Tax cap reform
This question asks whether the formula for calculating the limit on state tax collections should be altered, increasing the likelihood that Massachusetts owes money back to taxpayers at the end of a fiscal year.
What your vote means
If this passes
Massachusetts would use the new formula for calculating allowable tax collections and more regularly need to return money to taxpayers.
If this fails
The current formula would remain in place.
Effective date
July 1, 2027
What this does NOT change
Any tax rates.
The breakdown
This question seeks to make a technical change to a law passed by voters in 1986, which could have a big impact: amending how the annual limit on state tax revenues is calculated, a system often referred to as Chapter 62F.
The cap is currently calculated by taking the prior year’s cap and increasing it by the same rate as the statewide growth in wages and salaries. Under the ballot question, the cap would instead be calculated by taking the prior year’s total state tax revenue and adjusting it for the statewide growth in wages and salaries.
That would make it much more common for Massachusetts to owe more money back to the taxpayers at the end of the fiscal year because total revenues are usually less than the cap each year. Calculating the cap off of a lower baseline would make it easier to trigger a refund…