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CLT UPDATE
Wednesday, January 20, 2016
Chip Faulkner's After-Action
Report
Gimmee Lobby Grad Tax Hearing
|
The proposed amendment to the
Massachusetts constitution calls for an additional tax
of 4 percent on people with annual incomes of $1 million
or more. Revenue from the tax would fund public
education and transportation improvements....
The group Citizens for Limited
Taxation has called the tax proposal deceptive
because there's no guarantee the additional revenue
would go to education and transportation.
Associated Press
Monday, January 18, 2016
Massachusetts lawmakers to hear proposal for extra tax
on wealthy
For those in favor, it's called
the "fair share amendment" and for those opposed
it's better known as a $1.9 billion tax hike.
Supporters claim it would stem the growth of the
divide between the state's wealthy and the working
class while investing in education and
infrastructure, but opponents say it would
jeopardize investments and employment in the state.
The two sides clashed Tuesday at
a hearing on a proposed constitutional amendment (H
3933) that would establish a 4 percent surtax on
income in excess of $1 million, raising the tax rate
for those earnings to about 9 percent, and
dedicating the additional revenue to education and
transportation initiatives.
"To whom much has been given,
much is expected. The wealthy owe it to previous
generations of taxpayers that have built our
economic system, built the infrastructure, built the
institutions, paid for all of that, paid to educate
our students that helped them build their
businesses," former Democratic Rep. Matthew Patrick
said. "You've heard all of this before, but it's
true."
Opponents argued that the
amendment would have serious consequences that are
not being considered by proponents, like the
possible outward migration of Bay State millionaires
and the impact on the state budget of the associated
decline in capital gains taxes.
"This significant new tax burden
will fall on individuals and certain business
entities paying taxes at the individual rate," John
Regan, executive vice president of governmental
affairs for Associated Industries of Massachusetts,
said. "It is hard to imagine that this new
obligation will not impede investment, employment
and certain locational decisions."...
David Tuerck, executive director
of the Beacon Hill Institute, said he studied the
proposal and advised lawmakers to walk away from the
idea to "send a message that Taxachusetts exists no
more."
"We find that the amendment would
cause the loss of 9,500 private sector jobs and $405
million annually in personal disposable income,"
Tuerck said. "Furthermore, it will set the stage for
future, even more damaging tax increases and
resulting economic losses." ...
The two sides disagree over
whether the proposal's language directing the new
revenue be spent only on education and
transportation infrastructure would be allowed under
the state constitution, with opponents of the
amendment arguing that the constitution prohibits
ballot initiatives from making specific
appropriations.
"The money from this new marginal
tax will be deposited into the general fund like all
other tax revenue and used by the Legislature as it
deems appropriate," said Massachusetts Taxpayers
Foundation President Eileen McAnneny, who testified
against the amendment. "With all the competing
demands on revenue, it's not certain that the money
will go for new transportation or education
investments."
Supporters said that the specific
appropriations would be allowable because the
amendment would alter the constitution itself,
embedding it with the requirement that the new
revenues be spent only for education or
transportation.
Co-chair Sen. Michael Rodrigues,
who said he supports putting the question before
voters but has not yet formed his own opinion on the
amendment, said the issue of constitutionality
should be settled by obtaining an opinion from the
attorney general or constitutional expert before the
issue goes to voters....
The Revenue Committee has until
April 27 to report on the proposed amendment, but
Kaufman said he expects the committee to begin
deliberating on the topic in about a week. If a
majority of the committee is in favor, the question
could be added to the agenda for the Constitutional
Convention scheduled to resume on Feb. 3.
Chip Faulkner, associate
director of Citizens for Limited Taxation,
vowed to fight the proposed surtax all the way to
the 2018 ballot if necessary to reaffirm the message
voters sent when they defeated graduated income tax
proposals on the ballots in 1962, 1968, 1972, 1976
and 1994.
"Once again, we're going to fight
this battle and we're going to win for the sixth
time," he said.
State House News Service
Tuesday, January 19, 2016
Impacts of tax hike on wealthy debated at hearing
Advocates and citizens,
representing business, labor, education,
transportation and a host of other interests, packed
a Statehouse hearing on Tuesday to testify before
the Legislature's revenue committee on a proposed
constitutional amendment to raise the tax rate on
millionaires.
The proposal would raise taxes on
income over $1 million by 4 percentage points – from
around 5 percent to around 9 percent.
For it to pass, the amendment
needs support from 50 lawmakers in a first vote in
2016 and a second vote in either 2017 or 2018. It
would then go to the ballot in November 2018....
