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CLT UPDATE
Thursday, June 15, 2017
Sixth Grad Tax scheme headed to
2018 ballot
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For the second year in a row Massachusetts
lawmakers on Wednesday endorsed a proposal to extract an
estimated $2 billion from the state's roughly 20,000 highest
earners, setting up a 2018 ballot question campaign, a legal
dispute in the state's highest court, or both.
Rep. Jay Kaufman, a Lexington Democrat and
House chairman of the Revenue Committee, said establishing a
4 percent surtax on incomes over $1 million would give
Massachusetts a fairer system of government funding and
inject money into public education and transportation.
The state's constitution requires income
taxes be levied uniformly, so activists have backed the tax
measure as a constitutional amendment. Wednesday's vote of
134-55 means that voters will have the ultimate say on the
proposed tax unless the Supreme Judicial Court determines
the question is unconstitutional.
If it reaches the ballot and is approved,
the proposal would facilitate a major tax increase without
lawmakers having to vote directly on the proposal, or having
to deal with possible objections from Republican Gov.
Charlie Baker.
The top senators of both parties agreed that
the amendment is likely to be taken up by the Supreme
Judicial Court but they are of different minds about how the
court would likely decide the matter....
Senate Minority Leader Bruce Tarr, a
Gloucester Republican, suggested the question would run
afoul of the constitutional prohibition against initiative
petitions making a "specific appropriation of money."
"I'm fairly confident that there will be a
case about its constitutionality," Tarr told the News
Service. He said his analysis is that the question is "not
properly before us" but that it would be "for the court to
decide."
"The opponents have a right to challenge it,
and I am expecting that they will," Senate President Stan
Rosenberg, an Amherst Democrat, told reporters after the
vote. He said, "The proponents worked closely with
constitutional experts and they believe this will stand up
to constitutional muster."
Seeking to undercut Tarr's contention that
the amendment appropriates money, Senate Ways and Means
Chairwoman Karen Spilka said the money raised under the
proposal could not be spent without passage of an
appropriations bill.
Less than three years into his term in
office, Gov. Baker has appointed four of the seven Supreme
Judicial Court justices, and Geraldine Hines will hit the
mandatory retirement age of 70 later this year....
Weymouth Sen. Patrick O'Connor was the only
Republican to support the measure. House Majority Leader Ron
Mariano, of Quincy, was one of 12 House Democrats to oppose
the measure. Jennifer Flanagan, of Leominster, and Anne
Gobi, of Spencer, were the only Senate Democrats to vote
against it. Wilmington Rep. James Miceli, a Democrat, was
the only lawmaker to change his vote, opposing it in 2016
and supporting it this year.
The measure on Wednesday passed the
constitutional convention by a slightly higher margin than
last year when it passed 135-57.
State House News Service
Wednesday, June 14, 2017
Income surtax clears major hurdle, but legal challenge
likely
Could a tax on the rich be the political
kryptonite that weakens Charlie Baker’s seemingly invincible
status as one of the most popular governors in the country?
Some Democrats seem to think so.
Lawmakers on Wednesday voted to place a
constitutional amendment calling for the so-called
millionaire’s tax on the 2018 ballot, and Democrats
immediately pounced on the issue as a political weapon that
could be wielded against Baker and other Republicans running
for state office next year.
Early polling has found that more than
two-thirds of voters support the amendment, which would
increase taxes on earnings above $1 million and direct the
money to transportation and education. A WBUR poll in
January indicated even a slim majority of Republicans would
vote for the tax....
“It sets a significant platform for us: do
you stand for the middle class or not?” said Gus Bickford,
chairman of the Massachusetts Democratic Party. “That’s what
this question is about.”
But Republicans, in turn, hope to defuse the
potential political land mine by portraying the amendment as
yet another attempt by Democrats to increase the state’s tax
burden and drive away businesses.
