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CLT UPDATE
Thursday, June 22, 2017
Grad Tax observations in the
news
|
"No constitutional amendment gets on the
ballot unless the Legislature wants it to pass, so this is
now the lawmakers' proposal. For the sixth time
voters will have the last word, and like all previous
attempts to abolish the flat income tax, if it somehow
survives court challenges and gets that far, it too will
fail."
— Chip
Ford, executive director of Citizens for Limited
Taxation.
Beacon Hill Roll Call
Friday, June 16, 2017
4 percent tax hike on millionaires on the ballot in November
2018
Massachusetts voters have made some reckless
choices over the years (two words: Barney Frank), but on the
subject of income taxes their judgment has been consistently
prudent and restrained.
In 2000, for example, the voters approved a
ballot initiative reducing the income tax rate from 5.75
percent to 5 percent; but in 2002 and 2008 they defeated
measures that would have wiped out the income tax
altogether. In 1998, voters overwhelmingly said Yes to
taxing dividends and interest at the same rate as ordinary
income. During a recession in 1990, on the other hand, they
firmly said No to a sharp rollback in state taxes and fees.
Above all, the electorate has been as steady as a rock in
protecting the state’s flat-rate income tax from class
warriors eager to scrap it.
Article 44 of the Massachusetts Constitution commands
that income may be taxed only “at a uniform rate throughout
the commonwealth.” Five times — in
1962,
1968,
1972,
1976, and
1994 — voters have been asked to do away with that
provision and authorize a scheme of graduated, soak-the-rich
tax rates. Five times they have refused to do so.....
Actually, ballot initiatives may not be used
“to make a specific appropriation of money from the
treasury” — another guardrail embedded in the state
constitution — so any new revenue harvested by a
millionaires tax would go to the state’s general fund, to be
appropriated by the Legislature on anything it fancies.
But the class warriors are OK with that.
Their overriding priority is to breach the Article 44
barricade by any means necessary. A little bait-and-switch
to con voters into jettisoning the flat tax rule? Hey, c’est
la guerre.
Raise Up Massachusetts and its confederates
— who include 134 of the Legislature’s 158 Democrats — know
that “fairness” only starts with a surcharge on those
earning $1 million. Once the principle is established, they
can always come back for more. There’s always another target
that can be accused of not paying its “fair share.” Always
more “unmet needs” that demand more revenue. Always more
gnawing inequality to be soothed with new taxes.
Graduated tax rates are a hustle, one
Massachusetts voters have five times been too smart to fall
for. The class warriors are betting that the sixth time’s
the charm. I’m betting the voters are still pretty smart.
The Boston Globe
Wednesday, June 21, 2017
An 80 percent tax surcharge on millionaires? Don’t fall for
it, voters
By Jeff Jacoby
The Massachusetts Taxpayers Foundation
supports world-class transportation and education and the
additional resources necessary to improve them. We also
acknowledge that the growing income gap is an issue that
needs to be addressed. Yet, we oppose the 2018
constitutional ballot initiative more commonly known as the
millionaires’ tax. Why is that?
As the foundation’s recent publication
outlines, this ballot initiative raises several practical
and fiscal concerns: (1) it violates all tenets of sound tax
policy; (2) projected revenues will be unreliable and fall
short of expectations; (3) the money is unlikely to be used
to increase education and transportation investments; (4)
virtually no options exist to fix the damage from this
experiment; and (5) the Legislature has far better options
to raise funding equitably....
The proposed ballot initiative changes the
Massachusetts constitution — the oldest functioning written
constitution in continuous effect in the world – in profound
ways for political expediency. More specifically, this
initiative imposes a marginal tax of 4 percent on income
over a million dollars and attempts to earmark the
additional tax revenue for education and transportation. It
does so by legislating through the constitution, a novel
approach necessitated by four failed ballot attempts to
introduce a graduated income tax that were overwhelmingly
rejected by voters.
Unlike previous attempts that struck the
constitution’s “uniformity clause” (requiring all like
income to be taxed the same way) and filed companion
legislation to set forth the different tax rates in a
statute, this initiative permanently embeds an income tax
rate into the constitution itself — something no other state
has done....
This ballot initiative quite possibly
violates a separate constitutional provision that prohibits
specific appropriations from being made through the
initiative process. The foundation, along with others, will
ask the Supreme Judicial Court to make that determination.
