Hi ,
Yesterday, the House voted on a package of tax changes. There were some good things in there and there was one terrible thing, a large and regressive cut to the estate tax. Anyone who spoke with me on the doors last week knows, I have been fighting to stop this estate tax cut because it is both regressive and costly to our state. This is a foundational and moral issue for our state when we desperately need to invest in the T, invest in our schools, pre-K, K-12 and higher education, invest in affordable housing, invest in our infrastructure from our roads to our sewers, and invest in stopping the climate crisis.
Instead, this tax cut on generational wealth worsens the racial wealth gap, gives the largest “tax relief” to the very very wealthiest, and cuts state funding by over $200 million dollars. For reference, that’s about twice as much revenue as we’d need to cover the cost of fare-free buses across the entire MBTA system.
I want to be clear that I am sharing with you a loss: I did not succeed in stopping this cut in the House. As electeds, we don’t often talk about our losses, but it probably does not surprise you that we don’t always get what we want on Beacon Hill. I share this because I have learned as much from my losses as my wins in my life. My hope is that we learn from this together, and build from here: the fight against austerity has been happening for over 40 years and we will need to fight much harder for a tax system that is fair and fully funds our needs for all of us to thrive.
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Massachusetts has a regressive tax system
The first question we should always ask about taxes is: do these increase or decrease wealth and income inequality? This is what determines whether a tax is regressive or progressive. In Massachusetts, our tax system as a whole is regressive, or in other words, we have a tax system that makes the rich richer and the poor poorer. |
As you can see from this graph, if you make $20,000 a year, you pay a higher share of your income in state and local taxes than if you make $20,000 a week, which is equivalent to making $1,000,000 a year. A more just tax system would ensure that the wealthy are paying their fair share, they currently are not. |
This means Massachusetts has been putting in place deep austerity policies for my entire lifetime and more. Austerity is why our schools, the T, roads, housing, and our infrastructure have been crumbling and falling apart.
And austerity kills. Austerity is why environmental justice communities have an over two decade shorter life expectancy than affluent communities. A tax system that makes the poor, poorer and the rich, richer is how we have one of the highest racial wealth gaps in the country, where the median wealth of a white household is about $250,000 and a Black household is $8. This is why tax policy is such a deeply moral issue.
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The estate tax cut is costly and regressive
The estate tax is a tax on generational wealth and is the only tax that directly reduces wealth inequality. By cutting the estate tax, we are exacerbating the racial wealth gap. The Department of Revenue (DOR) reported that this tax was applied to 4,272 estates worth $1 million or more in one year. Compare that to the 58,884 individuals who died in that same year, this tax roughly only impacts the top ~7% of people who die with estates over $1 million.
In total magnitude, the estate tax was the most costly chunk of the tax change package voted on yesterday. |
In addition, the biggest tax handouts in the estate tax went to the largest estates worth well over $2 million. Below is a graph comparing the size of the tax handout (or more cynically referred to as “tax relief”) by size of estate. |
I’m going to be candid with you all: I believe the estate tax should be raised and should apply to more estates because it is the only tax on generational wealth. In every comparison, this is a small percentage of taxes, compared to many countries it is a very small percentage, compared to most other taxes you pay, such as income or sales tax, it is miniscule. If you earned $1 million in income, or in the lottery, or on a game show (Who wants to be a millionaire? Anyone?), you would pay much much higher taxes. When someone sells their $1 million home, you pay more than the estate tax on realtor, lawyer, and notary stamp fees. Finally, estate taxes are at their lowest in over a hundred years of our nation’s history.
Governor Baker proposed three changes to the estate tax earlier this spring. - Increase the lowest taxed threshold from $1 million to $2 million
- Eliminate the cliff
- Provide additional “tax relief” to the wealthiest estates
I pushed back on the regressive components of these changes at a hearing on these changes before the Committee on Revenue, which I serve on.
The last change was the sneakiest and most confusing mechanism of these changes and it is why the estate tax cut is so regressive. The way Governor Baker eliminates the cliff is by deducting $2 million off of every estate and then calculating the tax. This means if your estate is $2,100,000, you subtract $2 million and then pay taxes on $100,000. But the costs balloons up for larger estates, so for estates worth $15 million, they are only taxed on $13 million, we lost taxes on $2 million of the largest estates that should be paying the highest rates.
I proposed amendment #630 which fixes this by using a different method for eliminating the cliff effect. This compromise proposal ensures no one under $2 million pays an estate tax, and no estate above $2 million has a post-tax estate value lower than $2 million (this is known as a 100% marginal tax rate). This compromise raises the threshold to $2 million, eliminates the cliff, but does not provide tax relief to estates well over $2 million. You can see the “tax relief” by estate size of my amendment versus what was proposed by the House. |
I worked to earn the support from my colleagues and leadership on this proposal. It was a proposal that we all agreed fulfilled what the vast majority of the membership wanted, remove the cliff effect and raise the threshold. Yet, it still was not included in the final bill we voted on yesterday.
