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CLT UPDATE
Sunday, May 15, 2016
Divide-and-Conquer Grad Tax vote
on Wednesday
|
Advocates pressing an amendment to the Massachusetts Constitution
think they have a winning message: Raise taxes on millionaires and
use the new cash to fund transportation and education.
They may be right. A recent poll found 70 percent of voters
support the expected 2018 ballot effort. And the Legislature is
expected to give a preliminary green light to the measure next week.
But opponents believe they’ve found a torpedo that could blow a
hole in the hull of the “Fair Share” tax push.
They’ve seized upon a small part of the amendment that they say
undermines its whole premise, and would mean the up to $2.2 billion
in new yearly revenue could be spent willy nilly by the Legislature.
“They could appropriate the money to rehab poor kittens and
puppies, they could use it to hire everybody’s second cousin who is
related to a state rep, they could do a thousand things,” said
Chip Faulkner of Massachusetts-based Citizens for Limited
Taxation, which opposes the effort....
Massachusetts voters can change the state Constitution by
referendum, but they are prohibited from certain categories of
amendments. For example, a ballot question can’t undo the rights to
free speech or a trial by jury. Referenda also can’t make “a
specific appropriation” of taxpayer money, the Constitution says.
So the backers of the millionaires’ tax tried to thread the
needle. The language they wrote reads in part: “To provide the
resources for quality public education and affordable public
colleges and universities, and for the repair and maintenance of
roads, bridges and public transportation, all revenues received in
accordance with this paragraph shall be expended, subject to
appropriation, only for these purposes.” ...
“The amendment is not clear cut,” said Eileen McAnneny, a lawyer
and president of the business-backed Massachusetts Taxpayers
Foundation, which opposes the tax push.
She said it could well be the case due to the “vague” amendment
language that the extra money from the new tax on millionaires “can
be used by the Legislature as they deem appropriate. It could be
used for transportation and education, but also for many other
things not contemplated by voters, too.”
McAnneny said it is important for lawmakers — and the people they
represent — to get guidance on what, exactly, the amendment means
from the Supreme Judicial Court, before the question goes before
voters.
One outside lawyer, not involved in the dispute, also offered
words of caution.
Lawrence M. Friedman, a professor of law who specializes in the
US and Massachusetts constitutions and teaches at New England Law |
Boston, said the drafters have tried to get around the
constitutional prohibition against specific appropriations.
“I think there is some question as to whether they have
succeeded,” he said. “There is a plausible argument that the
Legislature would still have discretion to not spend the money the
way the drafters intended.”
The Boston Globe
Friday, May 15, 2016
Millionaires’ tax debate focuses on where revenue would go
A plan for taxing the wealthiest Massachusetts residents could
get its first nudge forward in the coming week when the Legislature,
meeting in a joint constitutional convention, is expected to take up
what has become known as the "millionaire tax."
The proposed constitutional amendment needs the backing of only
50 of the combined 200 lawmakers in the House and Senate to advance
Wednesday. Senate President Stan Rosenberg, who supports the tax,
told reporters this past week he expects to "comfortably" exceed
that threshold....
A constitutional amendment is needed because the state's
constitution stipulates a uniform or "flat" tax rate for all
residents. The federal government and all but eight of the 41 U.S.
states that tax wages have graduated rates, meaning that higher
earners pay a greater percentage of their income in taxes.
Rosenberg is among a cadre of liberal Senate Democrats who argue
that the state must find ways to generate more tax revenue to pay
for critical public needs....
"Senate President Rosenberg's admission that he's vigilantly
looking for new ways to hike taxes reveals what we all knew: Beacon
Hill Democrats just view working families as a constant source of
more revenue for their spending sprees," said Kirsten Hughes,
chairwoman of the Massachusetts GOP, in a statement....
"I thought it was time for someone to say it's not just a
spending problem," he said. "There is a spending problem but there
is also a revenue problem and I stand by that."
If the millionaire tax gets at least 50 votes Thursday, and again
in a constitutional convention during the 2017-2018 legislative
session, it would go before voters for ratification in November
2018.Massachusetts voters have rejected previous attempts to
institute graduated income tax rates, most recently in 1994.
Along with Republicans, the millionaire tax is opposed by several
business groups that call it anticompetitive.
In a letter to lawmakers, the Massachusetts High Technology
Council said if the constitutional amendment was approved
Massachusetts would have one of the nation's highest top tax rates
for individuals. The council argued that higher tax rates on
wealthier individuals have served to stifle investment and job
growth in other states.
WCVB TV-5
Saturday, May 14, 2016
Lawmakers face 1st vote on 'millionaire' tax amendment
Measure would impose 4 percent surtax
One of the great things about living in the United
States is that if you don’t like your tax burden, you can always
move.