Boston Business Journal
Wednesday, June 21, 2017
Millionaire’s tax process is flawed policy
By
Eileen McAnneny
It’s a tough time to be making a million in
Massachusetts.
Just ask Richard J. Valentine. Stung by a
proposed state constitutional amendment that would raise
taxes on top earners, the Hingham entrepreneur and investor
said he might move to Florida rather than pay the new tax.
“You’ve built a business in the state and
now, all of a sudden, they’re sticking it to you,” Valentine
said. “It’s shortsighted because that millionaire could be
the guy you’re working for and, when he goes, he takes 20,
30 jobs with him.” ...
“It will put a chilling effect on any
business already here, and any business considering coming
here,” said Valentine, whose businesses include F1 Boston,
an indoor go-kart track in Braintree.
Roger M. Marino, the co-founder of EMC
Corp., said he may leave if his taxes go up, even though he
has lived in Massachusetts his entire life.
“As far as I’m concerned, it’s a thing to
consider — absolutely, seriously consider,” said Marino, who
is 78 and has an estimated net worth of $1.2 billion. “I
have a place down in Florida that looks mighty attractive
now.”
No one doubts that some high earners leaving
can have a serious effect on state revenues.
A study by the Center on Wealth and
Philanthropy at Boston College found that, in the four years
following New Jersey’s income tax increase, $70 billion in
wealth left the state, while the expected amount of
charitable giving fell by $1.1 billion.
“It doesn’t take too many of them to leave
before it adds up,” said Eileen McAnneny, president of the
Massachusetts Taxpayers Foundation, a business-backed think
tank that opposes the higher tax rate in this state.
The Boston Globe
Wednesday, June 21, 2017
Millionaires might complain about new tax, but they probably
won’t flee, studies show
Lawmakers' decision to award themselves pay
raises earlier this year was an unpopular move with around
three quarters of the electorate, according to a poll
sponsored by a conservative group that argues the pay hike
could imperil progressives' push for a tax hike next year.
The pay raise law, approved over Gov.
Charlie Baker's veto, increased the compensation of the
speaker and the Senate president from about $97,000 to
$142,000 while other lawmakers' pay increased by lesser but
still substantial amounts depending on their leadership
positions or committee chairmanships.
Massachusetts Fiscal Alliance, a group that
has rankled Democrats since its founding five years ago,
calculated that the average pay raise was 40 percent. Except
for top leadership positions, lawmakers holding only one
stipend-eligible position saw their pay rise by less than 40
percent, and backbenchers received only an increase in their
expense accounts.
Thirty percent of voters said they would be
"much less likely" to support someone at the polls who voted
for his or her own 40 percent pay raise, and another 43.6
percent said they would be "less likely," according to the
survey conducted by Virginia-based Advantage, Inc.
The poll that was publicized Wednesday found
8.8 percent of voters would be more likely to support a
politician who voted for their own 40 percent raise. The
increase in lawmakers' expense accounts, another provision
of the pay raise law, was even less popular, according to
the poll....
Paul Craney, spokesman for Mass Fiscal, said
the poll also showed that Democrats who voted for the pay
raise bill created some challenges for the Democrat-led push
to add a 4 percent surtax onto incomes over $1 million. Mass
Fiscal opposes that tax.
State House News Service
Wednesday, June 21, 2017
Poll takes temp of Mass. voters on legislative pay raises
A two-day sales tax holiday, which has taken
place nearly every year for more than a decade, is a
lifeline for shops swamped with competition by online
retailers that are always a few clicks away, the state's top
retail spokesman told lawmakers.
Retailers, who are appealing to lawmakers
for help on the tax holiday and other issues, are facing the
prospect of a second consecutive August without a weekend's
reprieve from the 6.25 percent sales tax. Dating back to
2004, the only other year that did not feature a sales tax
holiday was 2009, right after lawmakers increased the sales
tax to address a state budget crisis.
Jon Hurst, president of the Retailers
Association of Massachusetts who is considering a ballot
campaign to lower the sales tax, said federal and state
policymakers have not sufficiently addressed the disparity
between online retailers and their brick and mortar
counterparts....
Hurst is considering launching a ballot
question campaign to lower the sales tax, and he said he is
researching how voters would respond to different levels and
how the proposal might fare when combined with a ballot
question to add a surtax on incomes over $1 million.
"We are taking a look at where the voters
stand on that, what would be most advantageous, what level,
how would it play against a millionaire's tax to make a tax
system more progressive," Hurst said.
