For just over a century
since Massachusetts imposed an income tax in 1916 the rate has been
flat, meaning all taxpayers pay the same tax rate on their earned
What can be more fair
than every taxpayer paying a tax on their taxable income at the same
rate? That used to celebrated as equality.
A graduated income tax
constitutional amendment in one guise or another has been proposed and
put on the ballot five times in the past (in 1962, 1968, 1972, 1976, and
1994) and soundly defeated by a large majority of voters every time.
But here we find
ourselves once again confronting a sixth bid to amend the state
constitution, another attempt to crack the flat tax which will provide
the first step toward creating a graduated income tax for all. This
time around it's deceptively dubbed "The Fair Share Amendment," but
again we ask, what can be more fair than every taxpayer paying a tax on
their taxable income at the same rate?
Pioneer Institute has produced numerous studies and reports on many
potential negative effects of this proposed "surtax" on "millionaires,"
whether those consequences are unintentional or otherwise. Perhaps the
most concerning is that constitutional amendments are extremely
difficult and time-consuming to change, requiring many years to reverse
once adopted. Dubious tax policies do not belong in the constitution —
period — especially one such as this which will possibly if not
likely produce results that need to be quickly reversed or amended.
When the "tech tax,"
adopted in July of 2013, was found to be bad legislation with
significant unintended consequences it was quickly repealed that
September retroactively. As a statute, that quick turnaround was
possible to accomplish before more damage was done. As a constitutional
amendment it would not have been; it would have taken many years by
which time the damage would have been compounded and irreversible.
Ironically it's not as
if the Commonwealth needs an additional (projected) $2 Billion a year at
this time, or frankly any time in the near future if at all.
State spending has
ballooned over the years. The FY2017 budget adopted just four years ago
was $38.9 billion; the FY2011 budget passed just ten years ago was $27.6
billion; a decade before that the FY2001 budget was $21.4 billion. When
adjusted for inflation that $21.4 billion FY2001 state budget in today’s
dollars is equivalent to $32.6 billion. The proposed $47.6 Billion
FY2022 budget now under consideration will increase the coming fiscal
year’s state spending by some $15 billion in real dollars over the past
twenty-one years — a spending increase of 146%.
Then there is the
Commonwealth's unexpected revenue bonanza. The Department of Revenue
announced last week "FY2021 year-to-date collections totaled
approximately $30.451 billion, which is $5.689 billion or 23.0% more
than collections in the same period of FY2020." And now the pandemic
lockdowns are easing, businesses are reopening, and employment is on the
Lest it be overlooked,
the federal government is providing Massachusetts with $5.3 Billion in
"free money" relief on top of the record state revenue collection.
Other states finding
themselves in this sudden embarrassment of riches predicament are taking
a humble and rational approach, for example look what Ohio is doing with
its unexpected pandemic revenue windfall: Income tax cuts, with each
branch of its state government vying to outdo the other. The Washington
D.C.- based Tax Foundation reported last Thursday ("Ohio
Lawmakers Ponder Tax Relief after Rosy Revenue Outlook"):
"Ohio is one of a
growing number of states which experienced revenue increases despite the
economic slowdown from the coronavirus pandemic and is now looking to
return some of that through tax relief. The question for Ohio
legislators is, how best to do that?
"This week, the Ohio
Senate released its budget proposal for the upcoming fiscal biennium
(2022-2023) and it includes a 5 percent tax cut to personal income
taxes. That differs from earlier versions offered by Gov. Mike DeWine
(R), which offers no cuts to the income tax, and the Ohio House of
Representatives, which includes a 2 percent cut. The Senate proposal
also offers a solution to the issue of cities taxing nonresident workers
who haven’t been coming to their offices in those cities throughout the
"The Senate tax
reduction plan would be implemented over two years, trimming rates by
3.5 percent the first year and 1.5 percent the second year."
What is the
Massachusetts Legislature's response to the Commonwealth’s own
embarrassment of riches predicament?
For too many
legislators it is to propose imposing even more taxes of course.
We ask you to vote down
or put aside this sixth assault on the historic Massachusetts
flat tax, reject this poorly considered proposed constitutional
amendment. It is not needed now if ever and will only lead to another
divisive ballot campaign and a sixth defeat.