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CLT UPDATE
Wednesday, October 18, 2017
Grad Tax would hike Mass. to
2nd-highest in U.S., 6th-highest in world
|
The proposed “millionaire’s tax” set for the
November 2018 ballot would force Bay Staters to pay the
second-highest combined state and federal top capital gains
tax rate in the country and sixth-highest in the world,
according to a
stunning new report by the Pioneer Institute.
“Right now we’re in the middle of the pack,”
said Greg Sullivan, the former state Inspector General, now
the research director at the Pioneer Institute. “This would
kick us up to be second-highest for people over a million
dollars.” ...
The Pioneer Institute argues that the
state’s top tax rate on capital gains — generated as a
result of selling investments like stocks or your home —
would increase to 9.1 percent, jumping Massachusetts from
30th-highest in the nation to fourth.
But taxpayers usually must file federal
taxes, too. So for a Bay Stater paying both state and
federal taxes, that combined top capital gains tax rate
would soar from 28.1 percent to 32 percent, according to
Pioneer. That would elevate Massachusetts from 25th place in
the nation currently to 2nd place, behind only California
(33 percent), Pioneer concluded.
Compared to other countries, the Bay State
would have the sixth-highest combined top capital gains tax
rate in the world, behind just Denmark (42 percent), France
(34.4 percent), Finland, Ireland and California (all 33
percent).
Raising taxes — or “back to Taxachusetts,”
as the report claims — could discourage companies such as
Amazon from locating to the Bay State, and could even drive
some wealthy innovators away, said Sullivan.
The Boston Herald
Tuesday, October 17, 2017
Study: Millionaire’s tax would bring state back to
'Taxachusetts'
Right now, the top marginal tax rate on
capital gains in Massachusetts is 28.1 percent, when the
federal and state rates are combined, Pioneer said in a new
policy brief. That’s the 25th-highest rate in the U.S., it
said.
But a “yes” vote next year would increase
that tax rate to 32 percent, second only to California
nationwide, according to Pioneer. Across the globe, only
Denmark, France, Finland and Ireland have higher rates, the
organization said....
The libertarian group said it’s important to
keep taxes on investments low to spur economic growth and
create jobs. “To attract business-oriented individuals to
start new businesses that stay here in Massachusetts, it’s
probably not a good thing to stand out from the rest of the
country,” said Gregory Sullivan, Pioneer’s research director
and the former inspector general of Massachusetts.
Even if Congress were to lower federal taxes
on capital gains, it would not affect Pioneer’s analysis,
according to Sullivan. Massachusetts would still stand out
in a negative way from other states, since any federal
changes will apply across the board nationwide, he said.
“I understand that people may feel that
folks who make a lot of money should pay more taxes, but
there’s a downside when you hang a sign that says you have
the second-highest capital gains tax in the U.S.A.,”
Sullivan said. “People should think about that.” ...
The argument over the proposal’s effect on
investment will be one of several fights that will play out
between proponents and opponents of the measure over the
next year, assuming the proposal is not struck down by the
Supreme Judicial Court. Five of the state’s major business
groups have challenged the constitutionality of the tax. A
ruling is expected in the first half of 2018.
Boston Business Journal
Tuesday, October 17, 2017
‘Millionaires’ tax’ would make Mass. an outlier in capital
gains tax, says group
The threat from that so-called millionaire’s
tax headed for the Massachusetts ballot is far worse than
its proponents have been letting on.
The impact on capital gains taxes — little
talked about by those pushing the initiative petition —
would have a devastating effect on the state’s economy,
according to a new report by the Pioneer Institute.
In fact, it would hike the state’s top
marginal rate from its current ranking of 30th in the nation
to fourth highest in the nation. Adding state and federal
rates would bring Massachusetts from 25th in the nation to
second (behind only California) — and the sixth highest in
the world.
Now to our way of thinking that’s rather
horrifying....
The state’s Supreme Judicial Court is being
asked to take a serious look at the nature of the ballot
question itself and whether it indeed constitutes exactly
the kind of log-rolling measure that would prohibit it from
being considered a proper initiative petition in the first
place. (It would dedicate new revenue to education and
transportation.)
