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CLT UPDATE
Tuesday, February 2, 2016
First Grad Tax amendment vote is
tomorrow
|
As Senate President Stanley Rosenberg continues to beat the drum
for more tax revenue to finance priorities like education, lawmakers
gathering Wednesday to consider amendments to the state constitution
may get the chance to vote on a proposal to tax income over $1
million at a higher rate....
The House and Senate will meet jointly on Wednesday to resume
their Constitutional Convention. There are nine other proposed
constitutional amendments on the docket before the millionaire's
tax, which was just added by the Senate on Monday after the Revenue
Committee voted 12-4 last week to recommend advancement....
Unlike gatherings of the Constitutional Convention last year,
both Rosenberg, who will wield the gavel at the joint session, and
[House Speaker Robert] DeLeo said they expect some debate rather
than just a quick recess to the next session.
"I'm hoping we'll get a fair amount of work done," Rosenberg
said....
Rosenberg has not recommended a specific plan to raise revenues.
In the past, the Amherst Democrat has sponsored a constitutional
amendment calling for a graduated income tax structure under which
higher tax rates would be imposed on taxpayers in higher income
brackets and lower rates on those in lower income brackets....
"We're eventually going to have to deal with the reality that
there isn't enough revenue to do what we need to do to keep this
economy strong and growing," he said.
State House News Service
Monday, February 1, 2016
Lawmakers to dig into ConCon calendar that includes millionaire's
tax
Massachusetts progressives are making another try at amending the
state constitution to permit a graduated income tax. This is after
unsuccessful efforts to do the same thing in 1962, 1968, 1972, 1976
and 1994....
Now the plan is to let voters find out after they have approved
the amendment exactly what they will be getting in the form of a
graduated rate structure.
The strategy adopted by the amendments architects is so
duplicitous as to raise the possibility that they are deceiving
themselves as much as they are deceiving the voters....
What the amendment masks, however, is the likelihood that once it
becomes law, it will lay the groundwork for further tax increases
that will fall on income earners well below the million-dollar
threshold. To say that the amendment is supposed to impose a higher
tax on only “the commonwealth’s highest income residents” is the
height of chicanery....
What the amendment does, in effect, is authorize the imposition
of a graduated rate, inasmuch as it puts a graduated rate right into
the text of the Article. If the Article, as amended, now requires
that income be taxed at a graduated rate, how can it prohibit
legislation that would expand upon the same principle?
The conclusion is that the amendment was written to permit the
legislature to redo the entire tax code, without the necessity of
further amending the constitution, and in the process to create
whatever new tax brackets it chooses and to tax income in those
brackets however it chooses.
The beauty of this scheme lies in the fact that it avoids
revealing to voters just what the tax code will eventually come to
be after the amendment is adopted. The message is, “Hey, unless you
make more than a million dollars a year, you lose nothing by voting
yes. Trust us on this.”
But can there be any doubt that once the once the amendment is
adopted, there will be pressure to force taxpayers making more than
$750,000 a year to pay more? Or taxpayers making more than $500,000?
Or taxpayers making more than $100,000? With the constitution
stripped of any obstacle to the creation of additional brackets and
additional rates, it is easy to see how there will be no resisting
these pressures.
Any hope that there will henceforth be just two brackets flies in
the face of experience. Tax Foundation data show that of the 32
states that had a graduated income tax in 2014, only two (Kansas and
Maine) got by with only two brackets. California had 10 brackets.
Its own top rate for 2015 comes in at 12.3 percent. If Massachusetts
voters understood that their state code could come to look anything
like California’s, they would vote no in droves....
As Karl Marx famously said, “History repeats itself, first as
tragedy, second as farce.” If Massachusetts progressives have
figured out how to get voters to buy into the idea of a graduated
income tax, they will have added a new chapter to history as farce.
Everyone will end up being fooled – the voters, the unions and
certainly low-income taxpayers. Only the legislature, with its new
$1.5 billion slush fund, will be happy.
