The Argument: Should the state double the exemption taxpayers can claim for dependents?
YES: Shawn C. Dooley – State Representative, Norfolk Republican
You don’t need to be an economist to realize that the cost of raising children in the Commonwealth has increased dramatically over the past 30 years. The struggle to cover the expense of nurturing these children as well as caring for other adult family members in need is very real. The proposed tax relief bill filed by Governor Baker addresses this need in a very modest way — by simply increasing the tax deduction for dependents by $1,000. This way, the money remains with the families who need it as opposed to being tossed into the abyss that is our state budget.
The last time Massachusetts taxpayers saw an increase in this tax deduction was 32 years ago. Many people who are eligible for this deduction hadn’t even been born in 1987 when the exemption was increased from $700 to $1,000. It is well past time for this action to be taken, especially at a time when tax revenues are growing at a robust rate.
This bill is a win for working families. Not only will they be able to keep more of their hardearned money, but they will be able to use it to help care for their loved ones.
Massachusetts has a booming economy, strong revenue projections, and a bright future ahead. Shouldn’t our taxpayers be rewarded for contributing to our strong state of affairs?
Unlike in Washington, Massachusetts is constitutionally obligated to have a balanced budget. Not only is our budget balanced, but we have hundreds of millions of surplus dollars rolling in.
I feel that this “surplus” money should go back to the people of the Commonwealth — for their families and for our future. Any opportunity to lower the average resident’s tax burden should be welcomed — especially when it can be done in a fiscally responsible way.
This proposal should be enacted into law because it will give tangible financial assistance to more than a million people, according to administration figures. And, at the end of the day, I am confident the people of Massachusetts know better how to spend their hard-earned dollars than the politicians on Beacon Hill.
NO: Chelsea Sedani – Weymouth resident; Director of Advocacy for Economic Mobility Pathways (EmPath), Boston-based anti-poverty agency
If the goal is to provide tax support for Massachusetts residents who need it most, there is a better way to do it. Doubling the $1,000 exemption allows tax filers with dependents to reduce their taxable income.
With the state’s 5 percent income tax rate, the proposal provides up to $50 of additional benefit per dependent, no matter how high your income. However, the doubled exemption is worthless if you would have received a tax refund anyway, or if your income is so low that you aren’t required to pay income taxes.
It’s important for tax policies to be better targeted. Massachusetts generally requires those with smaller incomes to pay a higher share in state and local taxes. The Massachusetts Budget and Policy Center calculates that families with incomes in the bottom 20 percent pay on average 10 percent of their income, while those in the middle 60 percent pay 9 percent and those in the top 1 percent less than 7 percent.
For the same cost as the doubled exemption, we could more effectively target tax relief towards working families by increasing the state Earned Income Tax Credit by nearly 10 percentage points. Increasing the state EITC is a better form of tax relief for low-income working households. By providing a refundable credit instead of an exemption, even the lowest-income qualifying family receives full support. The program delivers more bang for the buck because it goes to workers with incomes below about $56,000, depending mostly on family size.
Beyond being one of the most effective tools to combat poverty, a strong EITC delivers a variety of benefits. Studies show the EITC improves health outcomes for families by reducing stress and providing better access to healthy food and good medical care. Likewise, it is shown to improve kids’ test scores and graduation rates.
In my work, I hear from families struggling with Massachusetts’ high costs for housing and child care. They benefit greatly from the EITC and rely on it to cover necessities, pay off debt, and save for emergencies. Those who need relief the most are often unable to use the dependent deduction. Let’s help working families, but do it the smart way.
Read the original article here.