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CLT UPDATE
Monday, August 3, 2015

Any Grad Tax Paves the Road to Perfidy

A coalition of unions, religious leaders and liberal community organizing groups is pushing for a constitutional amendment that would raise taxes on Massachusetts residents earning more than $1 million a year.

The added tax revenue – which the coalition pegs at $1.3 billion to $1.4 billion a year - would be earmarked for the state to spend on education and transportation.

"There are great needs that are being unmet," said Lew Finfer, director of the Massachusetts Communities Action Network, a liberal organizing group that is co-chairing the coalition. "Support for education and transportation significantly deteriorated in the last ten years."

The coalition, Raise Up Massachusetts, is the same group that pushed the state Legislature to raise the minimum wage last year, then successfully advocated for the passage of a ballot initiative requiring employers to provide workers with earned sick time. But while the group has significant political clout, the constitutional amendment process, which takes three years, is a difficult one. The effort is also likely to face a backlash from anti-tax groups.

"This proposal is so absurd it's simply going to make a joke out of the whole process," said Barbara Anderson, the head of Citizens for Limited Taxation, which was founded in the 1970s to fight a graduated income tax.

"You have a small group of people getting picked on because they're rich," Anderson said. "Presumably, many of them worked very hard to get there, and they can pick up and leave." ...

Both Finfer and Raise Up Massachusetts spokesman Steve Crawford cited an argument that is often used to oppose a flat tax system — noting that rich people pay a lower percentage of their income in state and local taxes than poor people, since poorer people spend more of their income on purchases subject to the sales tax, while wealthy people save and invest more money. (Unlike state taxes, federal taxes are graduated, meaning the rich pay a higher tax rate than the poor.)

"We're calling it the fair share amendment, because the wealthiest people in Massachusetts pay a smaller percentage of their annual income than middle class and lower income earners in the state," Crawford said....

"We need a significant amount of new money," Finfer said....

But Anderson argued that the change would result in the state getting less tax revenue, since wealthy individuals could move away.

"My guess is if this passes in November 2018 on Tuesday, there are going to be a lot of UHauls heading out of the state on Wednesday," Anderson said. "These people don't have put up with being picked on because they're 'the rich.'" ...

Eileen McAnneny, president of the business-oriented Massachusetts Taxpayers Foundation, noted that there already is progressiveness in the tax code, due to exemptions and credits that are available to low-income individuals. According to 2013 figures from the Department of Revenue, taxpayers earning more than $100,000 already pay 72 percent of the taxes collected in Massachusetts, even though they make up just 19 percent of taxpayers. Those earning more than $1 million annually pay 20 percent of all the income taxes collected in the state.

"They're bearing more of the burden already," McAnneny said.

The Springfield Reporter
Sunday, August 2, 2015
Coalition would raise taxes on Massachusetts residents
earning more than $1 million annually

Chip Ford's CLT Commentary

"We need a significant amount of new money."
— Lew Finfer, director of the Massachusetts Communities Action Network
Co-Chair, Raise Up Massachusetts

"The only way to address inequities in our tax system and provide for the revenues we need for the services we need is to amend the constitution so we can have everyone paying their fair share."
— State Rep. Jay Kaufman (D-Lexington)
Supporter of the proposed amendment

"We need a significant amount of new money" — "we can have everyone paying their fair share."

You've got to hand it to the Progressives/Socialists — they never let go and they never let up.  I consider myself part of "everyone" and, though nowhere near close to being a millionaire, I'm already paying more than my "fair share."  Despite five times losing their assaults on our state's flat tax (1962, 1968, 1972, 1976, and 1994) they're back again for another stab — this time allegedly targeting only those whose income is over a million dollars.

Even if they target only billionaires, if adopted this constitutional amendment will transform our state's flat income tax into a graduated income tax — it's what Libs call "a first step."  As with every transformational "first step" they impose, they will never be satisfied. Once the public attitude adjusts, accepts and assimilates the change, the tax-borrow-and-spend cabal will inevitably be back for more — because we know MORE IS NEVER ENOUGH (MINE) and never will be.

Barbara was just interviewed on WRKO's "Boston.com Morning Show" hosted by Kim Carrigan [listen here], where she pointed out that many of those 14,000 Massachusetts millionaires who now pay 20 percent of all state income tax collected will likely just pack up themselves and their businesses and escape to lower/no income tax states. (There's one just north of our border; New Hampshire with no income tax and no sales tax either.)  Rep. Jay Kaufman was interviewed after [listen here].

How far behind that exodus will be those 19 percent of taxpayers who earn $100,000 and pay 72 percent of the state's income taxes? After all, "We need a significant amount of new money" and eventually it won't be coming from just millionaires.

When that's not a significant enough amount of new money, if the flat tax is eliminated then who will be next?

If this proposed constitutional amendment was to pass, the flat tax — which has existed in the Massachusetts Constitution since John Adams authored (1779-80) the oldest functioning written constitution in continuous effect in the world — will be gone, dead.  Even if the proposed amendment initially targets only millionaires, we will have surrendered the flat income tax and replaced it with a graduated income tax.

Amending the state Constitution to divide-and-conquer by income is, and always has been, a very slippery slope to perfidy.

Oh they'll promise to never target other income brackets if we just give them this minor little adjustment, "just on millionaires."

But we know how much such promises are worth — don't we.

Chip Ford
 

The Springfield Republican
Sunday, August 2, 2015

Coalition would raise taxes on Massachusetts residents earning more than $1 million annually
By Shira Schoenberg

A coalition of unions, religious leaders and liberal community organizing groups is pushing for a constitutional amendment that would raise taxes on Massachusetts residents earning more than $1 million a year.

