Last week’s $1.3 billion Mega Millions jackpot sparked a retelling of the sad story of what a sudden windfall like that can mean.
“Not long after William “Bud” Post won a Pennsylvania Lottery jackpot of $16.2 million in 1988, his brother was arrested for hiring a hitman to kill him for the inheritance. Post was later successfully sued by an ex-girlfriend for a share of the winnings, and was $1 million in debt by the time he died in 2006,” notes the Washington Post. “‘Everybody dreams of winning money, but nobody realizes the nightmares that come out of the woodwork, or the problems,” he said in 1993.’”
The Massachusetts Legislature can relate to Bud’s plight.
They were all set to plow a billion dollars of their recent haul from federal funding and a roaring economic recovery into permanent tax relief that surely would have boosted their brand and punctured Beacon Hill Democrats’ longstanding image as taxation-and-spending addicts. But this tantalizing prospect was shattered by the “surprise” revelation that this cash tsunami had triggered the 1986 tax rebate law promoted by Citizens for Limited Taxation and their allies that forces the state to offer taxpayer rebates or credits when revenues overflow.
For months, they held hearings and deliberated on their tax-cut plan, discarding Gov. Charlie Baker’s effort to cut the capital gains tax but keeping his more “progressive” relief for sympathetic constituencies: renters, the elderly, low-income families. But as the moment of triumph neared, CommonWealth Magazine reported that well over a billion could be due taxpayers under the 36-year-old statute, followed by Baker suggesting that figure could be “north of $2.5 billion.”
Incredibly, the Legislature’s top financial experts claimed to be blindsided. House Ways and Means Chairman Aaron Michlewitz confessed ignorance; so did Senate budget chief Michael J. Rodrigues, who claimed the executive branch had only just told them about it.
Baker administration sources say that’s b.s., that the likelihood of Barbara Anderson’s Revenge coming due was discussed with legislative leaders and staff during budget talks earlier this summer. All anyone had to do was surf on over to the state auditor’s website and note that the state fell $2.1 billion short of triggering the rebates last fiscal year, and since then has pocketed $4 billion in federal ARPA funds alone, along with billions in unexpected conventional revenue.
Hello? Concludes one disgusted Democratic official with knowledge of the process: “Nobody in either branch was mindful of it. I assumed they knew what they were doing, but that turns out to be a false assumption.”
As a result, pending a special legislative session no one expects to see happen or an extraordinary deal in which Beacon Hill Republicans agree to save the Democrats’ bacon by allowing the issue to be taken up in an informal session, this colossal display of ineptitude will screw quite a few needy people out of quite a lot of dough. Seven hundred thousand families who might have benefited from the hike in the Child/Dependent Tax Credit; 881,000 renters who could have used the increase in the Rental Deduction Credit; more than 100,000 seniors pocketing the Senior Circuit Breaker Credit.
Poof! Gone with the wind as the legislature refuses to go ahead with its plan on top of whatever money goes back to taxpayers – under a distinctly non-progressive formula, by the way – because they can’t abide sharing that much of the wealth.
The Democrats are extremely fortunate that Baker is not running for reelection. He could beat them to a pulp with this fiasco. And even after the current no-hope Republicans lose this November, a reconstituted state GOP could easily make long-term hay out of it.
As with poor Bud Post, Beacon Hill’s taxation nightmare has emerged from the woodwork. And, for now, they have as much of a clue what to do about it as they had about the reality of their wealth in the first place.
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