groups that led the successful push for an income surtax on high earners, on Monday said Healey’s estate tax proposal “would give a few thousand of the wealthiest families in the state a six-figure tax cut.”

“Tax cuts for well off people are not the answer,” tweeted Democrat Rep. Michelle DuBois on Monday.

One caller during Healey’s roughly hour-long slot, Jason from Haverhill, said he liked the governor’s package but asked about the chance of inadvertently raising demand and inflation on the state’s already-stressed housing market.

Healey said housing remains a “top priority” of hers, adding that it would feature in the tax package, the budget itself and also “separate legislation.”

Her tax proposal calls for increasing the annual cap on Housing Development Incentive Program credits from $10 million to $50 million in the first year, then $30 million per year after that, which Healey said is “meant to incent the development of more market-rate housing in places around Massachusetts.”

“We have got to boost housing production in this state. We need more housing out there to drive down costs,” Healey said. “The other thing, Jason, is we’re creating a housing secretariat. I’m filing legislation to do that. That person is going to be responsible for producing housing, for creating more housing, both for renters and homeowners around the state. Those are some of the things we’re doing.”

Another topic high on the mind of both Rea and his audience was the beleaguered MBTA. Service cuts have persisted due to staffing shortages and the contract to replace the entire Red and Orange fleets with brand-new cars continues to face delays and difficulties.

In the wake of the latest upheaval involving Chinese firm CRRC and the reported widespread problems in its Springfield manufacturing facility, Rea asked Healey if she was working to recoup any money from the nearly $900 million contracts.

“Well, Dan, you know, this is one of the things — you run, you get elected, and two weeks after I’m sworn in, I learn that we have this facility out in Springfield that’s receiving cars that are partially manufactured in China that are then fabricated in Springfield at this facility,” Healey replied. “They’re meant to replace trains on the Orange and Red Line, and they’re way behind.”

The end date for the Red and Orange Line train replacement project has been delayed since at least 2020, and MBTA officials publicly announced on Jan. 26 that the timeline had been pushed back once again. T Interim General Manager Jeff Gonneville said at a board meeting on that day that the agency learned of the latest postponement “in about the fall time period.”

Rea interjected to recount last week’s headache, when a trailer transporting one of the new Orange Line cars from Springfield to Medford detached from its truck on Interstate 495 in Chelmsford, snarling traffic.

“It’s amazing, right, that somehow, the Orange Line screws up a commute even when it’s not on the rail,” Healey said.

“But look, we take this really seriously. As soon as we learned about this, we assembled a team, we assembled a team that is on the ground right now in Springfield,” she added, referring to her move to send an independent team to examine the issues. “They’re looking at operationally what we need to change to expedite the production and the delivery of these trains. We also have to work with the Chinese company that was hired and given this contract to rework some of the terms. The goal here is to expedite the delivery of Orange and Red Line trains.”