The ballot question states that
the money raised by the new tax will be used for
education and transportation. Supporters of the
proposal have focused on Massachusetts' great needs
in those areas.
"Our classrooms lack crucial
resources, college students struggle with crushing
debt, roads and bridges are crumbling, and parents
are unable to access high-quality, affordable
preschool," said Massachusetts Teachers Association
President Barbara Madeloni. "The Fair Share
Amendment would provide essential revenue to make
much-needed investments across all levels of public
education and enhance our transportation
infrastructure."
But opponents say there is no way
to ensure that the Legislature will not divert the
money elsewhere. Under state law, ballot initiatives
cannot make specific budget appropriations. So it is
up to the Legislature to actually set aside the
money. Eileen McAnneny, president of the
Massachusetts Taxpayers Foundation, said that means
the money from the new tax will be deposited into
the state's general fund, and lawmakers will decide
where it goes.
"With all the competing demands
on revenue, and the modest revenue growth
projections for the next several years, it is not
certain the money will go for new transportation or
education investments," McAnneny said.
The Springfield Republican
Wednesday, January 20, 2016
'Millionaires' tax' raises questions of fairness,
business practices,
transit needs at Statehouse hearing
Lawmakers yesterday took
testimony on a proposed constitutional amendment
that would slap a special surcharge on tax filers
who earn more than $1 million per year. The
“millionaires’ tax” is the brainchild of Raise Up
Massachusetts, a group of community and social
service groups and labor unions seeking both a
revenue boost — and a tool to get the wealthy to pay
their “fair share.”
What they’re likely to get
instead is a widening of the gap between available
revenues and state spending, once the wealthy get
their tax advisers to
start sharpening their
pencils.
The amendment would impose a 4
percent surcharge on individual earnings above $1
million. So after the millionaires start packing up
for Florida — or simply find more creative ways to
shield income — how long before the push is on to
lower the threshold?
To redefine “rich”?
Connecticut imposes its top tax
rate (now at 6.99 percent) on individuals earning
$500,000. California’s version of a millionaires’
tax is imposed on those who earn more than $250,000.
The “fair share” crowd could have
pushed to impose a graduated income tax to replace
the Bay State’s flat rate, but voters absolutely
crushed the last effort to do that. And anyway, it’s
much simpler to demonize wealth, and call for a
special levy on “a tiny fraction” of the state’s
residents.
That tiny fraction affects at
least 14,000 individuals or businesses that pay
taxes at the individual rate. The same crowd that
insists “Taxachusetts” is an outdated slur now want
to give everyone a reason to bring it back.
A Boston Herald editorial
Wednesday, January 20, 2016
Back to ‘Taxachusetts’?
|
|
Chip Faulkner's CLT
Commentary
After-Action Report:
Gimmee Lobby Grad Tax Hearing
Tuesday, January 19, 2016
To CLT's activists and supporters:
There I was sitting in Room B-1 in the
Statehouse. Surrounding me in this packed hearing room were free
loaders, delusional liberals, parasites on parade, ivory tower
academics and union scatterbrains. Many in the crowd were
wearing t-shirts that said, “Coalition for Social Justice’ ― a
phrase that, to me, means they want what you have but don’t want
to work for it.
The hearing was held by the Legislature’s
Joint Committee on Revenue to take testimony both pro and con on
House Bill 3933, which would impose a graduated income tax. This
time it would inflict an additional state income tax of 4% on
incomes above one million dollars, bringing the total to 9.15%.
To my astonishment, this hearing actually had a semblance of
high tech. Behind the chairman, high on the wall, was a video
screen listing the speaker(s) and a timer which allowed three
minutes for each speaker’s testimony. The House Chairman, Rep.
Jay Kaufman, runs an efficient meeting and holds the speakers to
that three minute limit. Compared to most committee chairman,
the Lexington Democrat does a good job. (If only he did as well
on CLT’s 2013-14 taxpayer rating where he scored a zero ― but I
digress.)
My testimony focused on a few key points:
1. The Grad Tax has been defeated five times at the ballot ― in
1962, 1968, 1972, 1976 and 1994. It’s obvious that Bay State
taxpayers don’t want a tax increase.
2. Right now nobody wants to hike taxes in Massachusetts. The
Governor has said so, as well as the House Speaker. The trend in
states around the country is to hold the line or cut taxes.
3. Millionaires can easily move to another state if this
proposed constitutional amendment passes on the ballot. With
improved technology, it might be just a matter of moving a few
laptops. More ominous: If they get to tax millionaires, other
lower income groups will be their next segregated target.