The New Boston Post
Monday, February 1, 2016
The ‘millionaire tax’: California here we come
By David Tuerck
This year, Groundhog Day is coming a day late for Massachusetts
residents.
On Wednesday, it won’t be a rodent sticking its head out of a
hole. It will be the Legislature meeting for a Constitutional
Convention to consider whether to put a graduated income tax on the
ballot in 2018. Just what we need in Taxachusetts — higher taxes.
We have been down this road. Massachusetts voters have
rejected
a graduated income tax multiple times. Last time it lost 2 to 1.
Unfortunately, that’s not stopping those who are addicted to our
money.
Raise Up Massachusetts has renamed the grad tax the millionaire
tax, in an attempt to fool voters. Furthermore, they are marketing
this higher taxation as a way to fund education and transportation.
If you believe that, I have swamp land to sell you in Florida.
Once again, we have been down this road. How many times have we
been promised that tax money would go directly to a project
only to
find out later that it ended up in the black hole of state
government — the general fund? They can make all the promises they
want as to where the money will go, but the truth of the matter is
that a ballot question cannot legally bind the Legislature to spend
money. Hence, there is absolutely no guarantee that money from a
graduated income tax will ever be spent on education or
transportation....
What if this passes? Of course, the
Legislature will pass new
spending
before the taxes are even collected. When
revenue doesn’t
meet expectations, you know what Bacon Hill will do. They will lower
the
qualifying amount. First, it will be those who earn $500,000,
and then it will drop to $250,000, and finally $100,000. You’ll be a
millionaire and you won’t even know it.
The Boston Herald
Monday, February 1, 2016
Graduated tax a Trojan horse to take our $$
By Holly Robichaud
Stephanie Pollack in 2013 urged lawmakers considering new revenue
sources for transportation to consider a greater mix of funds. On
Monday, as state transportation secretary, Pollack said she has no
position nor opinion on one of the grandest proposals out there - a
plan to reap nearly $2 billion in state income tax dollars for
transportation and education.
"I have no position on that at this point," Pollack said after an
MBTA meeting. Asked if she had any thoughts or opinions on the
proposal, Pollack said, "Nope." ...
Chip Faulkner, director of communications at Citizens
for Limited Taxation, said he is confident Baker will join in
opposition to the proposal, and hopes Pollack will do the same.
"I'm disappointed that she hasn't opposed it at this point,"
Faulkner told the News Service. On Baker's position, Faulkner said,
"We know in the future he will oppose it if he holds true to his
word." ...
Rafael Mares, vice president of Healthy Communities and
Environmental Justice at the Conservation Law Foundation, encouraged
the Baker administration to look at revenue options such as the
proposed amendment.
"Considering the continued chronic underfunding of our
transportation system, it is important for the administration, in
addition to identifying and implementing as many efficiencies as
possible, to also look ahead at new and creative revenue sources,"
Mares wrote in an email. "The fair share amendment has great
potential to help the Commonwealth address its longstanding
transportation challenges."
The Department of Revenue estimates the proposed surtax would
raise $1.9 billion, affecting 19,500 filers. Opinions differ on
whether the amendment's language designating the revenue for
transportation and education would be legally binding.
"It's a falsehood," said Faulkner.
State House News Service
Monday, February 1, 2016
Pollack says she has no opinion on surtax to fund transportation
Two main narratives have emerged around the proposed
millionaire's tax in Massachusetts. Those in favor of the petition
essentially say there are nearly 20,000 fat-cat millionaires that
could be taxed to the tune of $2 billion a year with relatively
little harm to them or the economy. The other side argues this is
taking money directly out of the economy and could drive innovative
people to less tax-happy states.
Lost in the clutter of the debate has been the nuance that many
of these millionaires are the owners of relatively small businesses.
The tax could have a detrimental effect not only on these people's
personal bottom line, but that of their business, according to
Massachusetts business groups....
"It will discourage the creation of new jobs and the creation of
new small businesses and the expansion of current small businesses,"
Vernon said....
