Gov. Charlie Baker is on board with legislative Democrats who want to use tax revenue from major corporations to pay for tax credits for poor working families.
Baker didn’t seem to have a problem with the Democrats’ plan to pay for the Earned Income Tax Credit by eliminating the FAS 109 tax loophole that benefits only 20 of the top companies doing business in the state.
“I’m excited that the Legislature chose to expand the EITC and we’ll look forward to signing that,” Baker said at a press conference Wednesday.
The loophole has never actually been used to grant corporations a little tax relief since it’s been suspended every single year since it was adopted.
“FAS 109 has never been implemented here in Massachusetts, so therefor, using, basically, taking what has been standing practice and using that as a mechanism to fund the earned income tax credit, I think that’s a good thing and I don’t believe it’s a tax increase. Net-net on these two measures.
The people of Massachusetts are going to be better off,” Baker said.
The Senate had wanted to pay for the working families tax credit by freezing the income tax and preventing it from falling as it is expected to do. That method was a nonstarter for Baker and House Speaker Robert DeLeo.
“The concern that relative to the income tax is that a commitment was made to allow for the rollback of the income tax to five percent. We wanted to continue with that commitment. We thought that was very important but at the same time we wanted to find an alternative way to pay for the earned income tax credit,” Rep. Brian Dempsey, DeLeo’s top budget chief said.
The House overwhelmingly approved the budget plan, with only one Democrat voting off. Five Senate Democrats initially voted against the plan due to objections over privatization of MBTA services, but the budget eventually passed the Senate unanimously.
