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CLT UPDATE
Thursday, February 4, 2016
Hold the gate!
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Recessing until April without voting on a surtax on millionaires,
Massachusetts lawmakers on Wednesday rejected constitutional
amendments that would make it more difficult to withdraw money from
the state's reserve account and turn redistricting duties over to an
independent commission....
The convention met for less than two hours, recessing at about
2:45 p.m. until April 6 without taking action on a constitutional
amendment that citizens want to bring to the 2018 ballot and which
would tack a 4 percent tax on incomes above $1 million in order to
generate about $1.9 billion in new revenue....
The Constitutional Convention will return from recess at 1 p.m.
on Wednesday, April 6.
State House News Service
Wednesday, February 3, 2016
Lawmakers reject rainy day fund, redistricting
amendments
Will “Taxachusetts” soon join the undead? On Wednesday, lawmakers
on Beacon Hill have an opportunity to drive a stake through the
heart of that long-derided state nickname, by refusing to vote for a
new 4 percent surcharge on million-dollar incomes.
If legislators give the proposed constitutional amendment the 50
votes needed to advance the measure, it will still take years to
determine whether it becomes law. The soonest it could take effect
would be 2018, but that presumes a second favorable vote by 50
legislators and then by voters, who have rejected earlier
tax-increase proposals five times at the ballot box. That’s not to
suggest it faces long odds in a state dominated by Democrats and
liberals banging the drum over “income inequality” and “tax
fairness.”
There are solid arguments to be made against it, including that
it could open the door to further graduation of income-tax rates.
But one argument in favor – that it would boost state revenue by
$1.9 billion a year – is highly suspect....
Massachusetts has done much to shed the nickname Taxachusetts, by
holding back increases and even getting the Legislature to start
rolling back the income tax rate to the current 5.1 percent from
5.85 percent in 2000. This is no time to resurrect the dead.
A New Boston Post editorial
Wednesday, February 3, 2016
Leave ‘Taxachusetts’ dead and buried
Ahead of a potential vote on the proposal, the Massachusetts High
Technology Council warned Wednesday that a proposed 4 percent surtax
on incomes over $1 million would "severely limit legislative and
citizen power to set and amend tax policy in response to economic
conditions."...
According to the High Tech Council, establishment of the higher
tax bracket would place Massachusetts below only California and
Minnesota as one of the highest top-tax-rates among "peer
technology" states....
In a letter to lawmakers on Tuesday, Council Executive Vice
President Mark Gallagher said polling shows support for the measure
falls to 24 percent if voters believe funds raised from the higher
tax rate will go into the state's General Fund.
"These voters know that the biggest impediment to fiscal health
and stability of the Commonwealth is not a lack of revenue, but an
insatiable demand for spending," Gallagher said in a statement.
The council contends that if lawmakers advance the amendment and
it is approved by voters, the Legislature's hands will be tied
because income tax thresholds will be enshrined in the constitution.
State House News Service
Wednesday, February 3, 2016
Biz group warns lawmakers surtax will tie their hands on tax policy
Tax collections in January eclipsed even newly bullish
projections by the Baker administration as state revenues rose 4.4
percent over the same period last year, according to the Department
of the Revenue.
The $2.59 billion in taxes collected last month beat benchmarks
for January, which had been revised upward by Secretary of
Administration and Finance Kristen Lepore, by $48 million. Lepore in
January raised revenues estimates for the year by $140 million.
State House News Service
Wednesday, February 3, 2016
Tax collections beat estimates for January
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Chip Ford's CLT
Commentary
The good news is that the proposed
Graduated Income Tax constitutional amendment did not come
up for a vote during yesterday's Constitutional Convention.
The bad news is there will be another convention convened on
April 6th when it probably will.
According to the Mass. High Tech Council, "polling
shows support for the measure falls to 24 percent if voters believe
funds raised from the higher tax rate will go into the state's General
Fund."
This is why the proponents are promoting the Big Lie
that all revenue raised from this money grab will be dedicated to
transportation and education — even though
they fully realize that's not possible, not even likely. They
don't really care where it's spent, so long as it's theirs to spend.