Finally on a point of fairness, there are four other tax changes that are progressive but it is worth comparing them to this estate tax in terms of tax relief per individual (or for the estate tax, per estate). As an exercise, I calculated the per individual tax relief of the other four tax changes that are progressive changes: |
Now let’s compare that to the estate tax. This is a little tricky to compare (since we are comparing individuals with estates), but at least we get a sense of magnitudes. The left graph compares the per individual and per estate differences. Since the estate tax is literally a “once in a lifetime” tax, I also created the right graph to compare the estate “tax relief” with the other tax relief assuming that you received those reliefs over the entire duration of a lifetime (assuming 81 year life expectancy).
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The point is, all the other tax relief pales in comparison to the over $300,000 in tax relief that someone with an over $10 million estate is going to receive from these tax changes. There are two overarching problems happening here: |
1. For justice, we are colossally slow, while tax cuts slam down fast
When it comes to justice and the needs of our communities, the State House is incredibly slow and claims to be “deliberate” and “responsible". It takes us years to decades to pass progressive legislation (such as drivers licenses for immigrants), and even when we do, we have to “phase it in slowly” (such as raising minimum wage or making K-12 school funding more equitable). But when it comes to tax handouts to the very wealthy, we can do it brashly, quickly, and sloppily. Most legislators (including myself) did not understand the full extent of these changes when they were proposed and sadly many still do not. I got the most recent version on Monday, I had 4 hours to propose amendments, I had 48 hours to organize and earn support from my colleagues before we voted on it. Revenue is a moral and foundational issue that should be treated with care, commitment, and moral clarity, that is not what happened this week.
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2. We have always cut taxes
We cut taxes when times are good (like this year when we have a surplus), we cut taxes when times are bad (during a recession), and I cannot recall in recent State House history when we raised taxes (progressive or not), the only exception is a tax on tobacco. This is also not the first time the State House cut taxes quickly leaving us very little time to respond, we cut taxes almost every year and each time I have worked tirelessly to identify and catch them before they move forward. I was successful in stopping the short term capital gains tax cut that Governor Baker proposed this spring but I was not successful this time to stop the estate tax in the House, this bill will go to the Senate and I encourage you all to reach out to your Senators.
That said, you have my commitment that I will keep fighting come hell or high water for a tax system that is fair and progressive. |
Where do we go from here? We have a lot to fight for to both stop austerity and to build a taxation system where the wealthy and corporations pay their fair share.
1. Fight for progressive revenue
When I became a State Representative in 2020, my top choice for committee assignments was the Joint Committee on Revenue. As one of the wealthiest states in the wealthiest country on earth, we have the resources and ability to fully fund the MBTA, housing, food security, health care, and so many basic necessities for ourselves and our neighbors. What we lack is the political will to allocate funds.
Since being assigned to the revenue committee, I’ve worked tirelessly to build that will among my colleagues. It’s a slow sell, but I am proud to have been an instrumental part of removing the short term capital gains tax break that Governor Baker proposed in his revenue bill this year. The bill, which the Committee voted on last week, was Governor Baker’s wishlist of over $700 million in tax cuts, first filed back in January. While the House’s version of the bill no longer includes language to slash the capital gains tax, and we were able to drop the cost of this package from $700 million to $200 million.
2. Pass the Fair Share Amendment
The Fair Share Amendment is a change to the Massachusetts state constitution that would generate about $2 billion in yearly support for transportation and public education. The revenue would come from an additional tax on households with very high incomes—that’s why it’s also known as a “millionaire’s tax.”
The ballot question would create a 4 percent tax on annual income above $1 million and dedicate the funds raised to transportation and public education. Only people who earn more than $1 million annually will be impacted; 99% of us won’t pay a penny more. And we’ll all benefit from better schools, roads, bridges, and public transportation. |
Building Trades Unions Labor Walk on Saturday Joined by Special Guest Liz Shuler, President, National AFL-CIO!
This Saturday, the Greater Boston Building Trades Unions are hosting a rally and labor walk for my campaign, with special guest, Liz Shuler, President, National AFL-CIO at 10:30AM at Lincoln Park! I am so honored to have the support of the Greater Boston Building Trades Unions and can't wait to knock on doors of our sisters and brothers of organized labor. We will be rallying for how to continue to build power and support organized labor in Somerville, Massachusetts, and nationwide. Join me in welcoming AFL-CIO President Liz Shuler to Somerville! Hope to see you there!
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Office Hours
Join us this Sunday, from 10AM-12PM in Lexington Park for some donuts, caffeine, and good company. We will be joined by Councilor Wilson. We’re excited at answer any and all state or local questions. Or feel free to just drop by to say hi to neighbors. Hope to see you all there! |
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It is truly an honor to serve you all, please don’t hesitate to reach out to my office with your thoughts and questions about the budget, if you want to advocate for any bills, or need any help from government services. |
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