Correspondence, Spring 2017

Correspondence, Spring 2017

MILLIONAIRE’S TAX IS FAIR

In his recent piece in CommonWealth regarding the proposed Fair Share Amendment, or “millionaire’s tax,” Edward M. Murphy clearly understands why the amendment is necessary (“Dump the millionaire tax,” Winter ’17). He is right that the $1.9 billion that would be generated by the tax “could make a real difference” in funding transportation and public education across the state. He’s also correct that Massachusetts’ overall tax structure is regressive, and that voters support higher taxes on people whose annual income exceeds $1 million.

Unfortunately, Murphy’s piece contained several often-repeated misunderstandings of the Fair Share Amendment. As one of the original signers of the initiative petition, I hope to set the record straight.

First, Murphy argues that the Fair Share funds cannot be dedicated to transportation and public education due to a provision in the Massachusetts Constitution which precludes the adoption of any amendment that “makes a specific appropriation of money.”

In fact, Article 104 of the Constitution already dedicates revenue from the gas tax and other sources to the transportation needs of the Common-wealth. The Legislature determines what specific projects that revenue gets spent on, within the authorized range of purposes. Article 104 was passed by initiative petition. It has been repeatedly upheld by the courts as binding on the Legislature.

Murphy then cites a single anecdote about a hedge fund manager who moved from New Jersey to Florida as evidence that millionaires will flee the state if the Fair Share Amendment is adopted. Research shows that high-income people move to be near family and jobs, or to places with cheaper housing markets or warmer weather, not to save a few percentage points on their taxes. Multiple studies have found that when states such as New Jersey, Oregon, and Maryland raised the rate on their top tax brackets, there was no major change in the number of high income filers who moved to other states.

Murphy also claims that the Fair Share Amendment “fails to mitigate the state’s regressive tax system.” Today, the bottom 99 percent of taxpayers in Massachusetts pay 9.4 percent of their income in state and local taxes, while the top 1 percent of taxpayers pay only 6.5 percent. With the Fair Share Amendment, the amount paid by the top 1 percent would increase to 8 percent, still less than the rest of us. Murphy is therefore correct that our tax system would still be somewhat regressive. That hardly seems like a reason to oppose a major improvement to the equity of our tax system that would fund critical investments in our transportation infrastructure and public education.

Lastly, Murphy ignores the reason we’re talking about the Fair Share Amendment at all. This is a citizens’ initiative, not a legislative proposal. Raise Up Massachusetts—a grassroots coalition of community organizations, religious groups, and labor unions—collected more than 157,000 signatures from Massachusetts voters to place the Fair Share Amendment on the 2018 ballot.

If Massachusetts is serious about helping working families and building a stronger economy, we must all embrace the Fair Share Amendment.

Mary Ann Stewart
Parent representative
Massachusetts Board of Elementary and Secondary Education

 

CONTRACTOR STORY MISSING KEY NUMBERS

The article entitled “Home Wreckers” (Winter ’17) focused on the Massachusetts Home Improvement Con-tractor Program and Guaranty Fund administered by the Office of Consumer Affairs and Business Regulation as required by law since 1992.

Usually numbers tell the story, but in this instance very encouraging numbers weren’t in the story. Since the Baker-Polito Administration came into office in 2015, concerted and continuing efforts are yielding considerable improvements to a revamped program under my direction.

Compliance with the requirement for new contractor registration is central to fixing what has, in the past, negatively impacted Guaranty Fund balances and claim payments to aggrieved homeowners. However, since the end of 2014, new registrations have increased 34 percent. That’s had a very positive impact on the Guaranty Fund, which can reimburse homeowners up to $10,000 for unpaid court judgments against contractors. The fund’s coffers rose 51 percent in 2016 from 2014 levels. That, in turn, has led to full claim payments being made within 30 days to qualifying homeowners with court judgments against contractors. Contrast this with the fact that in 2013, some qualifying Guaranty Fund claim payments were often delayed by up to two years and others were staggered due to concerns over the Guaranty Fund’s solvency. My office is now working with municipal building inspectors to deny building permits to contractors owing outstanding fines. In 2016, the result was a recoupment of $72,000 in fine payments to the fund, a 100 percent increase over the previous year. In fact the fund closed out 2016 with a very healthy balance of $957,000.

What “Home Wreckers” also failed to convey is that homeowners apply for relief from the Guaranty Fund only after they demonstrate that they’ve made reasonable efforts to collect on their court judgment against a contractor. The Office of Consumer Affairs uses debt collection services and the Office of the Comptroller’s Interceptor Program to try and compel contractors to reimburse the Guaranty Fund. Enforcement referrals to the attorney general’s office have been made and will continue to be made going forward. This office can and does regularly revoke contractors’ registrations, but that doesn’t mean they will cease soliciting and accepting home improvement jobs.

Finally, the sub-headline speaks to homeowners being given a false sense of protection from the program. Registered or not, contractors can be proud craftsmen with great track records, but they can also be shoddy in their work and dishonest with their customers. The office always recommends that the best way homeowners can safeguard themselves is to get estimates from multiple contractors, ask for references, and use the office’s online look-up to ensure they are registered and see whether they have complaint, disciplinary, arbitration, or Guaranty Fund histories.

Meet the Author
John Chapman
Undersecretary, Office of
Consumer Affairs &
Business Regulation
CORRECTION

Due to a reporting error, a story (“Steward’s asset-light philosophy) in the Winter 2017 issue incorrectly stated that Steward Health Care oversees 4,000 patients. The company actually oversees 400,000 patients.