Even more important for them is that they'll have at long last breached
the flat tax barrier. If they can crack that safe
— tax all those "greedy millionaires" who
aren't paying "their fair share" — the only
question that remains is "Who will be next?"
In response to the last CLT Update, one legislator
sent me the following email message:
If the vote comes to the floor tomorrow,
I wanted you all to know that I'll be voting to move it
forward, despite being personally opposed to it and having
already written op-eds against it.
Since getting into politics locally in 2003 I've never taken
a vote to kill something procedurally, rather I have
consistently, as in 100% of the time, welcomed public input
at the ballot box on issues of importance, and use the bully
pulpit to try to sway public opinion. This issue will be no
different.
This might sound like a very small-d democratic
position to take when the bill before the Legislature is a proposed
initiative statute — a new law proposed by
the people. In that situation, if the Legislature rejects or ignores
the proposed initiative statute, then the proponents can go around the
Legislature, collect more signatures and put it on the ballot
regardless.
What we are currently dealing with is the Grad Tax
initiative amendment — a proposed
constitutional amendment — which is an
entirely different process with much more far-reaching consequences.
It was for that reason that the drafters of our state Constitution felt
it necessary to empower the Legislature with its input and potential
veto power. If the Legislature determines such an amendment to the
Constitution is not in the best interest of the Commonwealth it should
exercise its constitutional prerogative and vote it down. That is the
constitutional role of each legislator in the House and Senate when
meeting during a Constitutional Convention.
Voting in favor of moving the proposed amendment to
the Constitution forward is in fact a vote of support for the proposal.
To "kill something procedurally" in this situation
would be to not bring it up for a vote whatsoever
— avoiding either a Yea or Nay vote. If the proposed
amendment is never brought up for a vote in a Constitutional Convention,
if no vote is cast (e.g., term limits or the defense of marriage
amendment), then the proposed amendment is dead by default; end of the
story.
In a perfect democratic world it would come up for a
vote, and our elected representatives would be recorded on their votes
for or against. On the issue of amending the constitution to rid it of a
flat tax, 25 percent of the Legislature would not vote to forward the
grad tax proposal toward the ballot.
Chip Faulkner contacted his office, explained to an aide:
Unlike initiative petitions like
Proposition 2½, the graduated income tax is a
constitutional amendment that can be stopped in its
tracks by a legislative vote. Here is an opportunity to stop
bad tax policy without going to the ballot and wasting a lot
of peoples’ time and money. By voting for this in
Constitutional Convention, a legislator is greasing the
skids for a giant tax hike reaching the 2018 ballot. This
vote will be counted in the next CLT Legislative Rating; a
Yes vote will be ranked as an anti-taxpayer vote.
This proposal has attracted lots of attention so far,
and it hasn't yet come up for a vote. It's on everyone's radar
screen.
Thinking taxpayers recognize it for what it is:
A Trojan Horse to get the barbarians inside the gate. They've
built as attractive a sham as possible, even if it is nothing more than
a hollow deception. Still, they're not infiltrating inside the walls as
smoothly as they expected, it would seem.
Nonetheless, we've got to sound the alarm, call out
the citizenry, and — once again
— keep the invading horde outside the gate.
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Chip Ford |
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State House News Service
Wednesday, February 3, 2016
Lawmakers reject rainy day fund, redistricting amendments
By Michael P. Norton
Recessing until April without voting on a surtax on
millionaires, Massachusetts lawmakers on Wednesday rejected
constitutional amendments that would make it more difficult
to withdraw money from the state's reserve account and turn
redistricting duties over to an independent commission.
After the convention recessed, the House returned to session
and voted 117-34 to approve a resolution (H 3985) urging
Congress to pass a constitutional amendment limiting private
and superPAC campaign contributions.
The convention met for less than two hours, recessing at
about 2:45 p.m. until April 6 without taking action on a
constitutional amendment that citizens want to bring to the
2018 ballot and which would tack a 4 percent tax on incomes
above $1 million in order to generate about $1.9 billion in
new revenue.
On a vote of 49-140, lawmakers rejected the amendment (S 61)
that would have required roll call votes of two-thirds in
the House and Senate to make withdrawals from the rainy day
fund.
