By Bob Katzen
The House 30-127, rejected an amendment that would have raised the tax rate on long term capital gains, dividends and interest income from 5 percent to 9 percent.
Amendment sponsor Rep. Mike Connolly (D-Cambridge) said that this sort of income overwhelmingly goes to the wealthiest households. He said the hike would raise an estimated $1.7 billion annually in new, progressive revenue. He called capital gains, dividends and interest “unearned income” that is unfairly taxed at the same rate that the state taxes “earned income” like wages and salaries. He said this is inherently inequitable and means the person working a minimum wage job is subject to the same Massachusetts income tax rate as the person with a billion dollar investment portfolio.
“This additional revenue would allow us to stop the cuts at the MBTA and to boost funding for our regional transit authorities,” said Connolly. “It would allow us to guarantee housing stability and it would give us the means to end homelessness in our commonwealth. It would also enable us to live up to the commitments we proudly made earlier this session with the Student Opportunity Act, and it would further enable us to support our public colleges and universities and to expand access to the full range of health care, childcare and social services, programs that are made all the more critical in this time of worsening pandemic, economic hardship and legal threat to the Affordable Care Act.”
Amendment opponents said that calling capital gains, dividends, and interest “unearned income” is totally misleading. They noted that the taxpayer actually originally earned this income and should not be taxed more than once on it.
“To a ‘progressive’ Democrat perpetual tax hikes are the solution to every problem real or imagined,” said Chip Ford, Executive Director of Citizens for Limited Taxation, “and more is never enough.”
“Rep. Mike Connolly’s defeated amendment to hike the tax rate on so-called ‘unearned income’ is a perfect example,” added Ford. “He even compared it to the upcoming ‘Millionaire’s Tax’ constitutional amendment to unfairly soak the wealthy that’s being pushed onto the 2022 ballot by the liberal wing of the Legislature—most legislators— that is expected to raise an additional $2 billion annually. More is never enough for insatiable tax-and-spend ‘progressives,’ as this again demonstrates.”
“Through the Raise Up Mass coalition, my constituents are calling for greater funding to get us through this crisis and support progressive revenue to do that,” said Rep. Patricia Farley-Bouvier (D-Pittsfield) who voted for the amendment. “In fact, I pledged to a large group just a few weeks back that I would support progressive revenue increases. Though I would have much preferred to take this vote outside the budget process, when faced with an up or down vote, I believe it was important to keep my promise to my constituents.”
“Left wing House lawmakers live in a fantasy world where any low value state program should be funded no matter its cost,” said Paul Craney, Executive Director of the Massachusetts Fiscal Alliance. “It’s a good day for Massachusetts taxpayers when their proposals are soundly rejected.”
(A “Yes” vote is for the hike. A “No” vote is against it.)
Rep. Christine Barber Yes Rep. Mike Connolly Yes Rep. Denise Provost Yes