The added tax revenue — which the coalition pegs at $1.3 billion to $1.4 billion a year - would be earmarked for the state to spend on education and transportation.

"There are great needs that are being unmet," said Lew Finfer, director of the Massachusetts Communities Action Network, a liberal organizing group that is co-chairing the coalition. "Support for education and transportation significantly deteriorated in the last ten years."

The coalition, Raise Up Massachusetts, is the same group that pushed the state Legislature to raise the minimum wage last year, then successfully advocated for the passage of a ballot initiative requiring employers to provide workers with earned sick time. But while the group has significant political clout, the constitutional amendment process, which takes three years, is a difficult one. The effort is also likely to face a backlash from anti-tax groups.

"This proposal is so absurd it's simply going to make a joke out of the whole process," said Barbara Anderson, the head of Citizens for Limited Taxation, which was founded in the 1970s to fight a graduated income tax.

"You have a small group of people getting picked on because they're rich," Anderson said. "Presumably, many of them worked very hard to get there, and they can pick up and leave."

Currently, all Massachusetts residents pay a 5.15 percent flat tax on their income, which is scheduled to gradually decrease to 5 percent. The proposal, dubbed the 'fair share amendment' by its proponents, would raise taxes by 4 percentage points on income over $1 million.

That means if the flat tax rate in 2019 is 5 percent, someone earning $1.3 million a year would pay 5 percent on the first $1 million of his income and 9 percent on the next $300,000.

The increased tax rate would hit around 14,000 of the state's wealthiest taxpayers.

The state push comes at the same time as there have been similar efforts on a national scale to address growing income inequality in the U.S., including calls for higher taxes on millionaires. U.S. Sen. Elizabeth Warren, D-Massachusetts, has been one of the leaders in the national movement by Democrats to focus on income inequality.

Both Finfer and Raise Up Massachusetts spokesman Steve Crawford cited an argument that is often used to oppose a flat tax system — noting that rich people pay a lower percentage of their income in state and local taxes than poor people, since poorer people spend more of their income on purchases subject to the sales tax, while wealthy people save and invest more money. (Unlike state taxes, federal taxes are graduated, meaning the rich pay a higher tax rate than the poor.)

"We're calling it the fair share amendment, because the wealthiest people in Massachusetts pay a smaller percentage of their annual income than middle class and lower income earners in the state," Crawford said.

Supporters of the amendment focus on the fact that it would create a dedicated source of revenue for transportation and education. Lawmakers have over the last several years been talking about the need for greater investment in roads and bridges, as well as in public transportation like the MBTA and Regional Transit Authorities. Funding for education – including early education and higher education — is also a major issue.

"We need a significant amount of new money," Finfer said.

Finfer said since 2002, state education spending has not kept pace with the rate of inflation, leading to cutbacks at many local schools. "There's tremendous holes that impact people's opportunities and lives in terms of education and transportation," Finfer said.

But Anderson argued that the change would result in the state getting less tax revenue, since wealthy individuals could move away.

"My guess is if this passes in November 2018 on Tuesday, there are going to be a lot of UHauls heading out of the state on Wednesday," Anderson said. "These people don't have put up with being picked on because they're 'the rich.'"

Although this is the first time this proposal has been raised, voters previously rejected attempts to move from the flat tax to a graduated income tax. In 1994, a ballot question that would have imposed a graduated income tax and raised the top tax bracket to 9.8 percent was defeated overwhelmingly, 70 percent to 30 percent. A 1972 ballot question establishing a graduated income tax was defeated 67 percent to 33 percent.

Paul Craney, executive director of the fiscally conservative Massachusetts Fiscal Alliance, said the rejections show voters support the flat tax.

"People like fairness," Craney said. "People like the idea that we're all taxed equally no matter what you make. It gives an incentive for people to try to make more money."

Eileen McAnneny, president of the business-oriented Massachusetts Taxpayers Foundation, noted that there already is progressiveness in the tax code, due to exemptions and credits that are available to low-income individuals. According to 2013 figures from the Department of Revenue, taxpayers earning more than $100,000 already pay 72 percent of the taxes collected in Massachusetts, even though they make up just 19 percent of taxpayers. Those earning more than $1 million annually pay 20 percent of all the income taxes collected in the state.

"They're bearing more of the burden already," McAnneny said.

This proposal may be easier to build support for politically than a broader graduated income tax, since it affects a smaller group of people.

To pass a constitutional amendment, a group must gather around 75,000 signatures. The amendment must be approved by 50 of the state's 200 legislators in each of two consecutive legislative sessions. It would then go to the ballot in 2018, when it would have to be passed by a majority vote. The first deadline for the process comes next Wednesday, when language of the proposal is due to Attorney General Maura Healey.

Senate President Stan Rosenberg, D-Amherst, is a supporter of a graduated income tax, but he has not taken a position on this proposal. House Speaker Robert DeLeo, D-Amherst, also has not taken a position.

Elizabeth Guyton, a spokeswoman for Gov. Charlie Baker, a Republican, said Baker "does not support tax increases on our hardworking families."

State Rep. Jay Kaufman, a Lexington Democrat who is the chairman of the Joint Committee on Revenue and the former co-chair of the state's Tax Fairness Commission, is one prominent legislative supporter of the proposed amendment. A majority of the Tax Fairness Commission recommend passing a constitutional amendment to institute a graduated income tax.

"The only way to address inequities in our tax system and provide for the revenues we need for the services we need is to amend the constitution so we can have everyone paying their fair share," Kaufman said.

Kaufman said he thinks the world has "changed dramatically" since 1994, when a graduated income tax was last on the ballot. "We're increasingly aware that the wealth and income gap in our country is really hurting the middle class and hurting our economic vitality," Kaufman said.
 

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

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

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