Corporate, Cap Gains Tax Hikes Favored in Poll: Income Tax Increase Opposed in MTA Poll
September 14, 2020
State House News Service
By Colin A. Young
With crunch time for difficult and potentially painful budget decisions drawing nearer each day, advocates for greater state spending are touting survey results that they say show “overwhelming support” among Massachusetts voters for increasing taxes levied against corporations, annual household income over $1 million and investment profits.
Raise Up Massachusetts, which is working to add a proposed 4 percent surtax on income over $1 million to the state Constitution, said the results of the survey showed that most people in Massachusetts want the state to maintain or increase spending on public education and health care, and they want businesses and the wealthy to chip in more to offset the devastating financial impact of the COVID-19 pandemic.
“It’s undeniable that this recession and public health crisis is hitting low-income communities and communities of color the hardest, and state budget cuts threaten to make things even worse. Without action, damaging budget cuts to schools and colleges, hospitals, safety net programs, and other public services will worsen the economic pain, send us deeper into a recession, and intensify racial inequities,” Marie-Frances Rivera, president of the Massachusetts Budget and Policy Center said in a Raise Up press release. “By asking the well-off to pay a little more with these three proven policies, Massachusetts can generate the revenue needed to prevent devastating budget cuts and instead invest in a robust and just recovery for all.”
The three strategies that Raise Up said the survey, conducted online among 600 Massachusetts voters in late July, showed the most support for were hiking the corporate tax rate from 8 percent to 9.5 percent (41 percent strongly favor, 33 percent somewhat favor), increasing capital gains taxes by 2 percent (41 percent strongly favor, 31 percent somewhat favor), and closing a loophole to allow taxation of corporate profits shifted overseas (63 percent strongly favor, 21 percent somewhat favor). The results carry a margin of error of plus or minus 4 percent.
The survey, which was conducted by Echo Cove Research & Consulting for the Massachusetts Teachers Association, also found that 64 percent of voters either somewhat (32 percent) or strongly oppose (32 percent) increasing the state’s general income tax from 5 percent to 5.5 percent.
“There has been much attention focused on the economic consequences of the pandemic in Massachusetts. At a personal level, many families have seen their financial situation suddenly at risk. At the state level, falling tax revenues are putting a strain on funding for essential services. In addition, there has been much public attention paid to the fact that the wealthy have not suffered to the same degree as lower-income households,” the pollsters wrote in a memo to Raise Up and the MTA in which the survey results were described. “Given this environment, it is not surprising that an overwhelming majority of voters support increasing state taxes on wealthy households and corporations and oppose a general increase in state income taxes.”
Taxes could be a hot topic of conversation on Beacon Hill this fall. With spending plans for two fiscal years upended, lawmakers are on the lookout for ways to close potentially massive state budget gaps.
The business shutdowns ordered by the government to deal with the pandemic punched a gap in the state’s revenue base and officials have yet to say whether the drop was severe enough that they will need to dip into the state’s $3.5 billion rainy day account to cover fiscal year 2020 spending.
The outlook for fiscal 2021, which started July 1, has been unclear for months. The state is operating through next month on a temporary budget and tax collections have shown some recent promising signs, but the state’s unemployment rate stands at a worst-in-the-nation 16.1 percent. State officials, citing projections offered earlier in the pandemic, have estimated that fiscal 2021 tax collections could fall from $2 billion to $8 billion below fiscal 2020 levels.
Lawmakers and administration budget officials have said they need to know what, if any, relief the federal government is going to provide to states before they can craft a budget for the rest of fiscal year 2021.
The business-backed Massachusetts High Technology Council has long resisted efforts by Raise Up and others to impose new or higher taxes at the state level, but its president acknowledged in August that it is not entirely opposed to tax increases.
“Temporary revenue raising options may be necessary and could attract significant support from business leaders — including the High Tech Council — provided they are coupled with a combination of prudent and forward-looking approaches that optimize ‘rainy day fund’ resources, budget reductions, public procurement reforms, state borrowing and federal aid,” Christopher Anderson wrote in his August bulletin. “Conversely, the Council will continue to advocate vigorously against policy approaches that would adopt the ‘and this tax too’ approach sought by some advocates advancing policies that significantly threaten Massachusetts’ economic competitiveness.”
Raise Up, a coalition of more than 100 labor, community and faith-based groups that has worked to secure minimum wage increases, a new paid family and medical leave program and guaranteed earned sick time, has had its sights set on the 4 percent income surtax for years and is working to guarantee its place on the 2022 general election ballot.
The group said the survey results showed that 52 percent of respondents strongly favor the so-called millionaire’s tax and another 26 percent favor it somewhat.
“Notably, support for increasing state income taxes on annual incomes over $1 million is strong across all major income categories,” the group said, though it did not release survey result in that level of detail. “For example, increasing the income tax on the wealthy has the support of 83 percent of those earning more than $200,000 per year.”
That Constitutional amendment, which Raise Up says could generate as much as $2 billion per year for education and transportation, still needs one more vote from the Legislature to go before voters for final approval in November 2022. A previous attempt to put the question before voters in 2018 was sunk by the Supreme Judicial Court, which ruled in June 2018 that the question improperly mixed two different spending priorities and a major change in tax policy.
Supporters of the income surtax redrafted their plan after the court ruling. Because the state constitution calls for a flat tax rate, a formal amendment is required to put a different rate on a higher income bracket.