Dissecting Baker’s stance on millionaire’s tax
Call for living within our means masks disparity for high earners
GOV. CHARLIE BAKER hasn’t formally said he’s against the so-called “Fair Share” ballot question, which would create a surtax on incomes over $1 million and earmark the proceeds for education and transportation. But the totality of his public comments and statements from his office certainly suggest more opposition than support. Neither he nor his office has issued any statements supporting the proposed tax or suggesting the need for the revenue it would generate.
Even while avoiding clearly stating opposition to the proposal, he argued against it in an interview this past weekend. “I think we need to continue to live within our means. That’s what people in Massachusetts are doing,” Baker told WCVB’s On the Record. “I mean if you look at the data, part of the reason tax revenues aren’t going up that much in Massachusetts is because personal income is not going up that much – 1 or 2 percent a year based on the Federal Reserve Bank. If personal income is not going up that much, people are figuring out a way to make do on their own. State government should do the same thing.”
But this argument, focused on the average growth rate, masks a major disparity between the highest earners, who would be subject to the proposed tax, and everyone else who would not. Income gains in recent years have been heavily skewed toward those at the top of the economic ladder.
The Boston Globe’s Evan Horowitz wrote in 2015 about a study by the left-leaning Economic Policy Institute which showed economic gains flowing upward in the state, leaving Massachusetts the sixth most unequal state in the Union. The institute found that, between 2009 and 2012, the top 1 percent of earners in Massachusetts saw their incomes grow by 47 percent, while everyone else, on average, saw their income decline 1.5 percent. The institute estimated that, in 2012, Massachusetts incomes for the top 1 percent averaged $1.8 million, while incomes for the rest averaged a little less than $53,000. That 1 percent comprises anyone making a little more than $530,000 a year, so only a fraction of those people would be subject to the new income surtax being considered. And as you move up the rarified strata of the 1 percent, incomes are rising even more rapidly. Basically, the smaller the fraction at the very top, the faster incomes have been improving.
More recent national data from the Washington Center for Equitable Growth found that the lower 99 percent has done a little better as the recovery has continued, but the top 1 percent continues to pull away from the rest. From 2009 to 2015, the average real incomes of the lower 99 percent increased 7.6 percent. Over the same period, the average real incomes of the top 1 percent increased by 37 percent. “As a result,” the center writes, “the top 1 percent of families captured 52 percent of total real income growth per family from 2009 to 2015 while the bottom 99 percent of families got only 48 percent of total real income growth.”
In addition to the comments to WCVB, Baker’s statements about the tax have emphasized that he “does not support tax increases on our hardworking families.” His office provided a similar statement in response to inquiries for this article. Indeed, Baker has taken high-profile, anti-tax stances in the past, including campaigning against indexing the gas tax during his 2014 election. But he has supported some new revenue sources for specific reasons, including taxes on home-sharing services such as Airbnb and assessments on employers whose workers obtain health insurance coverage through Medicaid. He has also backed far larger fare increases at the MBTA than originally contemplated, a fee on transportation network company rides, and collection of the sales tax on internet purchases.Whether Baker will formally oppose the ballot question remains to be seen. A business coalition is working to get it disqualified on legal grounds, which would make Baker’s position irrelevant. Assuming the constitutional amendment clears the legal hurdles, it will appear on the ballot alongside the reelection efforts of both Baker and Sen. Elizabeth Warren. While supporters of the question currently enjoy a wide lead in the polls, several past attempts at a progressive income tax in the state have failed. If the constitutional amendment does make the ballot, objecting to it on the grounds of sluggish income growth is difficult to defend. Income growth among those that would pay the tax has been robust.
Steve Koczela is the president and Richard Parr is the research director of the MassINC Polling Group, a subsidiary of MassINC, the parent of CommonWealth.