Oct 6, 2022 - News

Tax rebate math favors rich

Illustration of a pattern of stacks of money.

Illustration: Shoshana Gordon/Axios

The rich are likely to benefit the most from tax rebates that could come as soon as next month.

What's happening: Massachusetts owes taxpayers $2.9 billion under the automatic tax refund law, an obscure law last triggered in 1987 that returns surplus tax revenue to Bay Staters.

  • Gov. Charlie Baker has said he hopes to issue the funds in the form of rebates in November, rather than waiting for tax filing season next year.
  • The formula bases tax payments on how much people paid in taxes in 2021, meaning the rich will get more money back than low- and middle-income earners.

The latest: An internal Department of Revenue document obtained by Axios through a public records request estimated a wide range in tax refund checks, from roughly $30 for low-income earners to $27,466 for those making $1 million or more.

  • Yes, but: The estimates are based on 2020 tax returns, not 2021.

Why it matters: Progressive Democrats say the money isn't benefiting those who need it most, including low-income earners whose tax payments take up a bigger share of their income.

What they're saying: "There's a disconnect between rushing these checks out the door, based on arguments that people are hurting and need this money as soon as possible on one hand, and on the other hand, the checks disproportionately helping those who need them the least," says Phineas Baxandall, a senior analyst at the Massachusetts Budget and Policy Center.

  • The law “in effect transfers to higher income households tax revenue paid by lower income households,” MassBudget senior policy analyst Jason Wright said in a report titled “62F Credits Benefit the Rich.”
  • Low-income residents might not receive a 62F credit if other low-income credits reduced the amount of income tax they owed, according to Wright

The other side: "[The 1987 law] was meant as a check on unlimited taxation and unsustainable spending," Chip Ford, executive director of Citizens for Limited Taxation, said in a statement after the state auditor certified the tax revenue estimates last month.

Reality check: The state hasn't released a summary of 2021-based estimates on how much people should get back from the automatic tax refund law. The estimates using tax data from previous years offer a glimpse, but an incomplete one.

  • The only way for taxpayers to see their projected automatic tax refunds is to fill out the state's refund estimator, using details from their 2021 tax returns.

Editor's note: This story has been updated to clarify the state hasn't issued a summary of 2021-based estimates, but is offering a personal calculator.


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