Sure, the IRS isn’t the easiest foe for an American
citizen to evade, but roughly half of the taxes most of us pay are
levied by state and local governments, and because U.S. citizens can
freely move among these jurisdictions, these governments are forced
to compete with each other to be appealing places for businesses and
wealthy individuals to set up shop.
This dynamic is in the headlines again this tax
season, after news broke that hedge fund titan David Tepper of
Appaloosa Management was moving his billions in income from high-tax
New Jersey to Florida, which has no income tax at all. And the move
has New Jersey officials worried. Frank Haines, a budget and finance
officer with the Office of Legislative Services told a State Senate
committee earlier this month, “We may be facing an unusual degree of
income-tax forecast risk,” this year, citing Tepper’s planned move
as prime cause for concern....
Fortune Magazine
Tuesday, April 12, 2016
This Hedge Fund Billionaire Just Bulldozed New Jersey's Tax Base
The Constitution of the Commonwealth of Massachusetts
Article 48
[excerpt]
The Initiative.
II. Initiative Petitions
Section 1. Contents. An
initiative petition shall set forth the full text of the
constitutional amendment or law, hereinafter designated
as the measure, which is proposed by the petition.
Section 2. Excluded
Matters. -
No measure that relates to religion,
religious practices or religious institutions; or to the
appointment, qualification, tenure, removal, recall or
compensation of judges; or to the reversal of a judicial
decision; or to the powers, creation or abolition of
courts; or the operation of which is restricted to a
particular town, city or other political division or to
particular districts or localities of the commonwealth;
or that makes a specific appropriation of money from the
treasury of the commonwealth, shall
be proposed by an initiative petition; but if a
law approved by the people is not repealed, the general
court shall raise by taxation or otherwise and shall
appropriate such money as may be necessary to carry such
law into effect.
State House News Service
Advances — Week of May 15, 2016
Wednesday, May 18, 2016
CONSTITUTIONAL CONVENTION - SURTAX AMENDMENT: After
hosting brief and sporadic Constitutional Conventions since the
start of the 2015-2016 session, the House and Senate are finally
getting around to taking up the only citizens petition on their
agenda. Tens of thousands of citizens gathered signatures to
put before the Legislature a proposal adding a 4 percent surtax on
income above $1 million with the nearly $2 billion in new revenues
targeted for education and transportation investments. A
citizens petition needs just 50 votes in the 200-seat Legislature to
advance. A second votes from 50 or more lawmakers in the
2017-2018 session would put the proposal on the statewide ballot for
a binding vote. (Wednesday, 1 p.m., House Chamber)
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Chip Ford's CLT
Commentary
It goes by a number of stealth identities
— the "millionaires' tax," the "fair share tax" — names
concocted and focus-group tested to make it sound more
palatable to the low-information voter. This creature
is nothing but the latest incarnation of taxpayers' old
enemy, the Graduated Income Tax, or "Grad Tax," with a
further deception thrown in than past such assaults, all
of which were
overwhelming defeated on the ballot five times over five
decades by discerning voters.
This latest manifestation falsely purports to direct
where that additional $1.8 billion raised will be spent — even though
making "specific appropriations" is forbidden by the Massachusetts
Constitution. Article 48 clearly states: "No measure that .
. . makes a specific appropriation of money from the treasury of the
commonwealth, shall be proposed by an initiative petition."
That this flagrant constitutional violation was
approved by Attorney General Maura Healey as an initiative amendment —
despite this blatant transgression — is astounding.
And even if — if — this sixth run at abolishing the flat
tax is approved by the voters and the constitution is changed
forever, and if— if — it raises the estimated $1.6-$2.2
billion, does anyone but the gullible, naïve,
or uninformed believe the additional revenue will be spent as
advertised? That's certainly not how it worked out when the
gas tax was almost doubled in 1991, the $108 million it generated
was supposedly "dedicated" to transportation needs. (See
AAA's scathing
editorial.) Only $7.4 million of it went to its
"dedicated" purpose, just 6.85%. The other $100.6 million
was spent elsewhere, the usual bait-and-switch scam.
As we've said so many times in the past, this
perversion is merely the first step by any means necessary to divide and
conquer taxpayers, one tax bracket at a time. If our state
constitution is ever amended by something like this abomination it will
be forever. The Constitution can never be amended without
support of the Legislature, and that support is never present unless it
benefits legislators or their personal agenda. Remember Term Limits,
approved by the voters but cut down by the court
then denied a vote in the constitutional convention?
Remember the constitutional amendment to forever determine
legislators’ salaries?
The Massachusetts income tax was created as a flat
tax at its inception and has remained so ever since. Every
taxpayer pays it at the same rate, the amount based only on the
individual's income. If there's to be an income tax, then what
could me more fair than everyone paying it at the same rate?