In 2015, the Department of Revenue estimated
$25.5 million in foregone revenue from the sales tax
holiday. The state budget is approaching $40 billion.
State House News Service
Tuesday, June 20, 2017
Revenue-hungry pols mull popular sales tax holiday
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Chip Ford's CLT
Commentary
I want to keep you "in the loop" with available information
that effects taxpayers: That's this update's purpose.
I need to add very little to what's being said.As you can
read, the latest Graduated Income Tax scheme
— aka, "The Millionaire's Tax,"
aka, "The Fair Share Amendment" —
is already receiving considerable attention since the
Legislature voted it onto the November 2018 ballot last
week. Undoubtedly it will receive more in the days
ahead. At least we are not alone recognizing The
Takers' scheme to get their noses inside the tent, their
opening gambit to endlessly divide and conquer taxpayers
under the guise of "tax fairness." Our job for the
next sixteen months — CLT's and yours
and others' — is to make sure enough of our fellow
voters realize the scam that's being perpetrated against
them and aren't sucked in by it.
Incredibly the Legislature is still struggling to
decide whether to gift taxpayers with the traditional "sales
tax holiday" — a single weekend
during the year without a sales tax imposed. They're still
resisting, still claiming that an
estimated $25.5 million in "foregone revenue"
is simply unaffordable.
That claim might conceivably have a
ring of truth, it would be more "affordable" if
legislators hadn't stuffed their pockets with an obscene $18
million pay grab in January. When it was in their
self-interest and going into their pockets
affordability was never discussed, even considered.
If anyone needs a single glaring
example of who is serving whom in Massachusetts, look no
further.
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Chip Ford
Executive Director |
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Beacon Hill Roll Call
Friday, June 16, 2017
4 percent tax hike on millionaires on the ballot
in November 2018 (H3933)
By Bob Katzen
Responses to the Legislature's passage of an
additional 4 percent income tax, in addition to
the current flat 5.1 percent one, on taxpayers'
earnings of more than $1 million. The proposal
will now go on the November 2018 ballot for
voters to decide.
"I was first to support this initiative because
it is aligned with my value for fairness, in
that it calls on those with the greatest ability
to pay their fair share of tax. I firmly believe
that the Fair Share Amendment represents our
best chance for new revenue in the near future
and I will continue to push for its goals."
—
Mary Ann Stewart, one of the 10 original signers of the
petition to get this question on the ballot.
"No constitutional amendment gets on the ballot
unless the Legislature wants it to pass, so this
is now the lawmakers' proposal. For the
sixth time voters will have the last word, and
like all previous attempts to abolish the flat
income tax, if it somehow survives court
challenges and gets that far, it too will fail."
— Chip Ford,
executive director of Citizens for Limited
Taxation.
"The reality is that the Commonwealth is
billions of dollars away from what is truly
needed to improve and provide a
state-of-the-art, 21st century transportation
system that connects employees to jobs, students
to institutions of higher education and elders
and others to medical appointments."
—
Sen. Tom McGee, D-Lynn, co-chair of the Committee on
Transportation.
"The proposed historic tax increase represents
an unprecedented move to shelter elected
politicians from accountability for taxation and
spending policies. 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."
—
Chris Anderson, president of the Massachusetts High
Technology Council.
"Our public schools and colleges are drastically
underfunded. We have many communities in need of
free high-quality pre-kindergarten. We need to
make sure that arts, athletics and cultural
activities are available to students no matter
where they live."
—
Barbara Madeloni, president of the Massachusetts Teachers
Association.
"Associated Industries of Massachusetts is
disappointed by today's vote, but not surprised.
The wording of the question, the fact that it
targets a small minority of Massachusetts
residents while purporting to raise billions of
dollars for new state spending, made passage
inevitable. Given the experience of other
states, we believe that this measure will not
raise the promised revenue and will make
Massachusetts less attractive as a business
location."
—
John Regan, executive vice president for Government Affairs
at Associated Industries of Massachusetts.
The Boston Globe
Wednesday, June 21, 2017
An 80 percent tax surcharge on millionaires?
Don’t fall for it, voters
By Jeff Jacoby
Massachusetts voters have made some reckless
choices over the years (two words: Barney
Frank), but on the subject of income taxes their
judgment has been consistently prudent and
restrained.
