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State Budget Avoids New Broad-Based Taxes

Posted on July 12, 2021

Both branches of the Massachusetts Legislature on Friday adopted a $48.1 billion budget proposal for the Fiscal Year 2022. Approval of the blueprint came a day after a conference committee resolved the differences between each chamber’s version of the budget.

The budget achieved a critical AIM priority by funding essential services without increasing broad-based taxes. AIM was able to defeat several problematic proposals such as accelerated sales tax collections, remote software taxation, digital advertising taxes, ride-share taxes, and several other measures that would hinder innovation and growth in the Massachusetts economy.

The Fiscal Year 2022 budget contains several policy changes in addition to spending.

The document establishes a new work-around of the eliminated federal deduction for State and Local Tax Deduction (SALT). The work-around could benefit AIM members classified as pass- through entities.

Legislative leaders also created a new disability tax credit to incentivize employers to hire individuals with a disability. In addition, the legislature chose to make permanent the film tax credit on productions filmed in the state.

The budget contains disappointments for employers as well.

It establishes a duplicative the Broadband Division within the Department of Telecommunications and Cable that will create new and unnecessary regulatory burdens on internet providers.

“AIM applauds the legislature for building a fiscally sound budget that contains no broad-based tax increases. The FY 22 budget admirably balances smart finical planning with the intense need for governmental services in the past year” said Brooke Thomson Executive Vice President of Government Affairs at AIM.

“Unfortunately, there were some elements of the final budget that present significant problems, including the Broadband Division within the Department of Telecommunications and Cable. AIM remains strongly opposed to new Broadband Division and we believe such sweeping regulatory decisions must be adopted through the formal committee process.”

As tax revenues continue to outpace expectations, the legislature decided to cancel a withdrawal of $1.5 billion from the state’s “rainy day” fund and instead use existing revenue sources to cover expenditures. The budget did not use direct federal aid from the American Rescue Plan Act to pay for the state’s operating expenses. AIM supports both financial decisions, which will help that Commonwealth’s budget in years to come.

The compromise proposal now advances to Governor Charlie Baker who can finalize the budget with his signature or return it to the legislature with amendments. AIM will use that opportunity to continue to advocate for and against provisions in the FY’22 budget.