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By JIM STERGIOS
Question 5 restores a taxpayer protection Massachusetts voters approved in 1986: State tax collections can grow, but not faster than the wages and salaries of the people who fund government. When collections exceed that limit, the excess must be returned to taxpayers.
Question 5 is not a tax cut. It does not reduce tax rates, freeze government revenues, or require cuts to public services. It simply ensures that tax collections do not outpace the earnings of Massachusetts residents.
Since its passage 40 years ago, Chapter 62F has triggered refunds only twice. Why? Simply put, the formula the state uses to determine if refunds are necessary is not based on actual tax collections. It uses as its basis tax collections in 1986 compounded annually.
Here’s how it works: Each year, the state increases its revenue ceiling by the percentage growth in Massachusetts wages and salaries. But instead of applying that increase to what the state actually collected the previous year, it applies it to the previous year’s ceiling—even if actual collections fell billions short.
Question 5 fixes this by calculating each year’s limit from the previous year’s actual collections, adjusted for wage-and-salary growth. Government revenues will grow as earnings grow, but the ceiling will no longer compound from a fiction based on a four-decade-old number.
Question 5 also preserves the 62F “no decline” rule, which ensures that we are not negatively impacting the budget. The “no decline” rules means that even when wages and salaries fall during recessions, the revenue ceiling cannot fall. Again, that protection for state government revenue will remain in place.
What the question seeks to dismantle is the insurmountable hurdle to taxpayer refunds that state bean counters have erected. In fiscal 2026, Massachusetts collected $43.1 billion in taxes, but under the current formula, its allowable ceiling stood at $48.3 billion—meaning the state would have had to collect another $5.2 billion before taxpayers received a dime in refunds.
In 2022, at the end of what we hope was a once-in-a-century pandemic, state revenues surged as the economy reopened. Chapter 62F returned $3 billion in excess collections—only the second refund since 1986. Under Question 5, refunds would no longer depend on such extraordinary revenue surges. Economic modeling by Mass Opportunity Alliance suggests smaller refunds could occur every couple of years.
Tufts University estimates that Question 5 would in the future produce refunds averaging $200 to $250 per taxpayer annually, including years with no refund. The Massachusetts Taxpayers Foundation, which opposes Question 5, calculated that refunds would have occurred four times over the past decade and averaged $701 in each of those refund years (actual range: $269 ~ $1,095 per filer).
Opponents warn that Question 5 would make it harder for the state to recover from recessions. But historical modeling found that the proposed formula would not have triggered refunds during either the Great Recession or the COVID downturn.
Outsized tax collections have helped fuel a 135 percent increase in Massachusetts’ budget since 2010, from $27 billion to more than $63 billion (excluding billions in supplemental spending). Over the same period, Massachusetts wages and salaries grew less than 110 percent. Sustaining that spending growth puts pressure on state taxes and fees, both of which have increased.
A recent Boston Globe poll found that taxes and the rising costs of housing, electricity, and health care are driving many residents to consider leaving Massachusetts. Many already have. The state has lost 182,000 residents through net domestic migration since 2020. In 2023 alone, Massachusetts lost $4.2 billion in adjusted gross income through interstate migration. From September 2022 through September 2024, nine consecutive quarters of negative net employer-business formation resulted in a loss of almost 18,000 businesses.
These losses weaken the economic base that supports government. State revenues depend on people earning wages, creating jobs, and building businesses.
With government spending outpacing wage growth and affordability concerns mounting, it’s little wonder that a Mass Opportunity Alliance poll found 73 percent support for strengthening Chapter 62F.
Some opponents call Question 5 a giveaway to the wealthy. That’s not true. In fact, it will have a “Robin Hood” effect. In 2023, Beacon Hill changed the law to exclude revenues from the Millionaire’s Tax when calculating whether taxpayers get refunds. Question 5 would reverse that decision, bringing billions in Millionaire’s Tax revenues back into the calculation.
Under Chapter 62F, everyone eligible for a refund gets the same check, regardless of income. Whether dogcatcher or bank president, you get the same amount.
Forty years ago, Massachusetts voters approved a limit on how much tax revenue the state could keep, not a formula that allows it to hoard billions more before issuing the required refunds. Question 5 would restore the original protection: Government can grow as taxpayers’ earnings grow, but excess collections belong to taxpayers.
Jim Stergios, Executive Director, Pioneer Institute, Boston.
