Massachusetts Question 5 would change the state's revenue-limitation law beginning July 1, 2027. The initiative would cap annual state revenue at the prior year's net revenue increased by the average growth of Massachusetts wages and salaries over the previous three years. Revenue above that limit would be refunded to taxpayers the following year. The calculation would include revenue from the surtax on incomes over $1 million. The measure therefore raises a recurring fiscal-policy question: whether state revenue should automatically track wage growth, whether excess collections should be returned, and how much flexibility state government should retain when tax receipts rise quickly. When tax collections surge, residents can reasonably ask whether government should automatically keep the extra money. But a mechanical cap can also constrain the state when costs or public needs rise faster than wages. The formula matters as much as the principle.
What kind of revenue limit, if any, should Massachusetts place on state tax collections?