Senate Minority Leader Bruce Tarr said achieving two thirds
support for rainy day fund withdrawals should not be
difficult if funds are needed for "extraordinary" purposes.
The Gloucester Republican noted land takings require a
recorded two-thirds vote.
Sen. Vinny deMacedo said the amendment's passage would send
a strong message to Wall Street and rating analysts who
alerted the state in November that they are concerned that
statutorily required rainy day fund deposits are not being
made. The fund had a $2.3 billion balance when the state
budget weighed in at $27 billion, deMacedo said, compared to
the current $1.2 billion balance with a budget approaching
$40 billion.
Senate Ways and Means Chair Karen Spilka said decisions to
withdraw rainy day funds have not been made "lightly" and
said rebuilding the fund is a priority and is "critically
important." She said she hopes to see the fund's balance
eventually reach $3 billion and opposed the amendment,
noting it could impede the ability to withdraw from the fund
in emergencies.
Reps. Paul Frost, David Vieira and Geoff Diehl along with
House Minority Leader Brad Jones also spoke in favor of the
amendment, while Reps. Benjamin Swan, Peter Kocot and Angelo
Scaccia, along with Sens. Joan Lovely and John Keenan spoke
in opposition.
The independent redistricting commission amendment was
defeated 43-145.
Jones said it was the "perfect time" to pass the amendment
since an independent commission could be in place for the
next decennial redistricting effort. Jones also noted
President Barack Obama endorsed the idea in his State of the
Union address and said passing the amendment would represent
a "fitting farewell" to the president.
Election Laws Committee Chair Rep. John Mahoney opposed the
amendment, saying "no one else" understands the districts of
the House better than the lawmakers who represent those
districts. Mahoney said the argument that an independent
commission would create district maps that would not be
challenged in court is "misleading" and not true.
Also opposing the amendment, Rep. Michael Moran said
Massachusetts is not among the 42 states that have been sued
since the last round of redistricting in the states in 2010,
and is the largest and most ethnically diverse of the eight
states not sued.
Moran and Senate President Stanley Rosenberg led the most
recent effort to redraw House, Senate and Congressional
district boundaries.
The convention adopted Sen. Ken Donnelly's motion to
postpone action on an amendment (S 53) favored by opponents
of the Supreme Court's Citizens United ruling and stating in
part that "money is not free speech and may be regulated."
The Constitutional Convention will return from recess at 1
p.m. on Wednesday, April 6.
Andy Metzger contributed reporting
The New Boston Post
Wednesday, February 3, 2016
A New Boston Post editorial
Leave ‘Taxachusetts’ dead and buried
Will “Taxachusetts” soon join the undead? On Wednesday,
lawmakers on Beacon Hill have an opportunity to drive a
stake through the heart of that long-derided state nickname,
by refusing to vote for a new 4 percent surcharge on
million-dollar incomes.
If legislators give the proposed constitutional amendment
the 50 votes needed to advance the measure, it will still
take years to determine whether it becomes law. The soonest
it could take effect would be 2018, but that presumes a
second favorable vote by 50 legislators and then by voters,
who have rejected earlier tax-increase proposals five times
at the ballot box. That’s not to suggest it faces long odds
in a state dominated by Democrats and liberals banging the
drum over “income inequality” and “tax fairness.”
There are solid arguments to be made against it, including
that it could open the door to further graduation of
income-tax rates. But one argument in favor – that it would
boost state revenue by $1.9 billion a year – is highly
suspect.
For one thing, should the proposed roughly 75 percent tax
increase on the state’s highest earners take effect, it’s
hard to imagine that a substantial portion of the targeted
taxpayers wouldn’t reconsider where they live. New
Hampshire, where ordinary income isn’t taxed at all, would
beckon all the more loudly.
Tax-flight doubters might only look to California, where
rates went up for high-income earners in 2012, to 13.3
percent from 10.3 percent for million-dollar incomes. Take
note: That’s a good deal smaller than the proposed
Massachusetts hike. California Gov. Jerry Brown, a Democrat,
urged voters to back a ballot measure to impose the
increase, saying it would add $9 billion a year to state
revenue.
