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and the
Citizens Economic Research Foundation
Post Office Box 1147 ●
Marblehead, Massachusetts 01945 ●
(508)
915-3665
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
44 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
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CLT UPDATE
Friday, February 16, 2018
A Grad Tax by any other name .
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The fate
of the millionaires tax is in the hands of the state’s
highest court. But that isn’t stopping opponents from trying
the case in the court of public opinion. Two reports
emerged this week claiming a new surcharge on high-income
earners would drive many of them out of state, particularly
with recent changes to federal tax law.
At issue: a proposal to raise the income tax by 4
percentage points, to 9.1 percent based on the current rate,
for earnings over $1 million. The change — if it survives a
legal challenge and gets approved by state voters — would be
ensconced in the state Constitution.
The Boston Globe
Tuesday, February 13, 2018
Trying the millionaires tax in the court of public opinion
The state’s top earners could get squeezed out of
Massachusetts by a new tax on millionaires, a report
suggests.
A 4 percent tax on incomes more than $1 million, combined
with the loss of federal deductions for state and local
taxes, could double tax bills for the state’s wealthiest
residents to an average of $318,095, the Pioneer Institute
said Monday.
The millionaires’ tax will appear as a question on the
November ballot, while the $10,000 cap on deductions for
state income and local property taxes was part of federal
tax reform.
Authors of the Pioneer Institute report say higher tax
payments could send top-earners to New Hampshire, Florida or
other low-tax states, hurting the Massachusetts economy.
"High income people in the rest of the country are going
to be enjoying a tax break, but in Massachusetts that has
been effectively eliminated because of Proposition 80," said
Greg Sullivan, research director for the Boston think tank.
"It's probably not a good calling card for Massachusetts."
Sullivan said Massachusetts policymakers need look no
further than Connecticut to see what happens when the
wealthy are overtaxed.
To close budget gaps, Connecticut doubled a surcharge on
large companies, taxed luxury goods and raised the income
tax for its highest earners. As a result, he said, the state
has seen a huge loss of top-earners and a substantial loss
of tax revenue.
"The results have been disastrous," Sullivan said. "From
2007 to 2016, the state placed 49th among the states and
D.C. in private-sector wage growth."
Connecticut's tax burden was among the reasons cited by
General Electric and Alexion Pharmaceuticals then they moved
their headquarters to Massachusetts, he said....
Opponents of the millionaires tax have filed a legal
challenge with the state Supreme Judicial Court.
Chris Geehern, vice president of Associated Industries of
Massachusetts, said, despite all the talk about taxing the
rich, the proposal would mostly hurt small and medium
business owners who create jobs and keep the state's economy
humming — "not a bunch of fat cats sitting on the beach
somewhere."
"We're not talking about multi-billion-dollar
corporations, but corner grocery stores and small
manufacturing companies," he said. "This tax would hollow
out the sector that we point to as the cornerstone of our
economy."
The Salem News
Tuesday, February 13, 2018
Top earners could ditch state, tax study finds
“The combined effect of Proposition 80 and
the Tax Cuts and Jobs Act’s $10,000 limit on deductions for
state and local taxes will double the Commonwealth’s
effective state tax rate for high-income taxpayers,” said
Pioneer Executive Director Jim Stergios. “That is not a good
calling card for Massachusetts.”
Pioneer Institute
February 13, 2018
Study Finds New Federal Tax Law Would Exacerbate Economic
Damage of Proposition 80
Federal state and local tax deduction
changes combined with a proposed 4 percent surtax on high
earners loom as an "upcoming shockwave to high-earners" in
Massachusetts, according to a business group opposed to the
surtax.
The Massachusetts Taxpayers Foundation on
Monday released a report concluding that a $10,000 cap on
state and local tax deductions combined with a 4 percent
surtax on household income above $1 million would lead to a
300 percent increase in the effective state income tax rate
for individuals making more than $1 million - from 3 percent
to 9 percent.
Asserting Massachusetts has a "migration
problem," the report says a net 475,000 people and $18.9
billion in adjusted gross income left the state from 1993
through 2016, and a surtax will "surely drive" more people
out of Massachusetts.
"Given the state's persistent out-migration
issues absent a massive tax hike, the state is rapidly
entering uncharted territory with no ability to mitigate the
damage for years," MTF wrote in its report.
State House News Service
Monday, February 12, 2018
MTF: Surtax will worsen state's "migration problem"
"If the surtax passes, Massachusetts would
have one of the highest tax rates in the nation on income
over $1 million. And that may understate the upcoming
shockwave to high-earners. Since SALT deductions are now
capped at $10,000, the effective state income tax rate for
individuals making more than $1 million would soar to 9
percent from 3 percent – a remarkable 300 percent
escalation. Given the state’s persistent out-migration
issues absent a massive tax hike, the state is rapidly
entering uncharted territory with no ability to mitigate the
damage for years."
