Gov. Charlie Baker has unveiled his new budget, which Democrats will cheer and Republicans should fear. Taxes are a major theme in this proposal.
A “modest” increase in the excise tax on real estate sales is included. The excise rate, which is paid by the seller of a property, would jump from $2 per $500 of value to $3, amounting to $137 million annually toward the Global Warming Solutions Trust Fund. With the extra revenue, Baker is proposing to spend $75 million on climate adaption programs, which are meant to incentivize cities and towns to invest in “climate-smart infrastructure.”
Former Gov. Deval Patrick would have visions of tax increases to combat global warming dancing in his head but Baker, the Republican governor, is bent on making this progressive dream come true.
“It’s pretty clear that climate change is starting to have a very significant impact on our communities, on our infrastructure, on personal property, on real property and on community property, and this is a way for us to build a program that can generate about $1 billion over 10 years to invest in communities, to invest in resiliency, to invest in infrastructure, to protect people’s property and to protect community property,” Baker said last week.
As the Herald’s Mary Markos reported, some in the real estate industry are less enthusiastic, including Justin Davidson, general counsel and director of government affairs with the Massachusetts Association of Realtors.
“Our concern is that this could have one of two effects on the market: It could drive up the cost of housing even more in Massachusetts or strip equity from homeowners,” Davidson said. “It really comes down to a fairness issue. Everyone benefits from a better climate and everyone should contribute to a better solution. It shouldn’t be something that’s just put on the backs of homeowners and home-sellers.”
The median price for a single-family home in December in Massachusetts was $375,000, according to the MAR, which would bring the tax from $1,710 to $2,565 on that home under the proposed law.
That is real money for a lot of people, but Gov. Baker has the climate on the mind.
“There is no program in Massachusetts that’s going to put a billion dollars on the table to put the kind of resiliency programming in place that we’re going to need to deal with the intensity and frequency of storms,” he said last Friday.
In fact, we are meant to think of the tax increase not as a penalty but an investment, something in our own best interests. “This is an excise tax that’s basically about property and the proposal we’re making here is to protect property,” he said. “We think, in the long run, the cost/benefit on this one is a good deal for Massachusetts residents.”
In addition to the increase on excise tax through property sales, Baker is proposing an expansion of the cigarette excise tax to include e-cigarettes, which is expected to bring in $6 million.
He’s also suggesting a sales tax on online marketplaces like Amazon, eBay and Etsy for deliveries to Massachusetts customers, which would bring in $42 million in new revenue.
There was a time when Charlie Baker was fundamentally opposed to most taxes but those days are over. Unfortunately, so may be the days of the hard-working people of Massachusetts keeping their own hard-earned money.