State House News Service Weekly Roundup
By Craig SanderSTATE HOUSE NEWS SERVICE
Marijuana’s major medical use is the alleviation of pain and anxiety – and after this week, Gov. Baker and his budget-writing team might consider availing themselves of the nearest dispensary.
But they’ll need to bring cash…
One would think with revenues performing decently and the economy in great shape, spending planners could ride those trends through a fairly agreeable and straightforward budget process, even in an election year charged with ferocious partisanship.
Ah, but a much more compelling trend strengthened this week: governors and lawmakers in high-wage, high-tax states across America unveiling and advancing plans to sidestep, circumvent, and contravene the effects of federal tax reform on state taxpayers and tax collections.
Gov. Andrew Cuomo of New York declared the Republican tax law an act of “economic civil war” on high-income, high-property value states like his, and Massachusetts, and promised to promote measures to protect upper-middle income earners from the hit they’re about to take as the state and local tax (SALT) deduction is capped at $10,000. The California Assembly is working on a plan to let people make, and then deduct, donations to a new fund to offset the SALT deduction reduction. And the movement is just getting started as budget clocks tick nationwide.
The politically-driven countervailing proposals overlay a fiendishly-nuanced accounting situation to begin with. Every millionaire who can no longer deduct much of her state income tax on the federal form nonetheless gets a wonderful windfall from the new tax brackets. In states like Maryland, lots of state tax deductions are linked to federal equivalents – and that actually means more revenues for state treasuries, not less.
State revenue department officials haven’t made clear yet if that’s the case in Massachusetts, and if it is, officials may want to take the