Massachusetts Taxpayers Foundation
February 12, 2018
On State Tax Policy and Migration
Two fiscally conservative think tanks are
pushing back against a proposed state constitutional
amendment that would raise taxes on income over $1 million,
with new studies arguing that the policy would hurt the
Massachusetts economy. Pioneer Institute
Executive Director Jim Stergios warned that the amendment,
combined with the recent federal tax overhaul, could double
the effective tax rate for wealthy Massachusetts residents.
"That is not a good calling card for Massachusetts,"
Stergios said. Unless it is ruled
unconstitutional by the Supreme Judicial Court, a
constitutional amendment is set to appear on the 2018
ballot, which would raise the state's income tax rate by 4
percentage points on income over $1 million.
The business-backed Massachusetts Taxpayers Foundation
argues in a report that higher taxes could encourage wealthy
individuals to leave Massachusetts.... "The
long-term economic well-being of Massachusetts is at risk
should this tax hike pass, as more of the state's population
and businesses would be motivated to move to states such as
New Hampshire and Florida, which have no state income tax,"
the Pioneer Institute wrote. "Others would be deterred from
locating or expanding businesses in Massachusetts."
But Steve Crawford, a spokesman for Raise Up Massachusetts,
which is advocating for the constitutional amendment,
responded with a study from the liberal leaning
Massachusetts Budget and Policy Center, which found that few
wealthy individuals actually move because of tax policy.
"Millionaire migration is a proven myth," Crawford said....
Raise Up Massachusetts, which is pushing for the tax, is
funded primarily by unions: SEIU, the Massachusetts Teachers
Association and others. It has support from liberal
organizing groups such as Neighbor to Neighbor and
Massachusetts Jobs with Justice. Noah Berger,
president of the Massachusetts Budget and Policy Center,
donated staff time worth $9,600 to the coalition, according
to campaign finance reports. Raise Up
Massachusetts is also supporting ballot questions to
institute paid family and medical leave and raise the
minimum wage. The Springfield Republican
Tuesday, February 13, 2018
Millionaires would leave Massachusetts if their tax rate is
hiked, studies say
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Chip Ford's CLT
Commentary
"Millionaire's Tax"?
"Fair Share Amendment"?
"Proposition 80"?
Where are all of these creative names
coming from for the same potential ballot question
— new names for what is, and
for half a century always has been, simply termed a
Graduated Income Tax?
Article XLIV (44) of Amendments to the Massachusetts
Constitution, ratified by the voters in 1915, is why we
don't have a graduated income tax in Massachusetts ever
since the state first imposed a state income tax. The
relevant part reads:
"Full
power and authority are hereby given and granted to
the general court to impose and levy a tax on income
in the manner hereinafter provided. Such tax may be
at different rates upon income derived from
different classes of property, but shall be levied
at a uniform rate throughout the commonwealth upon
incomes derived from the same class of property. The
general court may tax income not derived from
property at a lower rate than income derived from
property, and may grant reasonable exemptions and
abatements."
In the case "E.
Joel Peterson & others vs. Commissioner of Revenue" (441
Mass. 420, Feb. 5, 2004 - Apr. 6, 2004 @ Page 425) the state
Supreme Judicial Court noted:
"Article 44 does not define the term 'income.' The
concept of income had been widely debated at the
time of the adoption of the Sixteenth Amendment to
the United States Constitution from 1909 to 1913,
and this court has noted that that debate also
informed legislators and voters at the time art. 44
was approved and ratified in 1915."
"Such tax . . . shall be levied at a uniform
rate throughout the commonwealth upon incomes derived from
the same class of property."
That passage should disqualify the term or
name "Fair Share Amendment" because it will
— for the first time in over a
century since an income tax was conceived of and imposed
— create more than a single,
across-the-board tax rate for all taxpayers. No longer
will the income tax be "levied at a uniform rate throughout
the commonwealth." If the income tax can be levied at
different — instead of uniform
— rates then it is no longer a flat-rate income tax.
The income tax will no longer be "fair." It
will have become graduated: One rate for those earning
A, another rate for those earning B.
If this can ever be accomplished, there's
an entire alphabet that remains to come.
That passage has been in our state's
Constitution since the inception of the state's income tax
in 1915. That one passage is what The Takers have
committed over half a century —
half the tax's lifespan — and five failed
statewide ballot questions attempting to overturn.
That passage cannot be changed without
amending the state Constitution —
forever — from a fair
flat-tax which all taxpayers pay at the same rate, to a
graduated tax in which we would be divided by income and
class.
In
my commentary for the last CLT Update I wrote:
I can't understand why some of our allies
are intent on relabeling this abomination "Proposition 80."
It was explained to us that 80% reflects the percentage of
income tax increase on millionaires. We were asked to
adopt the term early in our mutual opposition but declined,
for a couple of reasons.
First, as a proposed constitutional
amendment, if it makes it onto the ballot it will likely be
Question 1. That has nothing to do with "Proposition
80" and can only serve to confuse less- or un-informed
voters.
Second, voters have consistently defeated a
Graduated Income Tax, five times over five decades. A
sixth proposed graduated income tax has a long
lineage of disapproval, failure, defeat. Voters have
never heard of or had to vote on a "Proposition 80."