If that historical flat tax is ever abolished,
replaced with a graduated income tax under any guise, it will then be
open season on taxpayers, one tax bracket at a time. Massachusetts
either keeps its longstanding flat tax — or it doesn't have a
flat tax and every tax bracket will become a target-rich environment.
David G. Tuerck of the Beacon Hill Institute
testified against this grad tax before the Revenue Committee on January
19th:
"Some will
argue that it is no big deal to tax more heavily the handful
of taxpayers whose annual income exceeds $1 million. But
this is facile thinking. Once the tax code becomes divided
between two brackets, there will be a clamor for creating
new brackets and making the code more and more progressive.
After all, there are twice as many taxpayers who make
between $500,000 and $1 million as there are who make more
than a million. And almost 40 times as many who make between
$100,000 and $200,000. What’s to stop the forces at work
here from chipping away at those income groups once the
state constitution is amended?"
Never again will taxpayers unite against tax
hikes — because never will a majority
of taxpayers be victimized. There will never again be
sufficient motivation for a tax revolt —
not one that reaches critical voter mass and succeeds.
That is precisely what the tax-borrow-and-spenders and the Gimme Lobby have long lusted to achieve. Their
intent is to divide and conquer the hands that feed them so they can take
ever more, more, more with impunity.
If the parasites ever accomplish that goal, it will
be forever — and there will be no
end to incremental tax rate hikes, one bracket after another, after
another.
This scheme must be defeated again, for the
sixth time, a stake driven through its heart every time it claws its
way out of its grave.
Chip Faulkner will attend the constitutional
convention on Wednesday to oppose this sixth attempt to impose a
graduated income tax by whatever name and ploy.
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Chip Ford
Executive Director |
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The Boston Globe
Friday, May 15, 2016
Millionaires’ tax debate focuses on where revenue would go
By Joshua Miller
Advocates pressing an amendment to the Massachusetts
Constitution think they have a winning message: Raise taxes
on millionaires and use the new cash to fund transportation
and education.
They may be right. A recent poll found 70 percent of voters
support the expected 2018 ballot effort. And the Legislature
is expected to give a preliminary green light to the measure
next week.
But opponents believe they’ve found a torpedo that could
blow a hole in the hull of the “Fair Share” tax push.
They’ve seized upon a small part of the amendment that they
say undermines its whole premise, and would mean the up to
$2.2 billion in new yearly revenue could be spent willy
nilly by the Legislature.
“They could appropriate the money to rehab poor kittens and
puppies, they could use it to hire everybody’s second cousin
who is related to a state rep, they could do a thousand
things,” said Chip Faulkner of Massachusetts-based
Citizens for Limited Taxation, which opposes the effort.
Proponents insist they are on unimpeachably sound legal
footing: The amendment would set the broad parameters for
how the Legislature must spend the new money, and lawmakers
would then be empowered to make the specific appropriations,
but only for education and transportation.
The top lawyer for the group advocating the measure, Peter
D. Enrich, called the opponents’ argument “really pretty
bogus,” citing constitutional history and decisions from the
state’s highest court.
Legal merits aside, should opponents succeed in sowing doubt
about what the new revenue would be spent on, it could hurt
the expected ballot push. The effort is premised on giving
voters a clear sense of who would be taxed (millionaires)
and what the money would be spent on (education and
transportation).
The state’s current income tax rate is 5.1 percent for all
income levels. The amendment would impose an additional tax
of 4 percent on annual taxable income in excess of $1
million starting in 2019. And that level would be tied to
inflation, so the extra tax would continue to apply only to
very wealthy people.
Massachusetts voters have previously rejected five proposals
to change the Constitution to allow for a graduated state
income tax. But the failed measures in 1962, 1968, 1972,
1976, and 1994 did not include such specificity on how the
new revenue would be spent. That allowed opponents to tar
the measures as enabling profligate Beacon Hill spending.
Understanding the current debate requires a dive into some
legal history.
Massachusetts voters can change the state Constitution by
referendum, but they are prohibited from certain categories
of amendments. For example, a ballot question can’t undo the
rights to free speech or a trial by jury. Referenda also
can’t make “a specific appropriation” of taxpayer money, the
Constitution says.
So the backers of the millionaires’ tax tried to thread the
needle. The language they wrote reads in part: “To provide
the resources for quality public education and affordable
public colleges and universities, and for the repair and
maintenance of roads, bridges and public transportation, all
revenues received in accordance with this paragraph shall be
expended, subject to appropriation, only for these
purposes.”
They emphasize there is one historical precedent for a
Constitutional ballot question setting a general category of
spending for a certain stream of revenue without making any
specific appropriations.
In 1974, voters approved an Constitutional amendment that
permitted the Legislature to spend money from a highway fund
— which included motor vehicle fees and gas tax receipts —
for mass transportation, instead of just for highways and
bridges.
And the state’s highest court, backers say, has indicated
that the effort was constitutionally kosher and also binding
on the Legislature. They argue their millionaires’ tax is
working within the same rubric.