“It’s hard to imagine something more
predictable than the chairman of the Democratic Party
calling for tax increases,” said Terry MacCormack, a
spokesman for the state Republican Party. “Instead of going
back to taxpayers with their hands out once again,
Massachusetts Democrats should start by joining Governor
Baker in leading a state government that lives within its
means.”
The amendment, backed by labor, religious,
and community groups, would scrap the state’s flat income
tax rate of 5.1 percent and create a two-tiered system.
Starting in 2019, earnings over $1 million would be taxed at
a rate 4 percentage points higher....
Backers say the money must be spent on
transportation and education, although opponents assert the
language in the amendment is not binding and that lawmakers
could spend the revenue on other uses.
So far, Baker has sounded cool to the
amendment, without taking a concrete stance....
House minority leader Bradley H. Jones Jr.,
a North Reading Republican, said even if the amendment is
ratified, there is no guarantee it will lead to an
additional $2 billion for education and transportation
because lawmakers could simply shift money to other
priorities or pet projects.
“Do you really trust Democrats on Beacon
Hill?” he said. “Look at the track record.”
Business groups have threatened to challenge
the amendment in court, asserting it violates the
Legislature’s constitutional power to make spending
decisions. If they were to file a successful lawsuit, it
could knock the amendment off the ballot, derailing it as a
political issue for Democrats. Lawyers who drafted the
amendment say they’re confident the measure passes
constitutional muster.
The Boston Globe
Thursday, June 15, 2017
State lawmakers approve tax on top earners for 2018 ballot
One of the state’s most powerful business
groups expects to spend more than $1 million to try to
prevent the proposed “millionaire’s tax” from getting on the
ballot.
At the annual meeting of the Massachusetts
High Technology Council yesterday, outgoing Chairman Bill
Achtmeyer estimated it will cost $1.1 million to wage a
legal challenge to a proposed amendment to the state’s
constitution that would add a 4 percent surtax on incomes
over $1 million to pay for education and transportation.
“In fact, (the money) will go to the general
fund, which is not constitutional,” said Achtmeyer, founder
of Parthenon and senior managing director of Parthenon-EY, a
Boston-based business management consulting firm.
“We believe we will be able to defeat it
before it gets to the ballot ... We’re going to go
gangbusters against this constitutional amendment,” he
added.
The Boston Herald
Wednesday, June 7, 2017
‘Millionaire’s tax’ in cross hairs of big biz group
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Chip Ford's CLT
Commentary
As expected, the House and Senate convening in
constitutional convention yesterday easily passed the sixth
attempt to impose a graduated income tax. By a vote of
134-55 the Legislature sent
The Takers' — and now
their — proposal to the
2018 ballot.Thanks goodness someone has the
resources to take this abomination of special interest
Takers Lust to the courts. CLT certainly can't afford
to do it. The
Massachusetts High Technology Council (MHTC)
estimates it's going to cost their organization more than a
million bucks to pursue that remedy —
which is close to ten times CLT's entire income and
operating budget for a year!
On the merits I think the MHTC has a very good case to
have the ballot question ruled unconstitutional by the
courts. This initiative amendment proposes: "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."
Never mind who ultimately gets to decide the definitional
vagaries of "quality" public education and
"affordable" public colleges and universities (the
courts will upon later challenge by the teachers unions, one
of the proposal's deep-pockets sponsors)
—
appropriations of money directed to specific spending is not
constitutionally permissible by initiative petition:
The Massachusetts Constitution, Article 48, 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.
As Sen. Bruce Tarr (R-Gloucester), the Senate minority
leader, eloquently pointed out during the debate:
If
this is an appropriation then the question is
unconstitutional. It is not properly before us. It's
been asserted that the words subject to
appropriation somehow change that. If it is subject
to appropriation then there is no guarantee. If that
is not the case, the question is not properly before
us.