But barring a court reprieve, this is no
time to send the state back to the bad old days of its
Taxachusetts roots.
A Boston Herald editorial
Wednesday, October 18, 2017
Taxachusetts revisited
In court documents, the coalition of
business groups say the question should never have been
certified by Healey because it improperly links changes to
the state’s income tax rate and spending on transportation
and infrastructure. Additionally, they argue the changes
would violate the state Constitution by stripping the
Legislature of its taxing authority and making
appropriations by initiative petition.
The court is expected to hear arguments in
the case beginning Feb. 5, with a decision expected sometime
in the spring.
Supporters of the tax dismissed the lawsuit
as “corporate lobbyist hypocrisy” and said they’re confident
it will stand up to a legal challenge.
“These corporate executives have made tens
of millions of dollars running companies that benefit from
investments in transportation and public education, and they
don’t hesitate to take millions of dollars in tax breaks
from the state,” said Deb Fastino, executive director of the
Coalition for Social Justice.
“Now they’re secretly bankrolling a legal
challenge to avoid paying a small percentage of their
enormous incomes to help our economy grow,” she added....
The millionaire tax amendment would change a
1917 provision that requires a uniform tax rate for all
citizens.
Progressive Democrats, including Senate
President Stanley Rosenberg, D-Amherst, have for years
pushed a graduated income tax, similar to the federal
system, in which low-income taxpayers pay at a lower rate
than those with larger incomes.
But the state’s voters have rejected those
efforts five times, most recently in 1994.
Massachusetts currently has a flat 5.1
percent income tax rate.
The Newburyport Daily News
Friday, October 13, 2017
Mass. business groups push to stop 'millionaires tax'
|
|
Chip Ford's CLT
Commentary
Click below graphic to
enlarge
Massachusetts taxpayers, we're still not #1 in marginal tax
rates. California holds that distinction. But in
Massachusetts we don't have marginal tax rates
— we have a constitutional
flat-tax by which we all pay the same rate based on our
individual income.If the Gimme Cabal manages to trick
voters to amend our state constitution, after more than a
century that will all be gone and we will have a
two-tier graduated income tax. At that point, for the
first time in our state's long and storied history, we
will have marginal rates depending on income.
If that should happen, Massachusetts will leap to the
head of the highest-taxed states, behind only California
(assuming it doesn't secede from the nation).
Worldwide, Massachusetts will tax at a higher rate than
all but four other countries (and California, which
already acts as an independent nation) according to
OECD
(Organisation for Economic Co-operation and Development,
35
member countries that include many of the world’s most
advanced countries but also emerging countries like Mexico,
Chile and Turkey.)
If the Gimme Cabal ever manages to break our flat-tax
barrier and replace it with the graduated income tax they've
long-lusted to impose by any means —
it won't be long before Massachusetts surpasses California
for #1 nationally. No doubt soon after, Taxachusetts
will vie to become #1 internationally as well.
"Taxachusetts" is simply too provincial, so passé
— if we're to run for the gold
we must to be #1 of the entire New World Order. Only
Ireland, Finland, France and Denmark will stand in our way!
For now we pray the Massachusetts Supreme Judicial Court
throws out this abomination before it can do any damage.
On the merits of the challenge the SJC should toss it out.
"The court is expected to hear arguments in the case
beginning Feb. 5, with a decision expected sometime in the
spring," Christian M. Wade reported for the North of Boston
Media Group.
I can't see how the court can rule other than
rejecting the ballot question on a number if not all of its
challenged deficiencies
—
but of course this is the highest court in
Massachusetts where anything is possible and the
unexpected, baffling, and convoluted is often the result.
|
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Chip Ford
Executive Director |
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The Boston Herald
Tuesday, October 17, 2017
Study: Millionaire’s tax would bring state back
to 'Taxachusetts'
By Chris Cassidy
The proposed “millionaire’s tax” set for the
November 2018 ballot would force Bay Staters to
pay the second-highest combined state and
federal top capital gains tax rate in the
country and sixth-highest in the world,
according to a
stunning new report by the Pioneer Institute.