“That’s the only instance we have where there is a
dedication of funds in the Constitution,” said Enrich, who
is also a professor at Northeastern University School of
Law. “Legislatures don’t have the power to amend, repeal, or
ignore constitutional provisions.”
But opponents don’t see a straight line between the 1974
effort and the expected 2018 effort.
“The amendment is not clear cut,” said Eileen McAnneny, a
lawyer and president of the business-backed Massachusetts
Taxpayers Foundation, which opposes the tax push.
She said it could well be the case due to the “vague”
amendment language that the extra money from the new tax on
millionaires “can be used by the Legislature as they deem
appropriate. It could be used for transportation and
education, but also for many other things not contemplated
by voters, too.”
McAnneny said it is important for lawmakers — and the people
they represent — to get guidance on what, exactly, the
amendment means from the Supreme Judicial Court, before the
question goes before voters.
One outside lawyer, not involved in the dispute, also
offered words of caution.
Lawrence M. Friedman, a professor of law who specializes in
the US and Massachusetts constitutions and teaches at New
England Law | Boston, said the drafters have tried to get
around the constitutional prohibition against specific
appropriations.
“I think there is some question as to whether they have
succeeded,” he said. “There is a plausible argument that the
Legislature would still have discretion to not spend the
money the way the drafters intended.”
The Constitution requires that at least a quarter of
lawmakers in two successive two-year sessions of the
Legislature approve an amendment before it can go on the
ballot.
Next week, the millionaires’ tax is expected to comfortably
meet that bar for its first vote, legislators say.
Senate President Stanley C. Rosenberg, who supports the
amendment, told reporters this week the intention of the
push is clear.
“The ‘subject to appropriation’ means we have to appropriate
the money to spend on education and transportation,” he
said. “That’s how I read, that’s how our lawyers read it,
and that’s what we would do, here in the Senate, assuming
that gets approved by the voters.”
WCVB TV-5
Saturday, May 14, 2016
Lawmakers face 1st vote on 'millionaire' tax amendment
Measure would impose 4 percent surtax
A plan for taxing the wealthiest Massachusetts residents could get its
first nudge forward in the coming week when the Legislature, meeting in
a joint constitutional convention, is expected to take up what has
become known as the "millionaire tax."
The proposed constitutional amendment needs the backing of only 50 of
the combined 200 lawmakers in the House and Senate to advance Wednesday.
Senate President Stan Rosenberg, who supports the tax, told reporters
this past week he expects to "comfortably" exceed that threshold.
The measure would impose a surtax of 4 percent on any portion of annual
income that exceeds $1 million. The additional revenue generated by the
tax would be earmarked for education and transportation purposes only.
The tax would be on top of the current 5.1 percent tax paid by all
wage-earners in Massachusetts.
A constitutional amendment is needed because the state's constitution
stipulates a uniform or "flat" tax rate for all residents. The federal
government and all but eight of the 41 U.S. states that tax wages have
graduated rates, meaning that higher earners pay a greater percentage of
their income in taxes.
Rosenberg is among a cadre of liberal Senate Democrats who argue that
the state must find ways to generate more tax revenue to pay for
critical public needs.
It is not a view shared by Republican Gov. Charlie Baker or Democratic
leaders in the House. And because the constitution also requires that
tax legislation originate in the House, the Senate's hands are often
tied when it comes to taxes in the annual state budget.
Republicans pounced on Rosenberg, an Amherst Democrat, when he said
during a recent WGBH-FM interview that the Senate was "ever at the
ready" to consider taxes.
"Senate President Rosenberg's admission that he's vigilantly looking for
new ways to hike taxes reveals what we all knew: Beacon Hill Democrats
just view working families as a constant source of more revenue for
their spending sprees," said Kirsten Hughes, chairwoman of the
Massachusetts GOP, in a statement.
Rosenberg said he stood by his remarks, adding that his primary interest
was in making the tax system fairer and more progressive. He also
rebutted claims by Baker and others that the state's fiscal woes are
purely the result of overspending.
"I thought it was time for someone to say it's not just a spending
problem," he said. "There is a spending problem but there is also a
revenue problem and I stand by that."
If the millionaire tax gets at least 50 votes Thursday, and again in a
constitutional convention during the 2017-2018 legislative session, it
would go before voters for ratification in November 2018.
Massachusetts voters have rejected previous attempts to institute
graduated income tax rates, most recently in 1994.
Along with Republicans, the millionaire tax is opposed by several
business groups that call it anticompetitive.
In a letter to lawmakers, the Massachusetts High Technology Council said
if the constitutional amendment was approved Massachusetts would have
one of the nation's highest top tax rates for individuals. The council
argued that higher tax rates on wealthier individuals have served to
stifle investment and job growth in other states.
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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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