It's been suggested that because the attorney
general certified it, then its constitutionality is
without question. There are cases where
certification was made and then overturned by the
Supreme Judicial Court. This list is available for
all. That is exactly what is likely to happen here.
When you look at the relevant case law, in 1987 the
Tax Equity case - and I'll quote: Article 48 does
not exclude a measure raising public revenue, but
excludes a measure making a specific appropriation
of money. The proponents say, it's not. So we read
further.
A measure intended to limit the use of state
revenues solely for highway purposes is excluded for
making a specific appropriation. The word specific
does not necessarily refer to an exact dollar amount
and should not be interpreted in any narrow or
constricted sense.
We take 20,000 taxpayers and say they'll be
responsible for funding education and
transportation. Their income is derived from the
volatile source of capital gains. We all agree on
transportation and education, so we'll exclude the
revenue from health care. And in doing that we
violate the constitution according to three
decisions by the Supreme Judicial Court.
Next it will be up to the courts —
up to the state Supreme Judicial Court
— to decide whether another Grad Tax scheme goes
before the voters, for the sixth time. I'd like to
think the SJC will rule impartially using the words in the
constitution and previous courts' precedent. But this
is the Massachusetts court system, funded by the
Legislature —
and as I've noted before, no constitutional amendment gets
onto the ballot unless the Legislature wants it to pass.
Long ago and on numerous occasions I labeled our state's
highest court the "Supreme
Judicial Kangaroo Court." There were righteous
reasons from experience for that.
For those who didn't have the opportunity to
watch it live, as we did, if you're interested you can
read the text of yesterday constitutional convention debate
here.
Constitutional Convention —
June 14, 2017
Senate Roll Call Vote
Download PDF version
House Roll Call Vote
Download PDF version
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Chip Ford
Executive Director |
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State House News Service
Wednesday, June 14, 2017
Income surtax clears major hurdle, but legal
challenge likely
By Andy Metzger
For the second year in a row Massachusetts
lawmakers on Wednesday endorsed a proposal to
extract an estimated $2 billion from the state's
roughly 20,000 highest earners, setting up a
2018 ballot question campaign, a legal dispute
in the state's highest court, or both.
Rep. Jay Kaufman, a Lexington Democrat and House
chairman of the Revenue Committee, said
establishing a 4 percent surtax on incomes over
$1 million would give Massachusetts a fairer
system of government funding and inject money
into public education and transportation.
The state's constitution requires income taxes
be levied uniformly, so activists have backed
the tax measure as a constitutional amendment.
Wednesday's vote of 134-55 means that voters
will have the ultimate say on the proposed tax
unless the Supreme Judicial Court determines the
question is unconstitutional.
If it reaches the ballot and is approved, the
proposal would facilitate a major tax increase
without lawmakers having to vote directly on the
proposal, or having to deal with possible
objections from Republican Gov. Charlie Baker.
The top senators of both parties agreed that the
amendment is likely to be taken up by the
Supreme Judicial Court but they are of different
minds about how the court would likely decide
the matter.
The proposed amendment (S 10) specifies that the
revenues collected could "only" be spent to
provide "quality public education and affordable
public colleges and universities, and for the
repair and maintenance of roads, bridges and
public transportation."
Senate Minority Leader Bruce Tarr, a Gloucester
Republican, suggested the question would run
afoul of the constitutional prohibition against
initiative petitions making a "specific
appropriation of money."
"I'm fairly confident that there will be a case
about its constitutionality," Tarr told the News
Service. He said his analysis is that the
question is "not properly before us" but that it
would be "for the court to decide."
"The opponents have a right to challenge it, and
I am expecting that they will," Senate President
Stan Rosenberg, an Amherst Democrat, told
reporters after the vote. He said, "The
proponents worked closely with constitutional
experts and they believe this will stand up to
constitutional muster."
Seeking to undercut Tarr's contention that the
amendment appropriates money, Senate Ways and
Means Chairwoman Karen Spilka said the money
raised under the proposal could not be spent
without passage of an appropriations bill.
