Business Groups Ask State Court to Kill Tax Proposal

Oct 3, 2017Boston Business Journal, Council in the News

By Greg Ryan

Leaders of five Massachusetts business advocacy groups are asking the state’s highest court to prevent the so-called “millionaires tax” proposal from going before voters, arguing that it sets aside tax revenue in a way that is unconstitutional.

The proposal, which is set to appear on the ballot in November 2018, would raise state income taxes for those making $1 million or more a year by four percentage points.  It would reserve those tax dollars for two purposes: transit and schools.

The heads of five of the state’s most high-profile business groups are filing the suit: the Massachusetts High Technology Council, Associated Industries of Massachusetts, Massachusetts Taxpayers Foundation, Massachusetts Competitive Partnership and the state chapter of the National Federation of Independent Business.

The lawsuit contends that the Massachusetts Constitution bars any ballot initiative from making a “specific appropriation” of state funding, according to a copy of the complaint that is expected to be filed with the Supreme Judicial Court on Tuesday.  It points to a 1937 SJC ruling that barred an initiative from requiring that certain revenue be spent “only” on highways.

By the same token, tax increases are supposed to be limited to the Legislature, not inserted into the constitution through a ballot question, according to the lawsuit.

“The result will be that the Legislature is left with little control over both taxes and spending, making its constitutional duty to produce a balanced budget increasingly difficult to perform,” the complaint said.

The lawsuit also argues that the proposal’s tying together of three unrelated topics — an income-based surtax, education funding and transportation funding — is barred by the Massachusetts constitution. Lawmakers long ago expressed a desire to prevent “logrolling,” or the combination of a popular proposal with an unpopular one, in a ballot question, according to the suit.

In the complaint, business leaders attempt to use the words of high-ranking Massachusetts lawmakers who support the tax against them.  Politicians have admitted the proposal is designed to use increases in transit and education revenue to overcome the unpopularity of graduated income taxes, according to the lawsuit.

For instance, the complaint quotes Senate President Stan Rosenberg as saying the millionaires tax “will stand a better chance of being approved” than past attempts to introduce a graduated income tax because “it is focused specifically on money for education and transportation.”  Joint Committee on Revenue chair Jay Kaufman and Joint Ways and Means Committee chair Karen Spilka are similarly quoted.

The defendants in the case are Attorney General Maura Healey, who found last month that the proposal is constitutional, as well as Secretary of the Commonwealth William Galvin, in order to prevent him from putting the proposal on the ballot.

The group behind the ballot proposal, Raise Up Massachusetts, is expected to involve itself in the case in some way, though it is not yet clear in what capacity.

 

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