In 2000, for example, the voters approved a
ballot initiative reducing the income tax rate
from 5.75 percent to 5 percent; but in 2002 and
2008 they defeated measures that would have
wiped out the income tax altogether. In 1998,
voters overwhelmingly said Yes to taxing
dividends and interest at the same rate as
ordinary income. During a recession in 1990, on
the other hand, they firmly said No to a sharp
rollback in state taxes and fees.
Above all, the electorate has been as steady as
a rock in protecting the state’s flat-rate
income tax from class warriors eager to scrap
it.
Article 44 of the Massachusetts Constitution
commands that income may be taxed only “at a
uniform rate throughout the commonwealth.” Five
times — in
1962,
1968,
1972,
1976, and
1994 — voters have been asked to do away
with that provision and authorize a scheme of
graduated, soak-the-rich tax rates. Five times
they have refused to do so.
But the class warriors can’t take a hint.
Last week the Legislature voted to send the
question to the Massachusetts ballot once again.
On a near-party-line vote, lawmakers endorsed a
proposal that would sock anyone earning more
than $1 million with an 80 percent income-tax
surcharge beginning in 2019. In place of the
state’s flat 5.1 percent tax rate, the so-called
millionaires tax would punish the wealthy with a
rate 4 percentage points higher on income over
$1 million.
But only if the taxpayers fall for it.
Those clamoring for punitive taxes on the
wealthy have dubbed their proposal the “Fair
Share Amendment.” It’s the usual Newspeak.
People with seven-figure incomes aren’t
compelled to pay an 80 percent surcharge when
they grab coffee at Dunkin’ Donuts or sign up
for Netflix or buy a ticket on Amtrak. Anyone
who insisted they be forced to do so as a matter
of “fairness” would rightly be thought
ridiculous. Higher tax rates on higher incomes
are a punishment for success, risk-taking, and
hard work. *Fair* is the last thing they are.
According to the Department of Revenue, about
19,600 Massachusetts residents — 0.5 percent of
tax filers — would be affected by the proposed
surtax. Liberal activists get woozy at the
thought of spending the nearly $2 billion the
tax is projected to raise. “The new revenue
generated by this tax,” rhapsodizes Raise Up
Massachusetts, the left-wing coalition
sponsoring the ballot measure, “could only be
spent on quality public education, affordable
public colleges and universities, and for repair
and maintenance of roads, bridges, and public
transportation.”
Actually, ballot initiatives may not be used “to
make a specific appropriation of money from the
treasury” — another guardrail embedded in the
state constitution — so any new revenue
harvested by a millionaires tax would go to the
state’s general fund, to be appropriated by the
Legislature on anything it fancies.
But the class warriors are OK with that. Their
overriding priority is to breach the Article 44
barricade by any means necessary. A little
bait-and-switch to con voters into jettisoning
the flat tax rule? Hey, c’est la guerre.
Raise Up Massachusetts and its confederates —
who include 134 of the Legislature’s 158
Democrats — know that “fairness” only starts
with a surcharge on those earning $1 million.
Once the principle is established, they can
always come back for more. There’s always
another target that can be accused of not paying
its “fair share.” Always more “unmet needs” that
demand more revenue. Always more gnawing
inequality to be soothed with new taxes.
Graduated tax rates are a hustle, one
Massachusetts voters have five times been too
smart to fall for. The class warriors are
betting that the sixth time’s the charm. I’m
betting the voters are still pretty smart.
Boston Business Journal
Wednesday, June 21, 2017
Viewpoint
Millionaire’s tax process is flawed policy
The Massachusetts Taxpayers Foundation supports
world-class transportation and education and the
additional resources necessary to improve them.
We also acknowledge that the growing income gap
is an issue that needs to be addressed. Yet, we
oppose the 2018 constitutional ballot initiative
more commonly known as the millionaires’ tax.
Why is that?
As the foundation’s recent publication outlines,
this ballot initiative raises several practical
and fiscal concerns: (1) it violates all tenets
of sound tax policy; (2) projected revenues will
be unreliable and fall short of expectations;
(3) the money is unlikely to be used to increase
education and transportation investments; (4)
virtually no options exist to fix the damage
from this experiment; and (5) the Legislature
has far better options to raise funding
equitably.
This ballot initiative will fundamentally alter
how tax revenues are appropriated, a change that
poses an enormous risk and, if it fails, cannot
be reversed before inflicting economic and
fiscal harm.