Less than three years into his term in office,
Gov. Baker has appointed four of the seven
Supreme Judicial Court justices, and Geraldine
Hines will hit the mandatory retirement age of
70 later this year.
The first-term Republican has hinted at
disapproval of the tax proposal but has yet to
stake out a firm position on a proposal
overwhelingly opposed by Republicans in the
Legislature. Widely expected to seek
re-election, Baker could share space on the 2018
ballot with the referendum.
Weymouth Sen. Patrick O'Connor was the only
Republican to support the measure. House
Majority Leader Ron Mariano, of Quincy, was one
of 12 House Democrats to oppose the measure.
Jennifer Flanagan, of Leominster, and Anne Gobi,
of Spencer, were the only Senate Democrats to
vote against it. Wilmington Rep. James Miceli, a
Democrat, was the only lawmaker to change his
vote, opposing it in 2016 and supporting it this
year.
The measure on Wednesday passed the
constitutional convention by a slightly higher
margin than last year when it passed 135-57.
O'Connor said he believed some "legitimate
arguments" had been raised about whether the
measure was constitutional. He said he would
have preferred that tax policy be debated and
settled by the Legislature after hearing from
stakeholders, including people earning more than
$1 million, but that he believed not letting the
question go to the ballot would be a "slippery
slope."
The Weymouth Republican said he did not expect a
large number of wealthy residents to leave the
state, repeatedly describing Massachusetts as
"unique" in terms of its economy and the
services it provides to residents.
"I ask, what is the economic cost if we don't
have this conversation and we lose our standing
in the nation and in the world?" O'Connor asked.
"Will that compare to the number of millionaires
who decide to leave the greatest state in the
nation? I think that this is a necessary step to
keeping up the momentum that has brought us here
today."
House Minority Leader Brad Jones harkened to
2013 when the Legislature passed a bill applying
the sales tax to certain computer services
before repealing the law a few months later. The
North Reading Republican wondered aloud what
lawmakers would do if they determined the income
surtax was ill-conceived.
"What do you do to fix it? My understanding is
it's a four-year process to fix that mistake,"
said Jones, who called the proposal a
"poll-tested, focus-group approved public
policy."
"We can't go back and three months later turn
the dial back, because it will be in our
constitution, enshrined, and that is something
we can't change," said Plymouth Republican Sen.
Vinny deMacdeo.
The tax proposal is a citizen petition backed by
Raise Up Massachusetts, a progressive group that
has scored wins at the ballot and in the
Legislature on raising the minimum wage and
guaranteeing workers earned sick time.
Saying lawmakers "owe a debt of gratitude" to
Raise Up, Kaufman told his colleagues that
people on the lower rungs of the income scale
expend 10 percent of their earnings in state and
local taxes, while the wealthiest Bay Staters
pay less than 5 percent of their income in state
and local taxes.
"That is the classic definition of a regressive
tax system," said Kaufman. Kaufman said that
99.5 percent of state residents would be
unaffected by the new tax, except for what he
said would be an enhancement in state services.
He said for incomes over $1 million, the tax
would cost $40,000, which he said would be about
$30,000 after a federal offset.
Republicans countered that the income tax is the
least regressive of the state's taxes, and that
relying on such a small number of the highest
earners to fund transportation and educational
needs would put state finances in a precarious
position. Speaking over the din of the crowded
chamber, Republicans also accused their
colleagues of abdicating their responsibility to
decide questions of taxation.
Brockton Democrat Sen. Michael Brady, the Senate
chair of the Revenue Committee, said lawmakers'
role is to give voters a chance to vote on the
plan. While lawmakers are actively working to
raise marijuana taxes and impose taxes on
short-term rentals, he said there are "no other
realistic revenue sources."
Tax revenues counted on to support the state's
roughly $40 billion fiscal 2017 budget have
fallen short by almost $500 million.
