By Bob Katzen
A new campaign is underway to promote an amendment to the state constitution to allow a graduated income tax in Massachusetts and impose an additional 4 percent income tax, in addition to the current flat 5.1 percent tax, on taxpayers’ earnings of more than $1 million. Language in the amendment requires that, “subject to appropriation,” the revenue goes to fund quality public education, affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation.
The proposal is sponsored by Sen. Jason Lewis (D-Winchester) and Rep. James O’Day (D-West Boylston). It would need the votes of 101 of the 200 members of the House and Senate in the current 2019-2020 session and again in the 2021-2022 session. The earliest it could be on the ballot is in November 2022.
A similar effort by a group called the “Raise Up Coalition” to get the question on the 2018 ballot was derailed when it was ruled unconstitutional by the Supreme Judicial Court which said the constitution prohibits placing more than one objective in a single proposed constitutional amendment that is sought by a citizens’ group. The court’s decision noted that the proposal imposed the tax and then stipulates how the money could be spent.
The current amendment is proposed by legislators rather than citizens and according to proponents, amendments proposed by legislators can have more than one objective and would not be ruled unconstitutional by the court.
Supporters say the amendment will affect only 14,000 extremely wealthy individuals and will generate up to $1.9 billion per year in additional tax revenue. They argue that using the funds for public education, public colleges, and universities, and for the repair and maintenance of roads, bridges and public transportation will benefit millions of Bay State taxpayers.
Opponents argue the new tax will result in the loss of 9,500 private sector jobs, the loss of $405 million annually in personal disposable income, and some millionaires moving out of state. They argued that the earmarking of the funds for specific projects is illegal and said all the funds will go into the General Fund and be up for grabs to spend on anything.
“The $2 billion in new revenue that this proposal would raise would go a long way in helping to fix crumbling roads and bridges, improving service on the MBTA and other public transportation, increasing funding for public schools, expanding access to quality early childhood education, and making higher education more affordable for students and families,” said Lewis. “It’s also the best way to raise revenue that would make our tax system fairer and more progressive, rather than increasing taxes on middle class families who cannot afford to pay more.”
“By increasing the state’s already-high reliance on the income tax—a volatile and economically sensitive revenue source—this proposal would make the state more vulnerable to future budget gaps, leaving residents more exposed to the tax increases and budget cuts required to close such gaps,” said James Rooney, President & CEO of the Greater Boston Chamber of Commerce in a written statement opposing the tax.
“Should the proposal pass, 30 percent of total income tax revenue would come from less than 1 percent of all Massachusetts personal income tax filers,” continued Rooney. “Since the revenue would be dependent on the actions of a small share of filers, it is even more susceptible to sharp fluctuation.”
“The 1 percent, those who make $1 million in income a year, pay the smallest share in state income tax,” said O’Day. “This practice has built an economy on the backs of those who struggle most. By increasing income taxes by 4 percent for those who make $1 million in income a year, Massachusetts will lower the economic burden on low income residents while investing in the education and infrastructural foundations of the state which drive our economic development.”
“We can’t conceive of how anything can possibly be more fair than every taxpayer paying an equal tax rate on whatever their income,” said Chip Ford, Executive Director of Citizens for Limited Taxation, an opponent of the tax. “The higher one’s income the more in taxes one pays. How can imposing a different tax rate on some and not on others by any stretch be termed ‘fair’? It is the antithesis of fair.”
“Please recognize that assaulting “the wealthy”— the most mobile population—will only serve to motivate many of the commonwealth’s higher earners and businesses to relocate to more tax-friendly, greener pastures,” concluded Ford.