The proposed ballot initiative changes the
Massachusetts constitution — the oldest
functioning written constitution in continuous
effect in the world – in profound ways for
political expediency. More specifically, this
initiative imposes a marginal tax of 4 percent
on income over a million dollars and attempts to
earmark the additional tax revenue for education
and transportation. It does so by legislating
through the constitution, a novel approach
necessitated by four failed ballot attempts to
introduce a graduated income tax that were
overwhelmingly rejected by voters.
Unlike previous attempts that struck the
constitution’s “uniformity clause” (requiring
all like income to be taxed the same way) and
filed companion legislation to set forth the
different tax rates in a statute, this
initiative permanently embeds an income tax rate
into the constitution itself — something no
other state has done.
This approach helps garner support from voters
who would otherwise be skeptical of giving the
Legislature unfettered discretion to impose
different tax rates on different classes of
taxpayers. In the process, though, legislators
are ceding to voters their sole power to
appropriate — and that is a dangerous precedent.
Rather than elected officials being directly
accountable to the voters for their
tax-appropriation decisions, the initiative’s
anticipated tax revenue (estimated at $2 billion
per year) will be required to be spent ad
infinitum on education and transportation,
regardless of fiscal circumstances, changes in
the population or the eventual economic
downturn.
This ballot initiative quite possibly violates a
separate constitutional provision that prohibits
specific appropriations from being made through
the initiative process. The foundation, along
with others, will ask the Supreme Judicial Court
to make that determination.
If this millionaires’ tax is allowed, it opens
up Pandora’s Box by enabling special interests
to dictate through the initiative process where
tax dollars must be spent.
Not only would that pose a real fiscal challenge
for the state, it would seriously undermine the
Legislature’s authority. One need only look to
California for an example of how ballot
initiatives have hamstrung lawmakers’ ability to
appropriate money. If this ballot initiative is
passed, lawmakers will be hard pressed to
balance the state’s increasingly tight budgets,
while allocating the necessary funding to
support our greatest needs.
Eileen McAnneny is president of the
Massachusetts Taxpayers Foundation.
The Boston Globe
Wednesday, June 21, 2017
Millionaires might complain about new tax, but
they probably won’t flee, studies show
By Michael Levenson
It’s a tough time to be making a million in
Massachusetts.
Just ask Richard J. Valentine. Stung by a
proposed state constitutional amendment that
would raise taxes on top earners, the Hingham
entrepreneur and investor said he might move to
Florida rather than pay the new tax.
“You’ve built a business in the state and now,
all of a sudden, they’re sticking it to you,”
Valentine said. “It’s shortsighted because that
millionaire could be the guy you’re working for
and, when he goes, he takes 20, 30 jobs with
him.”
The specter of wealthy residents fleeing if the
state raises taxes on incomes over $1 million
next year has emerged as a significant part of
the opposition to the proposal. But studies from
across the country show that while some wealthy
residents will follow through on their
complaints and actually move away, the vast
majority will stay put, opting for family and
familiarity over lower taxes in Palm Beach or
Wolfeboro.
“It might be a little more of an incentive to
pack up and move,” said Charles Steindel, former
chief economist at the Department of the
Treasury in New Jersey, which raised taxes on
residents earning more than $500,000 in 2004.
“But if that was the only reason people would be
driven out, they would have all left for New
Hampshire a long time ago.”
New Jersey estimated that 25,000 residents who
would have paid $150 million in income taxes per
year left the state in the seven years following
its tax increase on high earners.
But those losses did not eclipse the total
revenue gained from the tax hike, which was
about $1 billion annually, according to a state
report.
One nationwide study produced last year by
Stanford researchers — considered the most
comprehensive on the subject — showed that just
over 2 percent of wealthy people who relocate
appear to have been motivated by income tax
changes.
The study tracked the tax returns filed by every
million-dollar earner in the country from 1999
to 2011 to determine if they were moving in
response to changes in tax policy.
“The most striking finding of this research is
how little elites seem willing to move to
exploit tax advantages across state lines in the
United States,” the study found. “Millionaire
tax flight is occurring, but only at the margins
of statistical and socioeconomic significance.”
The study by two sociologists, Cristobal Young
and Charles Varner, also zeroed in on the
question of whether wealthy residents moved to
the lower-tax side of state borders after one
state raised its income tax rate. The findings
indicated that tax increases in these border
regions “did not lead to observable changes in
the millionaire population” and that “the
evidence that millionaires choose to live on the
low-tax side of state borders is weak.”