"With the Fair Share Amendment on the ballot, we
now have a once-in-a-generation chance to make
critical investments in transportation and
public education that increase economic
opportunity for the people of Massachusetts,"
said Lew Finfer, co-chair of Raise Up
Massachusetts, in a statement. Massachusetts
Teachers Association President Barbara Madeloni
said, "Our public schools and colleges are
drastically underfunded."
Rep. Paul Frost, an Auburn Republican,
highlighted a GOP-backed amendment to the
question that was shot down last session and
would have specified that any funds raised
through the surtax would be allocated on top of
-- not in place of -- existing spending. He said
he expects that any money generated will be
diverted to other purposes.
"We have seen in the past when times get tough
that trust funds and dedicated revenues for
certain programs get raided to be put elsewhere
in the budget," he said.
"The proposed historic tax increase represents
an unprecedented move to shelter elected
politicians from accountability for taxation and
spending policies," Massachusetts High
Technology Council President Chris Anderson said
in a statement. "But before the special-interest
backed measure, which would prove disastrous to
our goals of economic growth and job creation,
heads to the ballot - it must first pass
constitutional muster. We believe it will fail
that test."
Tarr told the News Service he believes the High
Tech Council has a "consortium of folks that are
contemplating who is the best plaintiff group
and how to move forward" with a legal challenge
to the proposal.
—Katie Lannan
contributed reporting.
The Boston Globe
Thursday, June 15, 2017
State lawmakers approve tax on top earners for
2018 ballot
By Michael Levenson
Could a tax on the rich be the political
kryptonite that weakens Charlie Baker’s
seemingly invincible status as one of the most
popular governors in the country? Some Democrats
seem to think so.
Lawmakers on Wednesday voted to place a
constitutional amendment calling for the
so-called millionaire’s tax on the 2018 ballot,
and Democrats immediately pounced on the issue
as a political weapon that could be wielded
against Baker and other Republicans running for
state office next year.
Early polling has found that more than
two-thirds of voters support the amendment,
which would increase taxes on earnings above $1
million and direct the money to transportation
and education. A WBUR poll in January indicated
even a slim majority of Republicans would vote
for the tax.
Such broad support for the measure could give
Democrats an opening to depict Baker, who has
declined to take a firm stand on the issue, as
an ally of the wealthy, a tactic they hope will
begin to deflate his sky-high popularity.
“It sets a significant platform for us: do you
stand for the middle class or not?” said Gus
Bickford, chairman of the Massachusetts
Democratic Party. “That’s what this question is
about.”
But Republicans, in turn, hope to defuse the
potential political land mine by portraying the
amendment as yet another attempt by Democrats to
increase the state’s tax burden and drive away
businesses.
“It’s hard to imagine something more predictable
than the chairman of the Democratic Party
calling for tax increases,” said Terry
MacCormack, a spokesman for the state Republican
Party. “Instead of going back to taxpayers with
their hands out once again, Massachusetts
Democrats should start by joining Governor Baker
in leading a state government that lives within
its means.”
The amendment, backed by labor, religious, and
community groups, would scrap the state’s flat
income tax rate of 5.1 percent and create a
two-tiered system. Starting in 2019, earnings
over $1 million would be taxed at a rate 4
percentage points higher.
State officials say about 19,600 people, or 0.5
percent of all filers in Massachusetts, would
pay the higher tax, which would raise about $2
billion annually.
Backers say the money must be spent on
transportation and education, although opponents
assert the language in the amendment is not
binding and that lawmakers could spend the
revenue on other uses.
So far, Baker has sounded cool to the amendment,
without taking a concrete stance.
“Governor Baker does not support tax increases
on our hard-working families, and was pleased to
sign a balanced budget last year that reflects
the administration’s priorities to create better
communities, schools, and jobs with no new
taxes,” said his spokeswoman, Lizzy Guyton, in a
statement Wednesday.
