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"Payroll Tax"?

To:  Members of the General Court
November 29, 2012
Re:  Union-liberal coalition ongoing fantasy of a graduated income tax (latest incarnation, “payroll tax”)

Citizens for Limited Taxation was founded in 1974 to fight the proposed graduated income tax which the Legislature had placed on the 1976 ballot. We fought it again when a coalition of unions and liberals placed it on the 1994 ballot; we won 70-30%.

Our state constitution does not allow a graduated income tax, so the union-liberals coalitions have to convince voters to change the constitution, which voters have wisely declined to do. We have also watched the union-liberals try to find some way around the constitution.

In 1985 the Massachusetts Senate asked for an advisory opinion about its plan to effectively graduate the income tax rate with graduation of the personal exemption. The Massachusetts SJC ruled that:

“Provisions of St. 1985, c. 593, Section 6, amending G. L. c. 62, Section 3, to provide for personal income tax exemptions which would progressively decrease as a taxpayer's total income increased, violated the requirement of art. 44 of the Amendments to the Massachusetts Constitution that such a tax be levied ‘at a uniform rate throughout the Commonwealth upon incomes derived from the same class of property’…Whatever may be the merits of the system commonly described as the graduated income tax, it is prohibited by art. 44.”

The union-liberal proposed payroll tax is just another attempt that will fail. Why take a “new tax” vote just to have it rejected by the SJC, again?

The flat rate is presently 5.25% (despite CLT’s ongoing efforts to return it to its traditional 5%, from where it was “temporarily” increased in 1989). Union-liberals cannot make taxpayers earning more than $100,000 pay a higher tax on their income, either directly or through their employers.

If by a stretch from the Massachusetts Supreme Judicial Court’s established precedent, the argument prevails that the tax is paid by employers instead of employees, all this would accomplish is raising the costs of doing business in Massachusetts, which is the last thing the commonwealth needs. I suppose they could refuse to pay anyone $100,000 or more, thereby sending some high-performing taxpayers off to work in other states.

Forget about it, unions-liberals. Taxes are plenty high on everyone in Massachusetts (4th highest per capita in the nation). Time to do something about the government spending, including the operating costs at the MBTA: perhaps a good start would be cutting the pay of “the rich” employees there who earn more than $100,000.

Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    508-915-3665