Young and Varner found the highest earners
actually migrate less than the general
population because the wealthy are more likely
to be married, own businesses, and have
school-age children that tie them to a
particular place.
Several other studies have also found that the
number of wealthy residents who leave a state in
response to higher taxes is usually small.
The proposed constitutional amendment in
Massachusetts, headed for the 2018 ballot, 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. By
comparison, New Jersey’s tax increase on the
wealthy was less than 3 percentage points.
State officials say about 19,600 residents, or
0.5 percent of all filers in Massachusetts,
would pay the higher tax. The measure would
raise about $2 billion annually, which the state
would have to spend on education and
transportation.
Supporters argue that while some wealthy
residents may leave, other entrepreneurs might
move into the state to take advantage of a
better-educated, more-mobile workforce.
“I think it would be a very good bet for the
Commonwealth,” said Robert Tannenwald, a former
vice president of the Federal Reserve Bank of
Boston and former senior fellow at the
left-leaning Center for Budget and Policy
Priorities in Washington. “The benefits of the
improved education and infrastructure have to be
factored in, and the likely revenue losses from
migration would be small — quite small — in
comparison to the revenue gained for these vital
functions.”
Tannenwald said he estimates that, for every
dollar that states gain when they raise taxes on
the rich, between 2 and 10 cents is lost from
top earners moving to other states.
Joshua Boger, the founder of Vertex
Pharmaceuticals, who lives in Boston, is among
those wealthy residents who would stay and pay
the higher tax.
“I don’t want to bash Florida, but you’d have to
sentence me to jail to go there,” he said. “It’s
not an attractive state for a lot of reasons.”
But critics point out that many wealthy
individuals own at least a second home — and
sometimes a third — so relocating is relatively
easy. Florida and New Hampshire — each without
an income or estate tax — are particularly
alluring. And if the wealthy leave, they could
take jobs and revenue with them and tarnish the
business climate.
“It will put a chilling effect on any business
already here, and any business considering
coming here,” said Valentine, whose businesses
include F1 Boston, an indoor go-kart track in
Braintree.
Roger M. Marino, the co-founder of EMC Corp.,
said he may leave if his taxes go up, even
though he has lived in Massachusetts his entire
life.
“As far as I’m concerned, it’s a thing to
consider — absolutely, seriously consider,” said
Marino, who is 78 and has an estimated net worth
of $1.2 billion. “I have a place down in Florida
that looks mighty attractive now.”
No one doubts that some high earners leaving can
have a serious effect on state revenues.
A study by the Center on Wealth and Philanthropy
at Boston College found that, in the four years
following New Jersey’s income tax increase, $70
billion in wealth left the state, while the
expected amount of charitable giving fell by
$1.1 billion.
“It doesn’t take too many of them to leave
before it adds up,” said Eileen McAnneny,
president of the Massachusetts Taxpayers
Foundation, a business-backed think tank that
opposes the higher tax rate in this state.
Seth Klarman, the billionaire chief executive of
the Baupost Group, a Boston hedge fund, said he
won’t leave if the tax increase is ratified but
expects others will.
“I’m a Bostonian. I love this state and I’m not
moving,” he said. “That said, I worry that this
initiative may have the unintended consequence
of causing tax revenue to leave the state. Of
course, it would be no surprise if some
investment capital and philanthropy left with
it.”
Steindel, the New Jersey economist, said a more
serious problem is the volatility that comes
from basing more of the state budget on taxes
paid by wealthy residents. Because the rich
often pay more taxes on investments than on
wages, the amount the state collects can
fluctuate wildly with swings in the stock
market.
“It wreaks havoc with your budget because you
don’t know what the revenues are going to be,”
Steindel said. “Quite literally, we would sit
around in Trenton and wait for those checks to
be opened. That’s a little nerve-racking when
you’re sitting around in late April wanting to
know if you’re going to have enough cash to keep
the lights on.”
State House News Service
Wednesday, June 21, 2017
Poll takes temp of Mass. voters on legislative
pay raises
By Andy Metzger
Lawmakers' decision to award themselves pay
raises earlier this year was an unpopular move
with around three quarters of the electorate,
according to a poll sponsored by a conservative
group that argues the pay hike could imperil
progressives' push for a tax hike next year.
