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Supporters Look to Revive the “Millionaires Tax”

Jan 19, 2019Boston Globe, Council in the News

By Jon Chesto

You may still get a say on that millionaires tax after all. You’ll just have to wait a few years.

The proposal, you may recall, had been headed to Massachusetts voters last year before being sideswiped by a court ruling. Proponents, led by the Raise Up Massachusetts coalition, suffered a crushing defeat in June when the state Supreme Judicial Court ruled that the group’s “Fair Share Amendment” would be unconstitutional.

Now, they’re back, with essentially the same proposal: a surcharge of 4 percentage points on the state income tax for earnings above $1 million, with the proceeds to be spent on education and transportation. But there’s an important twist. The previous proposal was submitted as a citizens’ petition. This time around, it’s being initiated by state lawmakers.

This distinction could prove to be crucial. Several business groups prevailed in court because the Fair Share proposal’s components — a new surcharge on income, setting aside money for schools, and more money for transportation — were deemed to be not closely connected enough. “Relatedness” is an important hurdle for citizens’ petitions to clear. Legislative proposals don’t need to pass that test.

Either way, a new tax rate for high earners requires a constitutional change in Massachusetts. These take time: two positive votes from the state Legislature, in two successive legislative sessions. Then, it’s up to the public, though the earliest statewide vote would be in November 2022.

Business groups will likely oppose it again. But it will be a tougher fight for them to wage. Sure, they’ll have lawyers check for any legal flaws in Raise Up’s approach again. But they’ll most likely try to battle this at the State House, not the courthouse.

Rather than focus on constitutional law this time, the Massachusetts High Technology Council is highlighting the potential economic damage. President Chris Anderson says “taxing your way out” of a problem just simply digs a bigger hole. He points to the exodus Connecticut has seen since imposing a tax on high earners. Massachusetts, Anderson says, “could end up with a Connecticut-like challenge” in a heartbeat. Anderson wants to avoid turning us into what he calls “an exit-strategy state” — a place where people want to head for the exits.

Chris Geehern of Associated Industries of Massachusetts says his group will underscore how this could hurt mom-and-pops whose business earnings get taxed as personal income.

One estimate showed nearly 20,000 households would pay the surcharge, adding some $2 billion a year to the state’s coffers.

Proponents have every reason to be confident. Senator Jason Lewis, a lead sponsor, says the previous proposal sailed through the Legislature with roughly 70 percent of lawmakers voting in favor, in two different sessions. (Supporters will need two majority votes; citizens’ petitions to change the constitution need just 25 percent.) If anything, the Legislature skews further to the left now.

Lewis filed his proposal on Friday, with Representative Jim O’Day leading the charge in the House. Schools and transit are in dire need of cash infusions here, Lewis argues, and an income tax on high earners is one of the fairest ways to get that money. Lewis says he’s open to other ideas — if the business community can propose another way to raise a comparable amount of funds.

Without a truce, the battle could be settled by a statewide political campaign. Raise Up has a few deep-pocketed unions on its side, along with the progressive Sixteen Thirty Fund. The business groups may need to turn to their own wealthy benefactors for help. A court ruling enabled them to dodge an expensive war last year. But they might not be so lucky the next time.

Increasingly, the Massachusetts High Technology Council is stepping up to create, execute, and lead critical statewide competitiveness strategies. Fostering a vision for our innovation economy under the MassVision2050 banner, the Council solidifies its position as a thought leader providing valuable insights to navigate emerging technologies, facilitates long-term planning, and reinforces the Council's commitment to excellence and action in the evolving Massachusetts tech-driven economy.

To learn more, contact Council President Chris Anderson.