NFIB and the Associated Industries of Massachusetts have come out
against the measure, while a group of university economists support
it. Whichever side you're on, there is a lot of lobbying left to do
before this issue is put to bed.
Worcester Business Journal
Monday, February 1, 2016
Millionaire's tax could hit small(ish) businesses hard
"Sweet music to the ears of the taxpayers ... No longer are
annual refrains of the need for new taxes or increased revenues
crooned by a Massachusetts governor."
— Chip Faulkner, Director of
Communications for Citizens for Limited Taxation (CLT), on
Gov. Baker's $39.6 billion fiscal 2017 state budget.
"It is largely a status quo budget. ... There are no major new
efforts to expand access to early education, to make higher
education more affordable or to make new investments in fixing our
transportation infrastructure."
— MassBudget President Noah Berger on
Baker's $39.6 billion budget.
Beacon Hill Roll Call
Sunday, January 31, 2016
By Bob Katzen
|
|
Chip Ford's CLT
Commentary
Tomorrow the Legislature will meet in its
first Constitutional Convention (ConCon) of this year.
All members of the House of Representatives and Senate will
meet together to consider proposed amendments to the
Commonwealth's Constitution. One of those proposed
constitutional amendments is for a graduated income tax
structure, replacing the state's longstanding flat tax.
This has been proposed and rejected by the voters five times
over recent decades, but five isn't good enough for "What
part of 'No' don't you understand?"
The easiest way to again defeat this otherwise long,
drawn-out and costly battle is for the proposal to have a stake driven
through its rancid heart as soon as it begins to claw its way out of the
ash heap once again.
Now is the time to call your state
representative and state senator — before
tomorrow's ConCon — and tell him or her to
smother this creature before it can rise from its grave.
Find and contact your State Representative and State Senator
Who are my
elected officials
You've heard all our arguments, our exposés
of the proponents' lies and false promises, read
CLT's memo to the Joint Committee on Revenue urging a NO vote.
More ammunition is included here in today's Update.
Ask your state representative and senator to vote
"NO" on
House 3933 – A
Legislative Amendment to the Constitution.
|
 |
 |
|
Chip Ford |
|
|
|
|
|
State House News Service
Monday, February 1, 2016
Lawmakers to dig into ConCon calendar that includes
millionaire's tax
By Matt Murphy
As Senate President Stanley Rosenberg continues to beat the
drum for more tax revenue to finance priorities like
education, lawmakers gathering Wednesday to consider
amendments to the state constitution may get the chance to
vote on a proposal to tax income over $1 million at a higher
rate.
The proposed amendment, which can not appear on the ballot
until 2018 at the earliest, would apply a 4 percent surtax
on all income in excess of $1 million on top of the state's
standard income tax. To reach the ballot, at least 50
lawmakers from the House and Senate must vote in consecutive
sessions to advance it to the ballot.
"We may or may not get that far in the calendar," Rosenberg
told reporters on Monday afternoon, indicating that he would
not seek consent from the members to take the tax amendment
out of order.
The House and Senate will meet jointly on Wednesday to
resume their Constitutional Convention. There are nine other
proposed constitutional amendments on the docket before the
millionaire's tax, which was just added by the Senate on
Monday after the Revenue Committee voted 12-4 last week to
recommend advancement.
The other questions ahead of the millionaire's tax include
proposals to prohibit eminent domain, extend the mandatory
retirement age for judges to 76, switch to an independent
redistricting process, raise the bar of support required for
spending from state reserves, and regulate corporate money
in politics.
"How far we'll get will depend on the members on both sides
in terms of how vehemently they want to debate any
particular issue," House Speaker Robert DeLeo said, after
meeting with both Rosenberg and Gov. Charlie Baker.
Unlike gatherings of the Constitutional Convention last
year, both Rosenberg, who will wield the gavel at the joint
session, and DeLeo said they expect some debate rather than
just a quick recess to the next session.
"I'm hoping we'll get a fair amount of work done," Rosenberg
said.