The pay raise law, approved over Gov. Charlie
Baker's veto, increased the compensation of the
speaker and the Senate president from about
$97,000 to $142,000 while other lawmakers' pay
increased by lesser but still substantial
amounts depending on their leadership positions
or committee chairmanships.
Massachusetts Fiscal Alliance, a group that has
rankled Democrats since its founding five years
ago, calculated that the average pay raise was
40 percent. Except for top leadership positions,
lawmakers holding only one stipend-eligible
position saw their pay rise by less than 40
percent, and backbenchers received only an
increase in their expense accounts.
Thirty percent of voters said they would be
"much less likely" to support someone at the
polls who voted for his or her own 40 percent
pay raise, and another 43.6 percent said they
would be "less likely," according to the survey
conducted by Virginia-based Advantage, Inc.
The poll that was publicized Wednesday found 8.8
percent of voters would be more likely to
support a politician who voted for their own 40
percent raise. The increase in lawmakers'
expense accounts, another provision of the pay
raise law, was even less popular, according to
the poll.
Jim Eltringham, vice president at Advantage,
Inc., said the poll of 500 registered voters
conducted in mid-June was modeled to resemble
the electorate in 2018. The margin of error was
4.4 percent.
According to the survey, two thirds of voters
were very or somewhat aware of the pay raise
vote, which was lawmakers' first major agenda
item this year.
No Republicans supported the pay raise bill and
nine House Democrats and three Senate Democrats
opposed the measure, which passed overwhelmingly
in both branches.
Paul Craney, spokesman for Mass Fiscal, said the
poll also showed that Democrats who voted for
the pay raise bill created some challenges for
the Democrat-led push to add a 4 percent surtax
onto incomes over $1 million. Mass Fiscal
opposes that tax.
In back-to-back sessions about 70 percent of the
House and Senate voted to advance the ballot
question to amend the constitution with a surtax
that proponents say could generate $2 billion
for transportation and education. Unless it is
blocked by the courts, the question will appear
on the 2018 ballot.
The poll told respondents that the "intent" of
the surtax ballot question was to finance the
pay raise, although the raise is not mentioned
in the question.
Supporters of the tax have maintained that its
intent is to raise money for education and
transportation and the legislation would bar the
tax proceeds from being used for anything else.
Surtax opponents have argued that lawmakers
would be able to circumvent that requirement in
part because the infusion of funds for
transporation and education would free up other
funds to be spent in other areas of government.
Craney contended that while activists who
gathered the signatures to place the proposed
constitutional amendment before lawmakers did so
to boost education and transportation funding,
lawmakers supported it merely to increase state
revenues.
"The lawmakers' intent is taxpayer money goes to
whatever they want," Craney said. He said,
"Lawmakers have a different intent than
activists."
Proponents refer to the surtax as the Fair Share
Amendment, while Craney calls it Prop 80 because
taxes on incomes above $1 million would go from
around 5.1 percent to 9.1 percent, a roughly 80
percent increase. The constitution currently
requires a flat income tax.
The poll asked, "Now that you've learned the
intent of Prop 80, which increases the top tax
bracket by 80% is to fund the legislature's 40%
pay raise, are you more or less likely to
support Prop 80?"
Nearly 68 percent of those surveyed responded
that they would be less likely to support the
surtax ballot question.
"If people could trust Beacon Hill with how
they're spending, there would probably be
support for this ballot question but at the end
of the day they just don't," Craney said.
Steve Crawford, spokesman for Raise Up
Massachusetts, a coalition of groups seeking to
enshrine the surtax in the constitution,
dismissed the poll results.
"Massachusetts residents want a serious
discussion of how we're going to invest in our
state's future, and Raise Up Massachusetts
welcomes that debate," Crawford said. "This
silly so-called poll insults the intelligence of
Massachusetts voters."
The poll also found that Baker remains extremely
popular and U.S. Sen. Elizabeth Warren is also
relatively well regarded by voters. Fifty eight
percent of respondents had a favorable opinion
of Warren and about 38 percent had an
unfavorable opinion of her. Of those, 33 percent
had a very unfavorable opinion of the Cambridge
Democrat who is seeking re-election next year.
More than 72 percent of respondents had a
favorable opinion of Baker, while 16 percent had
an unfavorable opinion of the Republican
governor.