The increases began on filers with incomes of $250,000 or
more, so it may well have boosted state coffers by something
close to Brown’s projection. But the gain didn’t come out of
the wallets of the highest income earners.
Instead, the total amount owed by those in the top bracket
fell in the first year that taxpayers had a chance to
protect themselves from the increase. California state data
shows a $5.2 billion, or 21 percent, drop in taxes owed by
millionaire earners in 2013 from 2012, while there was a 7
percent decline in the number of filers in the
highest-income bracket.
In 2012, the number of top-rate filers and what they owed
had risen substantially from 2011, which may have reflected
the retroactive nature of the increase imposed by the ballot
measure, called Proposition 30. When it passed in November
2012, it affected income earned after Jan. 1 of that year.
While the number of high-income filers had climbed 26
percent in 2012, the amount owed by this group almost
doubled.
There’s really no way to tell if 4,000 or so million-dollar
earners fled the Golden State in 2013 to escape the higher
tax rate, though anecdotal evidence suggests some did. For
instance, a significant jump in high-end home sales was
reported in the Lake Tahoe area, near the California state
line with Nevada, a state that doesn’t have an income tax.
Should a significant number of Massachusetts high-income
earners abandon the state, they’ll probably take their
investible capital along with them. The Associated
Industries of Massachusetts says it would likely affect
investment decisions and resulting jobs. The Beacon Hill
Institute’s David Tuerck has estimated a loss of 9,500 jobs
if the millionaire tax, as it’s often called, takes effect.
Whether that could happen in Massachusetts remains an open
question. But it’s not hard to find southern New Hampshire
residents whose families hailed from the Boston area, where
most of the approximately 13,000 million-dollar earners
lived in 2012, according to Revenue Department data obtained
by the Boston Business Journal. And it’s not uncommon to
hear from those who moved north that lower taxes was among
their reasons. Whether people react to taxes is easy to see
in the large numbers of Massachusetts plates on cars
crowding parking lots of retailers in Nashua and Salem, New
Hampshire, around the holidays. It’s not hard to imagine
shoppers are lured there by the absence of a sales tax.
For all the good things that have happened to kill
Taxachusetts, New Hampshire still beats the Bay State when
it comes to overall taxation, according to the Tax
Foundation in Washington. It scores Massachusetts in the
middle of the pack of all 50 states, ranking it 24th, where
50 is worst. The Granite State comes in at seventh. By many
foundation measures, Massachusetts goes easier on taxpayers
than most other Northeast states.
Advocates of the millionaire tax say the increase would
merely put Massachusetts on a more equal footing with other
Northeastern states that have graduated rates, such as New
York, Connecticut and Vermont. But keeping the Bay State out
of that category has been a significant achievement that
most likely helped Boston attract General Electric’s
corporate headquarters from the Nutmeg State, where Gov. Dan
Malloy, a Democrat, has aggressively pushed tax hikes.
Supporters of tax increases always cast it as a question of
fairness, in no small part by pointing to government
services that it would fund, an argument taken up by some
Democrats on Beacon Hill. But no one should forget that the
last major tax hike lawmakers imposed came from Democrats
led by Speaker Robert DeLeo in the House of Representatives.
And the Winthrop lawmaker’s 25 percent hike in the sales
tax, to 6.25 percent from 5 percent, disproportionately hit
the wallets of working people and the poor.
Massachusetts has done much to shed the nickname
Taxachusetts, by holding back increases and even getting the
Legislature to start rolling back the income tax rate to the
current 5.1 percent from 5.85 percent in 2000. This is no
time to resurrect the dead.
State House News Service
Wednesday, February 3, 2016
Biz group warns lawmakers surtax will tie their hands on tax policy
By Andy Metzger
Ahead of a potential vote on the proposal, the Massachusetts High
Technology Council warned Wednesday that a proposed 4 percent surtax on
incomes over $1 million would "severely limit legislative and citizen
power to set and amend tax policy in response to economic conditions."