The Department of Revenue estimates the tax on incomes over
$1 million would generate an additional $1.9 billion in
annual tax revenue. Rosenberg noted that the shared
opposition to new taxes by Baker and DeLeo would block a
debate on the Senate floor over new revenues this year, but
reiterated his belief that eventually the time will come
that reforms and efficiencies within government will be
exhausted.
"Over time, we're not going to be able to fulfill our needs
without having a revenue discussion," Rosenberg said, later
adding, "As hard as we're working to build balanced budget
when you add up what people are looking for, and I'm not
talking about being extravagant, I'm talking about the basic
needs, there's simply not enough revenue."
Both Baker and DeLeo, who were standing to Rosenberg's left
as he expounded on his belief that state government needs
more resources to keep education costs down and the economy
growing, did not comment on the Senate Democrat's position.
Rosenberg has not recommended a specific plan to raise
revenues. In the past, the Amherst Democrat has sponsored a
constitutional amendment calling for a graduated income tax
structure under which higher tax rates would be imposed on
taxpayers in higher income brackets and lower rates on those
in lower income brackets.
Asked specifically about efforts in recent years to support
half of the University of Massachusetts's budget with state
dollars, Rosenberg said Baker's budget came up short, but
did not say whether the Senate would put more money into the
university when its turn with the budget comes around in
May.
"I think if we continue this pattern we're going to be
driving up student charges and we're going to be creating an
enormous problem for our public higher education system,"
Rosenberg said. "It is there to serve people who have the
ability, but not the means and we were starting on a path of
trying to rebuild those budgets and we seem to have stalled
again. We have to find the will and the revenue and the
capacity to get back on track."
Baker's budget proposal for fiscal 2017 filed last week
increased state support for higher education by about 1
percent.
"We're eventually going to have to deal with the reality
that there isn't enough revenue to do what we need to do to
keep this economy strong and growing," he said.
The question on Wednesday before lawmakers, who could see a
tax vote raised later this year by political opponents
during re-election campaigns, would be whether the question
should be placed on the ballot for voters to decide.
The New Boston Post
Monday, February 1, 2016
The ‘millionaire tax’: California here we come
By David Tuerck
Massachusetts progressives are making another try at amending the state
constitution to permit a graduated income tax. This is after
unsuccessful efforts to do the same thing in 1962, 1968, 1972, 1976 and
1994.
But this time is different. In 1994, proponents were upfront about what
they had in mind. They put two measures on the ballot – one to amend the
constitution and a second to put a specific graduated rate structure
before the voters for their approval. Now the plan is to let voters find
out after they have approved the amendment exactly what they will be
getting in the form of a graduated rate structure.
The strategy adopted by the amendments architects is so duplicitous as
to raise the possibility that they are deceiving themselves as much as
they are deceiving the voters.
At first glance, the petition seems reasonable enough. It simply calls
for “an additional tax of 4 percent on that portion of annual taxable
income in excess of $1,000,000” and
earmarks the new tax revenue to provide for “quality public
education and affordable public colleges and universities, and for the
repair and maintenance of roads, bridges and public transportation.”
What’s not to like?
Indeed, the amendment itself simply creates two tax brackets, with
income of a million dollars or less taxed at one rate (5.15 percent for
2015 income) and every dollar over one million dollars taxed at that
rate plus 4 percent.
What the amendment masks, however, is the likelihood that once it
becomes law, it will lay the groundwork for further tax increases that
will fall on income earners well below the million-dollar threshold. To
say that the amendment is supposed to impose a higher tax on only “the
commonwealth’s highest income residents” is the height of chicanery.
Let’s see why.
The amendment adds a new paragraph to article XLIV of the state
constitution. Under that article, as it now stands, the state may impose
an income tax, but it must levy the tax “at a uniform rate … upon
incomes derived from the same class of property.” And it this language
that has been interpreted to prohibit legislation that would tax income
at a graduated rate.
What the amendment does, in effect, is authorize the imposition of a
graduated rate, inasmuch as it puts a graduated rate right into the text
of the Article. If the Article, as amended, now requires that income be
taxed at a graduated rate, how can it prohibit legislation that would
expand upon the same principle?
