BOSTON GLOBE: Business groups propose ballot measures to lower income tax, boost refunds

By Stella Tannenbaum

This article originally ran in the Boston Globe on August 8, 2025.

Massachusetts business groups are backing two proposed ballot initiatives that would put more money into residents’ pockets by slicing the state income tax and returning excess revenues to taxpayers more frequently.

One proposed initiative would cut the state income tax rate from 5 percent to 4 percent by 2029. Another would lower the threshold at which the state must issue refunds when tax collections are strong.

Those proposals — and many others filed by the Aug. 6 deadline — are still far from making the 2026 ballot. They need approval from the attorney general’s office and thousands of signatures.

The state’s spending is growing much faster than people’s paychecks, and cutting income taxes to 4 percent would save Massachusetts taxpayers much-needed cash, said Jim Stergios, executive director of the Pioneer Institute, a business-supported think tank that initiated the income-tax measure.

The fiscal 2026 budget is $61 billion, an increase of about 5 percent from the previous year’s $58 billion. The Massachusetts budget has grown nearly 50 percent in 7 years.

The fiscal 2026 budget is $61 billion, an increase of about 5 percent from the previous year’s $58 billion. The Massachusetts budget has grown nearly 50 percent in 7 years.

The tax proposals “both aim at the same purpose, which is to get more money into people’s hands and to make sure that the government is not growing faster than the people’s capacity to support that growth,” Stergios said.

The state estimates it will bring in $24.24 billion in state income tax revenue in 2026, not counting revenue from the from the Fair Share Amendment surtax, often known as the millionaires tax.

A little used law, enacted by a ballot measure in 1986, requires the state to send refunds to taxpayers when revenue collections exceed a cap. The state has exceeded that cap only twice since the law was enacted, most recently in 2022, when the state returned nearly $3 billion.

The proposal, championed by the Massachusetts High Technology Council, would adjust the cap so money is refunded to taxpayers more frequently. Backers estimated that such an adjustment would have returned money to taxpayers 24 times since the law went into effect.

Stergios said high costs and unfavorable policies are driving workers out of state, and these measures would keep them living, working, and spending in Massachusetts.

“It’s not like having policies that lead to people leaving is doing Massachusetts any favors, even from the perspective of state government revenue,” Stergios said.

But critics say that the proposals would blow a huge whole in the state budget and undermine important services. Reducing state income tax by 1 percentage point would reduce revenues by 20 percent, or nearly $5 billion, said Phineas Baxandall, director of research and policy analysis at the Massachusetts Budget and Policy Center.

He called the proposal “reckless.”

“I think anybody who would would try and say where $5 billion is going to come from would quickly see that this isn’t a workable proposal,” he said.

Baxandall said the proposed tax cuts would primarily benefit wealthier residents while forcing the state to cut programs that benefit lower-income families.

“It is true that people have trouble affording being here,” Baxandall said, “but giving more windfalls to the most affluent is doesn’t really address the problem.”

Evan Horowitz, executive director at Tufts University’s Center for State Policy Analysis, said the change would have “huge implications” for what kinds of programs the state could afford.

“It’s going to come from everywhere, but most of what we do through state government is education and health care,” he said. “So if you’re going to cut an amount of that size, it’s going to come from schools and insurance.”

He said he has not seen convincing evidence linking taxes with migration patterns, but whatever the worry, tax rates are precisely the kind of “very fundamental democratic debate” that makes sense for the public consider via ballot measure.

“Citizens should always be thinking about whether the state is raising the right amount of money for the services that they want and to create the social conditions that they want,” Horowitz said.