The House and Senate meet together at 1 p.m. for a Constitutional
Convention where a citizens' initiative (H 3933) is on the agenda behind
nine other proposed legislative amendments to the state's constitution.
The citizens' amendment, which would need the votes of 50 lawmakers this
session and next before appearing on the 2018 ballot, would add a 4
percent surtax on incomes over $1 million on top of what is now a 5.1
percent flat income tax.
Critics say the move will lead to a graduated income tax structure in
which higher earners are taxed at higher rates and lower earners at
lower rates. Unlike prior, unsuccessful attempts to allow for tiers in
the state income tax, this latest effort would not remove the
requirement for a flat income tax rate.
Proponents of the amendment, who last year gathered 92,617 certified
signatures around the state to advance the proposal, argue it will have
twin goals of establishing a more fair tax system and providing needed
dollars for education and transportation.
The Department of Revenue estimates the surtax would generate $1.9
billion in revenue, and while the amendment states all the dollars
raised would be limited to transportation and education investments,
opponents counter that the constitution prohibits ballot referendums
from making specific appropriations.
According to the High Tech Council, establishment of the higher tax
bracket would place Massachusetts below only California and Minnesota as
one of the highest top-tax-rates among "peer technology" states.
The council warned that General Electric - whose move from Connecticut
to Boston was touted by the mayor, the governor and the House speaker in
their annual speeches last month - was related to "anti-competitive
state tax policies" in Connecticut.
In a letter to lawmakers on Tuesday, Council Executive Vice President
Mark Gallagher said polling shows support for the measure falls to 24
percent if voters believe funds raised from the higher tax rate will go
into the state's General Fund.
"These voters know that the biggest impediment to fiscal health and
stability of the Commonwealth is not a lack of revenue, but an
insatiable demand for spending," Gallagher said in a statement.
The council contends that if lawmakers advance the amendment and it is
approved by voters, the Legislature's hands will be tied because income
tax thresholds will be enshrined in the constitution.
"The proposed amendment would actually embody the tax in the language of
the constitution itself and even go so far as to specify the tax rate
and income threshold in the text of the constitution," Gallagher wrote.
"Due to the elaborate and lengthy process required to amend the
constitution, both voters and future legislatures would be severely
constrained in their ability to modify the tax should adjustments be
warranted or necessary in response to changing circumstances in the
future. Through periods of recession and expansion, boom and bust,
inflation or deflation, you and your successors in the General Court
would be virtually powerless to modify this key state tax policy in a
timely manner."
The council is made up of technology companies, higher education
institutions, law firms and other business ventures. Board members
include representatives from workforce management company Kronos Inc.,
the lobbying firm ML Strategies and Northeastern University. Other
members listed on the council's website include the University of
Massachusetts system and government agencies with strong economic ties
like the Massachusetts Port Authority and MassDevelopment.
Gov. Charlie Baker, who generally opposes tax hikes but has yet to align
himself for or against the proposed amendment, was the council's
communications director in the early 1980s. Harvard Pilgrim Health Care,
the insurance company that Baker once ran, is also a member of the High
Tech Council.
State House News Service
Wednesday, February 3, 2016
Tax collections beat estimates for January
By Matt Murphy
Tax collections in January eclipsed even newly bullish
projections by the Baker administration as state revenues
rose 4.4 percent over the same period last year, according
to the Department of the Revenue.
The $2.59 billion in taxes collected last month beat
benchmarks for January, which had been revised upward by
Secretary of Administration and Finance Kristen Lepore, by
$48 million. Lepore in January raised revenues estimates for
the year by $140 million.
“January closed above expectations largely due to strong
performance in withholding, which was partly driven by
bonus-related income payments,” Revenue Commissioner Mark
Nunnelly said. “We must continue to monitor revenues closely
as a significant portion of the month's revenues could be
due to temporary or timing-related factors, which may not
recur in upcoming months.”
Income tax collections in January beat estimates by $20
million and grew by 2.6 percent over the same month last
year. Corporate and business tax collections of $37 million
also beat estimates by $22 million, in part due to lower
corporate refunds.
The $578 million collected last month in sales taxes missed
the target by $6 million, but represented a 4.6 percent
increase over last year.
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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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