In November President Donald Trump earned
roughly 33 percent of the Massachusetts vote and
after five months of his presidency 37.6 percent
of Bay State voters had a favorable opinion of
Trump, according to the poll. Fifty-nine percent
of Bay Staters surveyed had an unfavorable
opinion of the president. That roughly matches
the Gallup Daily Tracking poll of the
president's job approval rating nationwide.
State House News Service
Tuesday, June 20, 2017
Revenue-hungry pols mull popular sales tax
holiday
By Andy Metzger
A two-day sales tax holiday, which has taken
place nearly every year for more than a decade,
is a lifeline for shops swamped with competition
by online retailers that are always a few clicks
away, the state's top retail spokesman told
lawmakers.
Retailers, who are appealing to lawmakers for
help on the tax holiday and other issues, are
facing the prospect of a second consecutive
August without a weekend's reprieve from the
6.25 percent sales tax. Dating back to 2004, the
only other year that did not feature a sales tax
holiday was 2009, right after lawmakers
increased the sales tax to address a state
budget crisis.
Jon Hurst, president of the Retailers
Association of Massachusetts who is considering
a ballot campaign to lower the sales tax, said
federal and state policymakers have not
sufficiently addressed the disparity between
online retailers and their brick and mortar
counterparts.
"For two decades they've dodged fixing this
issue. That's why we haven't been able to fix it
for the long-term. We're continuing to try to
add lifelines like the sales tax holiday in the
interim," Hurst told the Revenue Committee.
Sen. Michael Brady, a Brockton Democrat and
co-chairman of the committee, said as they
consider the proposal lawmakers have their eye
on tax revenues - which have fallen more than
$400 million short of expectations this year and
left officials hunting for revenue sources to
plug holes in the state budget.
"We are very concerned about revenue and not
having enough revenue in the Commonwealth, so
we're weighing out every option," Brady said
when asked if the proposal should pass this
year. Without getting into specifics, Brady said
he was interested in speaking to his colleagues
about the idea of potentially lessening the
sales tax as opposed to eliminating it for two
days.
A strategy analysis by the accounting and
consulting firm PwC notes the grim outlook for
main street stores competing against online
sellers that have different overhead costs and
are sometimes not required to collect and remit
the sales tax.
"Although overall retail sales performance is
quite strong, during the last several years
essentially all of the inflation-adjusted gains
in retailer revenue have been driven by online
channels, which enjoy growth rates as much as 7
percent higher than retail sector growth as a
whole," the PwC analysis said. "Meanwhile,
traditional retailers are faced with flat or
declining sales and large, costly store
networks."
Two bills (H 1511, H 1544) would establish a
permanent sales tax holiday and a bill (H 1548)
filed by House Minority Leader Brad Jones would
establish August 12-13 as a sales tax holiday
this year, according to a bill summary.
Tobacco products, cars, purchases over $2,500
and certain other items would not be included in
the tax-free holiday, under the legislation.
Anthony Goodh, who owns BoConcept, a furniture
store in Cambridge, said a sales associate was
able to afford a new car lease after a sales tax
holiday weekend and he is now eager to learn
whether there will be one this year.
"There's something about not paying taxes that
makes people crazy," said Goodh, who said that
small businesses like his furniture shop benefit
from the "hoopla" generated by big brands ahead
of the tax-free weekend.
Hurst is considering launching a ballot question
campaign to lower the sales tax, and he said he
is researching how voters would respond to
different levels and how the proposal might fare
when combined with a ballot question to add a
surtax on incomes over $1 million.
"We are taking a look at where the voters stand
on that, what would be most advantageous, what
level, how would it play against a millionaire's
tax to make a tax system more progressive,"
Hurst said.
In 2015, the Department of Revenue estimated
$25.5 million in foregone revenue from the sales
tax holiday. The state budget is approaching $40
billion.
Rep. Paul McMurtry, a Dedham Democrat, said he
supports providing the economic booster to the
state's retail industry this year.
"I look at this as a gesture of appreciation to
the small businesses in the Commonwealth,"
McMurtry told the committee. He said, "I think
we can't afford not to do it."
Hurst noted the state has policies to provide
financial assistance to the movie industry and
the life sciences sector.
"This is a reasonable investment for the state
to make," Hurst told reporters, predicting a
decision would not be made on the proposal until
the state's fiscal 2018 budget process is
completed. He said, "I don't know if there's a
full appreciation in this building about what
the consumer is doing, where their dollars are
going."
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