The conclusion is that the amendment was written to permit the
legislature to redo the entire tax code, without the necessity of
further amending the constitution, and in the process to create whatever
new tax brackets it chooses and to tax income in those brackets however
it chooses.
The beauty of this scheme lies in the fact that it avoids revealing to
voters just what the tax code will eventually come to be after the
amendment is adopted. The message is, “Hey, unless you make more than a
million dollars a year, you lose nothing by voting yes. Trust us on
this.”
But can there be any doubt that once the once the amendment is adopted,
there will be pressure to force taxpayers making more than $750,000 a
year to pay more? Or taxpayers making more than $500,000? Or taxpayers
making more than $100,000? With the constitution stripped of any
obstacle to the creation of additional brackets and additional rates, it
is easy to see how there will be no resisting these pressures.
|
Table 1
California’s Income Tax Brackets
(2015 tax year) |
| |
|
|
Rate
|
Taxable Income
(couples filing jointly) |
|
1.0% > |
$0 |
|
2.0% > |
$15,700 |
|
4.0% > |
$37,220 |
|
6.0% > |
$58,744 |
|
8.8% > |
$81,546 |
|
9.3% > |
$103,060 |
|
10.3% > |
$526,444 |
|
11.3% > |
$631,732 |
|
12.3% > |
$1,052,886 |
|
Any hope that there will henceforth be just two
brackets flies in the face of experience. Tax Foundation data show that
of the 32 states that had a graduated income tax in 2014, only two
(Kansas and Maine) got by with only two brackets. California had 10
brackets. Its own top rate for 2015 comes in at 12.3 percent. If
Massachusetts voters understood that their state code could come to look
anything like California’s, they would vote no in droves.
The fact that the amendment leaves Massachusetts open
to this kind of
rate escalation is just one example of the duplicity at work here.
What about the promise that the new tax would promote social justice? If
the new money really does go to roads and schools, it will end up in the
pockets of unionized construction workers and school teachers. None of
it will go directly into the pockets of low-income earners.
Ironically, the unions behind the amendment might be disappointed too.
Under Article XLVIII of the constitution, “no measure . . . that makes a
specific appropriation of money from the treasury of the commonwealth,
shall be proposed by an initiative petition.” Which clearly conflicts
with that portion of the amendment that earmarks the new money for roads
and schools. And it is impossible, anyway, despite the language of the
amendment, to guarantee that existing funding of roads and schools will
get a $1.5 billion boost. Money is fungible. The legislature could
easily shift funds that currently go to roads and schools to other
purposes even as it shunts the new money to those uses.
As Karl Marx famously said, “History repeats itself, first as tragedy,
second as farce.” If Massachusetts progressives have figured out how to
get voters to buy into the idea of a graduated income tax, they will
have added a new chapter to history as farce. Everyone will end up being
fooled – the voters, the unions and certainly low-income taxpayers. Only
the legislature, with its new
$1.5 billion slush fund, will be happy.
David G. Tuerck is executive director of the Beacon Hill Institute.
The Boston Herald
Monday, February 1, 2016
Graduated tax a Trojan horse to take our $$
By Holly Robichaud
This year, Groundhog Day is coming a day late for Massachusetts
residents.
On Wednesday, it won’t be a rodent sticking its head out of a hole. It
will be the Legislature meeting for a Constitutional Convention to
consider whether to put a graduated income tax on the ballot in 2018.
Just what we need in Taxachusetts — higher taxes.
We have been down this road. Massachusetts voters have
rejected a
graduated income tax multiple times. Last time it lost 2 to 1.
Unfortunately, that’s not stopping those who are addicted to our money.
Raise Up Massachusetts has renamed the grad tax the millionaire tax, in
an attempt to fool voters. Furthermore, they are marketing this higher
taxation as a way to fund education and transportation. If you believe
that, I have swamp land to sell you in Florida.