4. The idea, pushed by proponents, that the extra revenue would
automatically go to public education, repair of the roads, et al
is preposterous. Article 48 of the State Constitution, under
excluded matters, prohibits an appropriation of funds from
appearing on the ballot.
The only others at the hearing testifying in opposition were:
Prof. David Tuerck of the Beacon Hill Institute, Eileen MCAnneny
from the Mass Taxpayers Foundation and John Regan representing
Associated Industries of Massachusetts. One of them pointed out
that millionaires currently pay two-thirds of the capital gains
tax revenue in Massachusetts.
I had said in my testimony that the force behind this proposal
will once again be “led by the usual suspects.” Of course they
showed up in force: The head of the State AFL-CIO, the
Massachusetts Teachers Association honcho, three wooly-haired
economic professors, Community Action, SEIU, et al.
Also, for some reason at this type of hearing, you always see
two or three women of an indeterminate age dressed like they had
just come from Woodstock.
Their testimonies were a collective moaning and gnashing of
teeth over the extra revenue needed for their various and sundry
“needs.” Plus, the unfairness of it all, that millionaires don’t
pay more! One of them said, “We want them to pay their fair
share of taxes.” (Gee, the last time I looked they were paying
the same 5.1% as the rest of us.)
NOTE: This grad tax proposal will most likely appear on the 2018
Massachusetts ballot. But before that happens the House and
Senate must meet in a Constitutional Convention this year and
give it a minimum 25% approval (50 votes) and another 25% vote
in the 2017-18 session.
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Chip Faulkner |
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Associated Press
Monday, January 18, 2016
Massachusetts lawmakers to hear proposal for extra tax
on wealthy
Legislation that's been dubbed the "millionaire tax" is
going before a legislative committee on Beacon Hill.
The proposed amendment to the Massachusetts constitution
calls for an additional tax of 4 percent on people with
annual incomes of $1 million or more. Revenue from the
tax would fund public education and transportation
improvements.
A public hearing on the bill is set for Tuesday.
Supporters say they collected more than 157,000
signatures last year in an effort to put the measure
before lawmakers and, eventually, the state's voters.
The earliest it could appear on the ballot is November
2018.
The group Citizens for Limited Taxation has
called the tax proposal deceptive because there's no
guarantee the additional revenue would go to education
and transportation.
State House News Service
Tuesday, January 19, 2016
Impacts of tax hike on wealthy debated at hearing
By Colin A. Young
For those in favor, it's called the "fair share amendment" and
for those opposed it's better known as a $1.9 billion tax hike.
Supporters claim it would stem the growth of the divide between
the state's wealthy and the working class while investing in
education and infrastructure, but opponents say it would
jeopardize investments and employment in the state.
The two sides clashed Tuesday at a hearing on a proposed
constitutional amendment (H 3933) that would establish a 4
percent surtax on income in excess of $1 million, raising the
tax rate for those earnings to about 9 percent, and dedicating
the additional revenue to education and transportation
initiatives.
"To whom much has been given, much is expected. The wealthy owe
it to previous generations of taxpayers that have built our
economic system, built the infrastructure, built the
institutions, paid for all of that, paid to educate our students
that helped them build their businesses," former Democratic Rep.
Matthew Patrick said. "You've heard all of this before, but it's
true."
Opponents argued that the amendment would have serious
consequences that are not being considered by proponents, like
the possible outward migration of Bay State millionaires and the
impact on the state budget of the associated decline in capital
gains taxes.
"This significant new tax burden will fall on individuals and
certain business entities paying taxes at the individual rate,"
John Regan, executive vice president of governmental affairs for
Associated Industries of Massachusetts, said. "It is hard to
imagine that this new obligation will not impede investment,
employment and certain locational decisions."
Raise Up Massachusetts has estimated the surtax would affect
14,000 individuals, generating between $1.3 billion and $1.4
billion in additional revenue, while the Department of Revenue
estimated a higher yield of $1.6 billion to $2.2 billion with
$1.9 billion as the median.
David Tuerck, executive director of the Beacon Hill Institute,
said he studied the proposal and advised lawmakers to walk away
from the idea to "send a message that Taxachusetts exists no
more."
"We find that the amendment would cause the loss of 9,500
private sector jobs and $405 million annually in personal
disposable income," Tuerck said. "Furthermore, it will set the
stage for future, even more damaging tax increases and resulting
economic losses."
The hearing before the Joint Committee on Revenue was the first
State House step in what could be a three-year long process to
get the proposed constitutional amendment before voters on the
2018 ballot.
