THE MASSACHUSETTS LEGISLATURE on Wednesday cleared the way for voters to decide whether to raise more than $2 billion in annual revenue through an income tax surcharge on people earning more than $1 million a year.
Meeting in a rowdy joint session, the House and Senate voted 134-55 to put the constitutional amendment on the November 2018 ballot. The so-called millionaire’s tax, called the Fair Share Amendment by its backers, is likely to dominate the political debate in Massachusetts next year and become a major issue in the campaign for governor, barring a successful court challenge preventing the measure from appearing on the ballot.
“This is going to be a very big issue for Democrats in the election,” said Senate President Stanley Rosenberg, who presided over the joint session of the Legislature and is a major supporter of the millionaire’s tax. “Democrats will be rallying around this because we did 42 tax cuts in the late 1990s and into the turn of the century and $3.8 billion was taken out of the revenue stream. Now we’re starting to pay for the fact that we went too far.”
Gov. Charlie Baker is playing it cute on the millionaire’s tax. His standard line is that he doesn’t support tax increases on the state’s hardworking families, but he has declined to say where he stands on the millionaire’s tax specifically. All three of his Democratic challengers back the millionaire’s tax, and two of them issued a joint statement on Wednesday prodding Baker to say where he stands.
“At a time when so many are struggling to keep their heads above water, the Fair Share Amendment is a reasonable, modest step towards solving some of our most urgent challenges. It will lay the foundation for revitalized schools and public transportation,” said Jay Gonzalez and Robert Massie.
The Legislature’s debate lasted close to two hours, but little new ground was broken, possibly because a similar debate took place last year. Constitutional amendments must be approved by 50 lawmakers in consecutive sessions; the vote last year was 135-57.
The votes both years broke down mostly along party lines. On Wednesday, the Senate voted 29-7 in favor of putting the constitutional amendment on the ballot, with two members absent. Sen. Patrick O’Connor of Weymouth was the only Republican senator to vote for the tax while Democratic Sens. Jennifer Flanagan of Leominster and Ann Gobi of Spencer voted against it.
The vote in the House was 105-48, with 12 Democrats voting no. The Democrats voting no included Majority Leader Ronald Mariano of Quincy and Reps. David Nangle of Lowell and Thomas Petrolati of Ludlow. House Speaker Robert DeLeo voted yes, as he did last year.
It was often hard to hear the debate, because most lawmakers were chatting away with each other, paying no heed to the speakers. Rosenberg banged his gavel many times asking for silence, usually to no avail.
Rep. Jay Kaufman, the House chair of the Revenue Committee, said establishing a 4 percent surtax on incomes greater than $1 million would help make the state’s tax system less unfair. He said Massachusetts has a regressive tax system where low-income residents tend to pay a higher share of their income in taxes.
Even with passage of the millionaire’s tax, he said, the state’s overall tax picture would remain moderate. “We will not be a high-tax state,” he said. “We will be in the middle of the pack.”
Republican lawmakers accused their colleagues of abdicating their responsibility by asking voters to approve tax hikes rather than taking action themselves. They also warned that the millionaire’s tax might prompt some of the state’s wealthiest residents to head for New Hampshire, where there is no income tax. And they questioned whether the constitutional amendment would run afoul of state law barring initiative petitions from appropriating state money for specific purposes.
Sen. Karen Spilka of Ashland, the chair of the Senate Ways and Means Committee, said the constitutional amendment will pass court muster because it sets aside $2 billion for transportation and education, but leaves specific appropriations within those broad categories to the Legislature.
Republican Rep. Peter Durant of Spencer, an opponent of the millionaire’s tax, said the measure was likely to pass. He said 99.5 percent of the state’s residents will not be affected by the tax, so it was likely at least half of them would vote for it.
Republican Rep. Bradley Jones of North Reading also indicated he thought the measure would be approved by voters. “It is poll-tested, focus-group-approved public policy,” he said.
CommonWealth has published a number of commentary and analysis pieces on the millionaire’s tax. A sampling is below:
False business narrative on millionaire’s tax by Sean Mulkerrin
Dissecting Baker’s stance on millionaire’s tax by Steve Koczela and Richard Parr
Blue state chauvinism by Josh McCabe
Dump the millionaire tax by Edward M. Murphy
“They also warned that the millionaire’s tax might prompt some of the state’s wealthiest residents to head for New Hampshire, where there is no income tax.”
I don’t see how or why — if they could and were so inclined, they already would have. And why haven’t they?
Maybe this is “Massachusetts Source” income which is taxable regardless of where they live — they may already live in New Hampshire. Maybe the source of the income can’t move, Harvard isn’t going to and MIT can’t (it’s a Land Grant institution).
Maybe the opportunity cost of moving is too steep in terms of other social, political, and/or cultural ways that Massachusetts differs from New Hampshire. Or maybe this would be a “tipping point”, encouraging a mass departure from Massachusetts.
My point is that we don’t know!
One side has the money already spent while the other is calculating the net loss — both are being disingenuous. Is it too much to ask that those advocating for or against a significant change in public policy to present at least a scintilla of research supporting their claims?