“Right now we’re in the middle of the pack,”
said Greg Sullivan, the former state Inspector
General, now the research director at the
Pioneer Institute. “This would kick us up to be
second-highest for people over a million
dollars.”
The so-called “millionaire’s tax,” which is
expected to be a ballot question next year,
would place an additional 4 percent tax
surcharge on top of the state’s 5.1 percent
income tax for people earning beyond $1 million.
So a Bay Stater pulling in $1.1 million, for
example, would pay 5.1 percent on the first
million and a 9.1 percent rate on the additional
$100,000.
The Pioneer Institute argues that the state’s
top tax rate on capital gains — generated as a
result of selling investments like stocks or
your home — would increase to 9.1 percent,
jumping Massachusetts from 30th-highest in the
nation to fourth.
But taxpayers usually must file federal taxes,
too. So for a Bay Stater paying both state and
federal taxes, that combined top capital gains
tax rate would soar from 28.1 percent to 32
percent, according to Pioneer. That would
elevate Massachusetts from 25th place in the
nation currently to 2nd place, behind only
California (33 percent), Pioneer concluded.
Compared to other countries, the Bay State would
have the sixth-highest combined top capital
gains tax rate in the world, behind just Denmark
(42 percent), France (34.4 percent), Finland,
Ireland and California (all 33 percent).
Raising taxes — or “back to Taxachusetts,” as
the report claims — could discourage companies
such as Amazon from locating to the Bay State,
and could even drive some wealthy innovators
away, said Sullivan.
“I think that any business or even an
independent investor or businessman trying to
choose a location would probably not consider
Massachusetts — having the second-highest
capital gains tax rate — as having an
advantage,” said Sullivan. “It’s just one more
element that can convince people to relocate to
other states with lower tax rates.”
Sullivan added that the ballot question would
also cause Massachusetts to treat capital gains
differently than the federal government. Under
the initiative, those capital gains — including
the sale of a home (beyond $250,000 for a single
person or $500,000 for a married couple) — would
count toward a person’s overall income for state
tax purposes, but not federal tax purposes, said
Sullivan.
“This would affect people who are longtime
home-owners who have owned property for 20 or
more years, for example, who have seen
considerable appreciation,” said Sullivan. “That
income gets counted as part of your income for
the year.”
Supporters of the ballot question — who dub it
the “fair share amendment” — insist that 99
percent of Bay Staters won’t be affected by the
tax. While they concede that a small number of
high-income retirees could decide to leave, many
wealthy working taxpayers won’t move out because
they want to keep their jobs.
The estimated $1.9 billion a year in additional
revenue would be used for public education,
including colleges and universities, and
transportation, including roads and bridges.
Boston Business Journal
Tuesday, October 17, 2017
‘Millionaires’ tax’ would make Mass. an outlier
in capital gains tax, says group
By Greg Ryan
The so-called “millionaires’ tax” would
dramatically increase taxes in Massachusetts on
gains from the sale of stocks and other
investments, making the Bay State the
second-highest in the country for such taxes,
according to the Pioneer Institute.
Massachusetts residents are set to vote in
November 2018 on a proposal to raise state taxes
on every dollar that a person makes over $1
million.
Right now, the top marginal tax rate on capital
gains in Massachusetts is 28.1 percent, when the
federal and state rates are combined, Pioneer
said in a new policy brief. That’s the
25th-highest rate in the U.S., it said.
But a “yes” vote next year would increase that
tax rate to 32 percent, second only to
California nationwide, according to Pioneer.
Across the globe, only Denmark, France, Finland
and Ireland have higher rates, the organization
said.
The libertarian group said it’s important to
keep taxes on investments low to spur economic
growth and create jobs. “To attract
business-oriented individuals to start new
businesses that stay here in Massachusetts, it’s
probably not a good thing to stand out from the
rest of the country,” said Gregory Sullivan,
Pioneer’s research director and the former
inspector general of Massachusetts.