Labor activists and others working with Raise Up Massachusetts
gathered about 157,000 signatures, 92,617 of which were
certified by the secretary of state's office, to put the
petition before the Legislature. If the proposal is advanced by
House and Senate members meeting jointly in Constitutional
Conventions this session and in the 2017-2018 session, the
question could go to voters in November 2018.
The two sides disagree over whether the proposal's language
directing the new revenue be spent only on education and
transportation infrastructure would be allowed under the state
constitution, with opponents of the amendment arguing that the
constitution prohibits ballot initiatives from making specific
appropriations.
"The money from this new marginal tax will be deposited into the
general fund like all other tax revenue and used by the
Legislature as it deems appropriate," said Massachusetts
Taxpayers Foundation President Eileen McAnneny, who testified
against the amendment. "With all the competing demands on
revenue, it's not certain that the money will go for new
transportation or education investments."
Supporters said that the specific appropriations would be
allowable because the amendment would alter the constitution
itself, embedding it with the requirement that the new revenues
be spent only for education or transportation.
Co-chair Sen. Michael Rodrigues, who said he supports putting
the question before voters but has not yet formed his own
opinion on the amendment, said the issue of constitutionality
should be settled by obtaining an opinion from the attorney
general or constitutional expert before the issue goes to
voters.
"I think that's an important issue that the voters of the
commonwealth have to be assured that as this constitutional
amendment proposes that these new revenues can only be expended
on education and transportation, that there's no cloud out there
and no question on whether or not that is actually the truth and
fact," he said.
His House counterpart, Rep. Jay Kaufman, who has called himself
an "active, enthusiastic supporter" of the proposal, said that
he is confident it will get the required 50 votes during a
Constitutional Convention this session and advance to the
2017-2018 session.
"I've been pleasantly surprised that, for the most part, I'm
hearing that our tax system is unfair and needs to be fixed, our
investments in infrastructure and education are inadequate and
that needs to be fixed and, given that this is coming to us as
an initiative petition, we should let the people vote," Kaufman
said of his conversations with other legislators.
Kaufman said he has not heard anxiety from lawmakers that they
could be asked to take a vote on a tax-raising proposal during
2016, an election year.
The Revenue Committee has until April 27 to report on the
proposed amendment, but Kaufman said he expects the committee to
begin deliberating on the topic in about a week. If a majority
of the committee is in favor, the question could be added to the
agenda for the Constitutional Convention scheduled to resume on
Feb. 3.
Chip Faulkner, associate director of Citizens for
Limited Taxation, vowed to fight the proposed surtax all the
way to the 2018 ballot if necessary to reaffirm the message
voters sent when they defeated graduated income tax proposals on
the ballots in 1962, 1968, 1972, 1976 and 1994.
"Once again, we're going to fight this battle and we're going to
win for the sixth time," he said.
The Springfield Republican
Wednesday, January 20, 2016
'Millionaires' tax' raises questions of fairness, business
practices,
transit needs at Statehouse hearing
By Shira Schoenberg
Advocates and citizens, representing business, labor, education,
transportation and a host of other interests, packed a
Statehouse hearing on Tuesday to testify before the
Legislature's revenue committee on a proposed constitutional
amendment to raise the tax rate on millionaires.
The proposal would raise taxes on income over $1 million by 4
percentage points – from around 5 percent to around 9 percent.
For it to pass, the amendment needs support from 50 lawmakers in
a first vote in 2016 and a second vote in either 2017 or 2018.
It would then go to the ballot in November 2018.
Here's a look at a few of the arguments made by supporters and
opponents of the amendment.
Is the proposed tax "fair"?
Supporters of the amendment say it ensures that people who earn
more than $1 million "pay their fair share." They have called it
the "Fair Share Amendment."
State Rep. Ellen Story, D-Amherst, a supporter of a graduated
income tax, called the proposal the best idea so far to impose
higher taxes on rich people. "It is fair," Story said.
Supporters of the higher tax say the current tax system is
unfair because wealthier people pay a smaller percentage of
their income in state and local taxes than poorer people.
According to the Institute on Taxation and Economic Policy, the
top 1 percent of Massachusetts earners (those making more than
$860,000) pay 4.9 percent of their income in state and local
taxes, while the middle 20 percent (those earning $44,000 to
$70,000) pay 9.3 percent of their income in state and local
taxes. This reflects the fact that although the income tax rate
is flat, middle class people pay a larger percentage of their
income in sales and property taxes.