Peter Ubertaccio, a Stonehill College political
scientist, said under normal circumstances
voters might not think twice about a Republican
governor opposing a tax increase. But
Massachusetts has faced repeated budget gaps and
one Wall Street rating agency recently
downgraded the state’s creditworthiness. The
budget problems indicate that state leaders will
need to either cut spending or increase taxes to
balance the budget, he said.
“It puts the governor in a tight spot,” he said.
“I’m not sure it’s necessarily fatal.”
Baker, after all, was rated the nation’s most
poplar governor, with a 75 percent approval
rating in an April survey by Morning Consult.
The Legislature’s vote to place the amendment on
the ballot could also increase pressure on Baker
to take a stand. The vote was 134 to 55.
“Today, Governor Baker has an opportunity to get
off the sidelines and lead,” Jay Gonzalez and
Bob Massie, two Democrats running for governor,
said in a joint statement Wednesday.
Mayor Setti Warren of Newton, another Democratic
candidate for governor, also seized on the
issue, saying supporters of the amendment “must
prepare to defeat Governor Baker on this
question.”
But the issue may not be so clear-cut. Voters in
Massachusetts, who have a history of electing
Democratic legislators and Republican governors,
could choose to support the tax and then reelect
Baker to oversee the new revenue and ensure it
is spent wisely.
House minority leader Bradley H. Jones Jr., a
North Reading Republican, said even if the
amendment is ratified, there is no guarantee it
will lead to an additional $2 billion for
education and transportation because lawmakers
could simply shift money to other priorities or
pet projects.
“Do you really trust Democrats on Beacon Hill?”
he said. “Look at the track record.”
Business groups have threatened to challenge the
amendment in court, asserting it violates the
Legislature’s constitutional power to make
spending decisions. If they were to file a
successful lawsuit, it could knock the amendment
off the ballot, derailing it as a political
issue for Democrats. Lawyers who drafted the
amendment say they’re confident the measure
passes constitutional muster.
The amendment, supporters said, simply asks the
wealthiest residents to pay a higher tax to
improve schools, make public higher education
more affordable, and maintain and repair the
state’s crumbling roads and rails.
“Everybody knows, in this current system, the
wealthy are doing extremely well, and that’s not
a problem,” Bickford said. “But we need to have
them pay their fair share.”
The Boston Herald
Wednesday, June 7, 2017
‘Millionaire’s tax’ in cross hairs of big biz
group
By Marie Szaniszlo
One of the state’s most powerful business groups
expects to spend more than $1 million to try to
prevent the proposed “millionaire’s tax” from
getting on the ballot.
At the annual meeting of the Massachusetts High
Technology Council yesterday, outgoing Chairman
Bill Achtmeyer estimated it will cost $1.1
million to wage a legal challenge to a proposed
amendment to the state’s constitution that would
add a 4 percent surtax on incomes over $1
million to pay for education and transportation.
“In fact, (the money) will go to the general
fund, which is not constitutional,” said
Achtmeyer, founder of Parthenon and senior
managing director of Parthenon-EY, a
Boston-based business management consulting
firm.
“We believe we will be able to defeat it before
it gets to the ballot ... We’re going to go
gangbusters against this constitutional
amendment,” he added.
In a statement yesterday, Lizzy Guyton, a
spokeswoman for Gov. Charlie Baker, said he
“does not support tax increases on our
hardworking families.”
House Speaker Robert A. DeLeo said there is a
“good possibility” that the Legislature will
vote at the June 14 constitutional convention on
advancing the income tax measure to draw $1.6
billion to $2.2 billion from the state’s highest
earners.
The proposed amendment cleared the joint
convention by a 135-57 vote in May 2016. If
lawmakers pass the proposal again this session,
it will be placed before voters in 2018 to
ratify or reject it.
Herald wire services contributed to this
report.
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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
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▪ 508-915-3665
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