Even if Congress were to lower federal taxes on
capital gains, it would not affect Pioneer’s
analysis, according to Sullivan. Massachusetts
would still stand out in a negative way from
other states, since any federal changes will
apply across the board nationwide, he said.
“I understand that people may feel that folks
who make a lot of money should pay more taxes,
but there’s a downside when you hang a sign that
says you have the second-highest capital gains
tax in the U.S.A.,” Sullivan said. “People
should think about that.”
Noah Berger, the president of the left-leaning
Massachusetts Budget and Policy Center, takes
issue with the claim that higher taxes on
capital gains will hurt the local economy.
Despite having the highest capital gains taxes
nationwide, California has a strong economy, he
argued. Meanwhile, Kansas rolled back tax cuts
earlier this year after they failed to produce
significant economic growth, he said.
Revenue generated by the “millionaires’ tax” is
supposed to be reserved for improving education
and transportation. Pioneer’s Sullivan
acknowledged that while the proposal would hurt
Massachusetts competitiveness on capital gains
taxes, it could help the state’s business
climate by improving schools and transit.
The argument over the proposal’s effect on
investment will be one of several fights that
will play out between proponents and opponents
of the measure over the next year, assuming the
proposal is not struck down by the Supreme
Judicial Court. Five of the state’s major
business groups have challenged the
constitutionality of the tax. A ruling is
expected in the first half of 2018.
Pioneer does not typically take official
positions of ballot measures, Sullivan said. The
group is generally known for its tax-skeptical
views.
The Boston Herald
Wednesday, October 18, 2017
A Boston Herald editorial
Taxachusetts revisited
The threat from that so-called millionaire’s tax
headed for the Massachusetts ballot is far worse
than its proponents have been letting on.
The impact on capital gains taxes — little
talked about by those pushing the initiative
petition — would have a devastating effect on
the state’s economy, according to a new report
by the Pioneer Institute.
In fact, it would hike the state’s top marginal
rate from its current ranking of 30th in the
nation to fourth highest in the nation. Adding
state and federal rates would bring
Massachusetts from 25th in the nation to second
(behind only California) — and the sixth highest
in the world.
Now to our way of thinking that’s rather
horrifying.
“By imposing a 4 percent income surtax on all
annual income over $1 million, including capital
gains, Proposition 80 would penalize the capital
formation that is the key to long-term growth
and higher living standards,” the study authored
by Pioneer research director Greg Sullivan
noted.
The report also points out that the tax would
apply to capital gains from the sale of a
principal residence (minus exclusion of $250,000
for a single filer or $500,000 for a married
couple) — raising the possibility of creating
“accidental millionaires” in today’s hot real
estate market.
The state’s Supreme Judicial Court is being
asked to take a serious look at the nature of
the ballot question itself and whether it indeed
constitutes exactly the kind of log-rolling
measure that would prohibit it from being
considered a proper initiative petition in the
first place. (It would dedicate new revenue to
education and transportation.)
But barring a court reprieve, this is no time to
send the state back to the bad old days of its
Taxachusetts roots.
The Newburyport Daily News
Friday, October 13, 2017
Mass. business groups push to stop 'millionaires
tax'
By Christian M. Wade
BOSTON — The state’s business community is
mounting a last-ditch legal challenge to keep a
proposed tax on the state’s highest earners off
next year’s ballot.
Under the plan, which was twice approved by the
Legislature and certified for the November 2018
ballot by Attorney General Maura Healey,
individuals who make more than $1 million per
year would be subject to a 4 percent surtax. The
special tax would only apply to portions of
income over $1 million.
Opponents say the proposed levy would hurt the
state’s business climate, drive job creators
elsewhere and lead to a confusing and unfair tax
system. They’ve filed a legal challenge against
the referendum with the Supreme Judicial Court,
questioning the legality of the proposed
“millionaire tax.”