Once again, we have been down this road. How many times have we been
promised that tax money would go directly to a project
only to find out
later that it ended up in the black hole of state government — the
general fund? They can make all the promises they want as to where the
money will go, but the truth of the matter is that a ballot question
cannot legally bind the Legislature to spend money. Hence, there is
absolutely no guarantee that money from a graduated income tax will ever
be spent on education or transportation.
Do proponents have a memory problem? Just over a year ago, voters
resoundingly
rejected automatic gas tax hikes for the roads. Maybe
taxpayers think it is time to control costs instead of raising taxes.
Clearly, proponents are hoping that
voters want to stick it to the
rich. However, an educated voter would know that
millionaire taxes
don’t work. The millionaire
money grab in Maryland resulted in a loss
of tax
revenue because 31,000 millionaires fled the state to avoid the
tax. The rich have the
flexibility to move to avoid an unfavorable tax
code.
What if this passes? Of course, the
Legislature will pass new spending
before the taxes are even collected. When
revenue doesn’t meet
expectations, you know what Bacon Hill will do. They will lower the
qualifying amount. First, it will be those who earn $500,000, and then
it will drop to $250,000, and finally $100,000. You’ll be a
millionaire
and you won’t even know it.
Once they get an inch, they will take a mile!
The grad tax can be stopped. They need 50 votes during the
Constitutional Convention to move it forward. Call your legislator to
tell them no grad tax.
State House News Service
Monday, February 1, 2016
Pollack says she has no opinion on surtax to fund transportation
By Andy Metzger
Stephanie Pollack in 2013 urged lawmakers considering new revenue
sources for transportation to consider a greater mix of funds. On
Monday, as state transportation secretary, Pollack said she has no
position nor opinion on one of the grandest proposals out there - a plan
to reap nearly $2 billion in state income tax dollars for transportation
and education.
"I have no position on that at this point," Pollack said after an MBTA
meeting. Asked if she had any thoughts or opinions on the proposal,
Pollack said, "Nope."
As transportation secretary, Pollack oversees the MBTA, which is holding
hearings on its latest fare hike proposals, and the larger
transportation network that has long been saddled with unfunded capital
needs associated with both new projects and efforts to keep existing
infrastructure in good working conditions.
Pollack's remarks align with Gov. Charlie Baker, who is generally
opposed to tax increases but declined as a candidate to take a no new
taxes pledge and is so far not yet in either the pro or con camp on the
proposed constitutional amendment.
Education Secretary James Peyser opposes the amendment that would add a
4 percent surtax on incomes over $1 million, arguing it would damage the
state's economy. "I think it will weaken our economy and that will
damage our ability as a Commonwealth to support the schools and the
other services that we desperately need," Peyser told the News Service
last month.
As associate director of the Dukakis Center for Urban and Regional
Policy at Northeastern University in 2013 when a separate $2 billion tax
proposal was on the table, Pollack spoke on the "lack of revenue and
under?investment" in Bay State transportation.
"There is no silver bullet for generating enough revenue to address the
transportation system's multi?billion dollar operating, maintenance and
capital deficits," Pollack said in written testimony to the
Transportation Committee, arguing in favor of a "portfolio of revenue
sources."
More than two years out from her surprise appointment to the Baker
administration, much of Pollack's committee testimony is consistent with
her leadership of the Transportation Department now: a focus on
improving capacity of the existing system and attention to asset
management.
"I can fully understand why the governor and his cabinet aren't going to
be talking on this issue and let the voters decide," Barry Bluestone, an
economist who supports the surtax, told the News Service. Founding
director and research associate at the Dukakis center, Bluestone said it
was "surprising" that Peyser opposes the proposal, which he said is a
"way of realizing some revenue from people who can afford it."
Chip Faulkner, director of communications at Citizens for
Limited Taxation, said he is confident Baker will join in opposition
to the proposal, and hopes Pollack will do the same.
"I'm disappointed that she hasn't opposed it at this point," Faulkner
told the News Service. On Baker's position, Faulkner said, "We know in
the future he will oppose it if he holds true to his word."
