House’s 62F Overhaul “Unconstitutional,” Council Alleges

An influential business group warned Monday that a bill the House approved last month features an “unconstitutional provision” to reshape the rebate program that provided nearly $3 billion back to taxpayers last year.

The Massachusetts High Technology Council, which has threatened or taken legal action in several other tax policy matters, wrote to legislative leaders and Gov. Maura Healey to argue that carving up excess tax revenues into equal rebates would “violate the state’s Constitution by effectively taxing income at different rates for different taxpayers.”

Under the successful 1986 ballot question known as Chapter 62F, if state tax collections surpass an allowable threshold, Massachusetts must provide relief in proportion to the amount that any eligible taxpayer paid. That means higher earners who faced a bigger tax bill receive bigger rebates, and vice versa.

House Democrats muscled through a $1.1 billion tax relief package last month that, among several other changes MHTC praised, would instead order any future 62F relief to be provided equally to all taxpayers, regardless of how much they contributed to the pot.

MHTC asked attorney Kevin Martin of Goodwin Procter LLP to review “potential constitutional concerns,” and Martin concluded that the measure could run afoul of the Constitution’s requirement for a flat income tax rate.

“For example, a taxpayer who had paid $500 in taxes would receive the same credit as a taxpayer who had paid $5,000 in taxes,” MHTC Vice President of Policy and Government Affairs Elizabeth Mahoney said in a letter to legislative leaders. “This change (which was not subject to a public hearing) would not only alter a law that was passed by the voters, it would also violate the state’s Constitution by effectively taxing income at different rates for different taxpayers.”

The group was one of the plaintiffs that successfully challenged a proposed income surtax in 2018, which took effect this year following a revived campaign. Last year, when a flood of tax collections triggered 62F for the first time in more than three decades, MHTC and its allies pledged to ask the courts to intervene if lawmakers sought to duck the requirements of 62F.

Asked if the council was prepared for legal action against the potential new law, Mahoney replied, “Our hope is that, given this information, the proposed change to Chapter 62F will never get to the point of becoming law. We expect the Legislature and the Governor would not wish to enact a law that violates the state’s Constitution.”