“We’ve made a lot of progress in the past 20
years to move away from the ‘Tax-achusetts’
label and boost economic growth,” said Chris
Anderson, president of the Massachusetts High
Technology Council, which has joined with other
business and trade groups to fight the ballot
question. “We believe this tax would be a blow
to our ability to remain competitive with states
that are hungry for the same jobs and employers
that are driving our economy.”
In court documents, the coalition of business
groups say the question should never have been
certified by Healey because it improperly links
changes to the state’s income tax rate and
spending on transportation and infrastructure.
Additionally, they argue the changes would
violate the state Constitution by stripping the
Legislature of its taxing authority and making
appropriations by initiative petition.
The court is expected to hear arguments in the
case beginning Feb. 5, with a decision expected
sometime in the spring.
Supporters of the tax dismissed the lawsuit as
“corporate lobbyist hypocrisy” and said they’re
confident it will stand up to a legal challenge.
“These corporate executives have made tens of
millions of dollars running companies that
benefit from investments in transportation and
public education, and they don’t hesitate to
take millions of dollars in tax breaks from the
state,” said Deb Fastino, executive director of
the Coalition for Social Justice.
“Now they’re secretly bankrolling a legal
challenge to avoid paying a small percentage of
their enormous incomes to help our economy
grow,” she added.
Other groups represented in the legal challenge
against the tax are Associated Industries of
Massachusetts, the Massachusetts Taxpayers
Foundation, and the Massachusetts Competitive
Partnership.
The coalition behind the measure, Raise up
Massachusetts, which is largely backed by labor
unions, is pushing two other ballot questions
for 2018 that have raised concerns among
business leaders. One would bump the minimum
wage to $15 an hour; the other would require
employers to provide paid leave.
The state is seeking new sources of revenue to
address transportation and education needs in
light of a structural budget deficit of roughly
$1 billion.
Proponents estimate that the tax proposal would
drum up more than $2 billion a year in
additional revenue.
Supporters collected more than 157,000
signatures in 2015 to put the measure to voters.
House and Senate lawmakers, voting in two
Constitutional Conventions over the past two
years, approved the ballot question. Healey
certified the question for the November 2018
ballot in August.
The state Constitution has been amended only 121
times since it was ratified in 1780, according
to the Secretary of State’s office. Voters most
recently changed it in 2006, when they approved
the state’s health care law.
The millionaire tax amendment would change a
1917 provision that requires a uniform tax rate
for all citizens.
Progressive Democrats, including Senate
President Stanley Rosenberg, D-Amherst, have for
years pushed a graduated income tax, similar to
the federal system, in which low-income
taxpayers pay at a lower rate than those with
larger incomes.
But the state’s voters have rejected those
efforts five times, most recently in 1994.
Massachusetts currently has a flat 5.1 percent
income tax rate.
Exactly how many households or individuals
statewide would be affected by the proposed tax
isn’t clear.
The latest “Wealth Report” by the Boston
Business Journal found there were hundreds of
tax filers on the North Shore and in the
Merrimack Valley reporting at least $1 million
in income in 2014, the most recent tax year
available.
Andover topped the list in the region with 264
filers with incomes above the $1 million mark,
followed by Marblehead, which had 168. North
Andover had 116 and Beverly 99.
Manchester-by-the-Sea boasted 98 filers above $1
million. Gloucester had 56, Newburyport had 41,
and Salem had 14.
Statewide, at least 15,273 Massachusetts
residents reported at least $1 million in income
in 2014, according to the BBJ report.
Opponents of the measure point out that small
business owners could wind up paying more, even
if their personal income isn’t above $1 million.
Chris Carlozzi, Massachusetts state director for
the National Federation of Independent
Businesses, said many “pass-through” businesses
-- where profits are passed through to the
owners’ personal tax filings and business income
is taxed at personal tax rates -- could end up
paying substantially more.
“This is a misguided tax policy that would will
have a devastating impact on small businesses,
not just corporations,” said Carlozzi, whose
group has also signed on to the lawsuit. “It
would seriously inhibit their ability to grow
their business, and in turn provide jobs and
strengthen the state’s economy.” |
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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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