The surtax, which would be added to the state's constitution, would need
consecutive votes of 50 members of the 200-seat Legislature in a
constitutional convention this session and next before it could appear
on the 2018 ballot. Lawmakers will meet in a constitutional convention
on Wednesday and the Senate on Monday adopted an order placing the
surtax amendment on the convention calendar.
Rafael Mares, vice president of Healthy Communities and Environmental
Justice at the Conservation Law Foundation, encouraged the Baker
administration to look at revenue options such as the proposed
amendment.
"Considering the continued chronic underfunding of our transportation
system, it is important for the administration, in addition to
identifying and implementing as many efficiencies as possible, to also
look ahead at new and creative revenue sources," Mares wrote in an
email. "The fair share amendment has great potential to help the
Commonwealth address its longstanding transportation challenges."
The Department of Revenue estimates the proposed surtax would raise $1.9
billion, affecting 19,500 filers. Opinions differ on whether the
amendment's language designating the revenue for transportation and
education would be legally binding.
"It's a falsehood," said Faulkner.
On Tuesday night, Pollack will appear on a Lexington cable access
program with Rep. Jay Kaufman, House chairman of the Revenue Committee,
and an ardent supporter of the constitutional amendment.
Worcester Business Journal
Monday, February 1, 2016
Millionaire's tax could hit small(ish) businesses hard
By Sam Bonacci
Two main narratives have emerged around the proposed millionaire's tax
in Massachusetts. Those in favor of the petition essentially say there
are nearly 20,000 fat-cat millionaires that could be taxed to the tune
of $2 billion a year with relatively little harm to them or the economy.
The other side argues this is taking money directly out of the economy
and could drive innovative people to less tax-happy states.
Lost in the clutter of the debate has been the nuance that many of these
millionaires are the owners of relatively small businesses. The tax
could have a detrimental effect not only on these people's personal
bottom line, but that of their business, according to Massachusetts
business groups....
These millionaire's aren't just people with a high-paying job. Nearly 80
percent of those making a million or more are reporting income from a
business such as a sole proprietorship or a partnership, said Bill
Vernon, the Massachusetts director for the National Federation for Small
Businesses.
What is it?
The millionaire's tax is an initiative petition that would establish a
4-percent surtax on incomes more than $1 million. More than 90,000
certified signatures were turned in supporting the petition. Proponents,
such as Raise Up Massachusetts, say the measure would improve equality
and provide needed funds for education and transportation.
The Massachusetts Department of Revenue estimates the proposed surtax
would affect 19,500 filers, raising about $1.9 billion in revenue. The
measure could appear on the 2018 ballot pending a vote by 50 members of
state legislature.
How are small firms impacted?
These millionaire's aren't just people with a high-paying job. Nearly 80
percent of those making a million or more are reporting income from a
business such as a sole proprietorship or a partnership, said Bill
Vernon, the Massachusetts director for the National Federation for Small
Businesses.
While this category does not cover most small business owners -- the
average NFIB member has five employees and grosses around $450,000 a
year -- it does include small manufacturers and financial services
firms, he said. Many of these people pay taxes at the individual rate on
their business' profits because it is simpler than setting up a
corporation.
Vernon stopped short of saying the tax would drive small businesses to
other states. He acknowledged many small businesses are not prime
candidates for relocation. However, it's a matter of simple math: if
business owners have less money, there will be fewer investments in the
business.
"It will discourage the creation of new jobs and the creation of new
small businesses and the expansion of current small businesses," Vernon
said.
He said simply having $2 billion pulled out of the state economy would
hurt small businesses' revenue.
What happens now?
If you're a small business, not a whole lot will happen until 2018 when
the measure might appear on the ballot. If this measure were to
progress, Vernon expects more small businesses would move to
incorporations.
NFIB and the Associated Industries of Massachusetts have come out
against the measure, while a group of university economists support it.
Whichever side you're on, there is a lot of lobbying left to do before
this issue is put to bed.
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