But opponents of the higher tax on millionaires counter that
people earning more money already pay significantly more in
taxes. Someone earning $1 million a year would pay $51,000 in
state income tax; someone earning $50,000 would pay $2,550,
based on the current flat tax rate.
John Regan, executive vice president of government affairs for
the business trade group Associated Industries of Massachusetts,
said the proposed tax would be a 78 percent increase in the tax
obligation for income over $1 million – which would affect just
1 percent of citizens. That means an approximately $1.9 million
tax increase would be paid by just 19,500 filers.
Regan suggested that implementing the tax increase "makes
Massachusetts an unfair place."
What happens to the new revenue?
The ballot question states that the money raised by the new tax
will be used for education and transportation. Supporters of the
proposal have focused on Massachusetts' great needs in those
areas.
"Our classrooms lack crucial resources, college students
struggle with crushing debt, roads and bridges are crumbling,
and parents are unable to access high-quality, affordable
preschool," said Massachusetts Teachers Association President
Barbara Madeloni. "The Fair Share Amendment would provide
essential revenue to make much-needed investments across all
levels of public education and enhance our transportation
infrastructure."
But opponents say there is no way to ensure that the Legislature
will not divert the money elsewhere. Under state law, ballot
initiatives cannot make specific budget appropriations. So it is
up to the Legislature to actually set aside the money. Eileen
McAnneny, president of the Massachusetts Taxpayers Foundation,
said that means the money from the new tax will be deposited
into the state's general fund, and lawmakers will decide where
it goes.
"With all the competing demands on revenue, and the modest
revenue growth projections for the next several years, it is not
certain the money will go for new transportation or education
investments," McAnneny said.
Will millionaires pay the tax – or will they leave?
Opponents of the bill say faced with a new tax, millionaires –
including business owners who create jobs – will leave the
state.
They point to General Electric's recent decision to relocate its
global headquarters from Connecticut to Massachusetts, partially
because Connecticut raised taxes. David Tuerck, executive
director of the Beacon Hill Institute at Suffolk University,
said when Maryland raised its top tax rate by 1.5 percentage
points, the number of tax returns filed by millionaires fell by
30 percent, resulting in a drop of revenue.
"Millionaires have a way of going mobile. New Hampshire is just
a short drive up Interstate 93," Tuerck said.
But supporters of the bill say companies like General Electric
relocate to Massachusetts because of the state's reputation for
innovation and talent – a product of a strong education system.
A group of 71 economists who support the amendment note that the
higher tax rate would be similar to the tax rates at that income
level in other states, including New Jersey, New York and
Vermont. "While a very small number of wealthy taxpayers might
decide to move in response to higher taxes, most will not," the
economists wrote.
Arnold Hiatt, former CEO and chairman of Stride Rite, told the
legislative committee, "Rich folks don't move because they have
to pay more taxes."
The Boston Herald
Wednesday, January 20
A Boston Herald editorial
Back to ‘Taxachusetts’?
It isn’t just General Electric leaving Connecticut and its
unpredictable and punishing (for some) tax system. Wealthy
individuals may flee for friendlier tax territory, too, as the
state jacks up taxes on its highest earners. Now a group of
activists wants to create the same conditions in Massachusetts.
It’s fiscal insanity.
Lawmakers yesterday took testimony on a proposed constitutional
amendment that would slap a special surcharge on tax filers who
earn more than $1 million per year. The “millionaires’ tax” is
the brainchild of Raise Up Massachusetts, a group of community
and social service groups and labor unions seeking both a
revenue boost — and a tool to get the wealthy to pay their “fair
share.”
What they’re likely to get instead is a widening of the gap
between available revenues and state spending, once the wealthy
get their tax advisers to
start sharpening their pencils.
The amendment would impose a 4 percent surcharge on individual
earnings above $1 million. So after the millionaires start
packing up for Florida — or simply find more creative ways to
shield income — how long before the push is on to lower the
threshold?
To redefine “rich”?
Connecticut imposes its top tax rate (now at 6.99 percent) on
individuals earning $500,000. California’s version of a
millionaires’ tax is imposed on those who earn more than
$250,000.
The “fair share” crowd could have pushed to impose a graduated
income tax to replace the Bay State’s flat rate, but voters
absolutely crushed the last effort to do that. And anyway, it’s
much simpler to demonize wealth, and call for a special levy on
“a tiny fraction” of the state’s residents.
That tiny fraction affects at least 14,000 individuals or
businesses that pay taxes at the individual rate. The same crowd
that insists “Taxachusetts” is an outdated slur now want to give
everyone a reason to bring it back.
|
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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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