Why would anyone who wants to defeat this graduated
income tax want to rebrand it for its proponents,
call it something new — provide
it with a different image?
At CLT we'll stick with the tried-and-true,
with the known and proven, with our past successes:
It's just another graduated income tax scheme with
lipstick, another Grad Tax divide-and-conquer scam.
We're curious how our members feel, so I put
together the first CLT online survey, which we invite you to take:
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Chip Ford
Executive Director |
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The Boston Globe
Tuesday, February 13, 2018
Trying the millionaires tax in the court of
public opinion
By Jon Chesto
The fate of the millionaires tax is in the hands
of the state’s highest court. But that isn’t
stopping opponents from trying the case in the
court of public opinion.
Two reports emerged this week claiming a new
surcharge on high-income earners would drive
many of them out of state, particularly with
recent changes to federal tax law.
At issue: a proposal to raise the income tax by
4 percentage points, to 9.1 percent based on the
current rate, for earnings over $1 million. The
change — if it survives a legal challenge and
gets approved by state voters — would be
ensconced in the state Constitution.
For the right-leaning Pioneer Institute, this
would be “an economic time bomb” considering the
new $10,000 cap on deductions for state income
and local property taxes. Pioneer says this new
limit, along with the millionaires tax, would
more than double the effective state income tax
rate for most taxpayers earning $1 million or
more.
A Mass. Taxpayers Foundation report, meanwhile,
says the surtax would give Massachusetts one of
the highest taxes on $1 million-plus earners in
the country. The business-backed MTF, one of the
plaintiffs suing to stop the surcharge, says the
new tax would accelerate moves to lower-tax
states such as New Hampshire and Florida, based
on patterns observed in New Jersey and
Connecticut.
But supporters of the Massachusetts surcharge,
which could bring in $2 billion a year, say the
concerns are overblown; they point to research
that shows tax-related migrations are usually
marginal in size.
These two new reports could become forgotten
footnotes. But if the Supreme Judicial Court
strikes down the ballot question, that would be
a happy resolution for the groups that wrote
them.
The Salem News
Tuesday, February 13, 2018
Top earners could ditch state, tax study finds
By Christian M. Wade
BOSTON — The state’s top earners could get
squeezed out of Massachusetts by a new tax on
millionaires, a report suggests.
A 4 percent tax on incomes more than $1 million,
combined with the loss of federal deductions for
state and local taxes, could double tax bills
for the state’s wealthiest residents to an
average of $318,095, the Pioneer Institute said
Monday.
The millionaires’ tax will appear as a question
on the November ballot, while the $10,000 cap on
deductions for state income and local property
taxes was part of federal tax reform.
Authors of the Pioneer Institute report say
higher tax payments could send top-earners to
New Hampshire, Florida or other low-tax states,
hurting the Massachusetts economy.
"High income people in the rest of the country
are going to be enjoying a tax break, but in
Massachusetts that has been effectively
eliminated because of Proposition 80," said Greg
Sullivan, research director for the Boston think
tank. "It's probably not a good calling card for
Massachusetts."
Sullivan said Massachusetts policymakers need
look no further than Connecticut to see what
happens when the wealthy are overtaxed.
To close budget gaps, Connecticut doubled a
surcharge on large companies, taxed luxury goods
and raised the income tax for its highest
earners. As a result, he said, the state has
seen a huge loss of top-earners and a
substantial loss of tax revenue.
"The results have been disastrous," Sullivan
said. "From 2007 to 2016, the state placed 49th
among the states and D.C. in private-sector wage
growth."
Connecticut's tax burden was among the reasons
cited by General Electric and Alexion
Pharmaceuticals then they moved their
headquarters to Massachusetts, he said.
'Handed a gift'
Proponents of a tax on top-earners say they can
afford to dig deeper into their pockets to pay
for education and transportation upgrades.
"The reality is that the impact of the (state
and local tax) deduction is dwarfed by the other
tax cuts that the wealthy received under the tax
bill," Andrew Farantino, a spokesman for Raise
Up Massachusetts, a coalition of labor and
religious groups backing the Fair Share
Amendment on the November ballot.
"Regardless of what happens in November, they've
been handed a huge gift by the federal
government," he said.
To be sure, a recent report by the Massachusetts
Budget and Policy Center, a left-leaning
research group, estimated the federal tax cuts
will reduce levies paid by the top 1 percent of
Massachusetts earners by over $2.96 billion in
2019, an average savings of $82,720 per
household.
That's compared to an average of $1,090 for the
middle 20 percent of taxpayers, and $90 for
those with the lowest 20 percent of incomes.
Farantino and other proponents of the
millionaires’ surcharge say evidence that the
wealthy will pack up and leave is anecdotal.
Nationwide an average of 2.4 percent of
millionaires — 12,000 households — move to a
different state each year, according to one
recent study.
"Studies across the country have shown that
people move to be be near high-paying jobs and
their families," Farantino said. "There's no
statistical impact of state tax changes on the
migration patterns of the richest people. In
fact, millionaires move from state to state at a
lower rate than the rest of us."
'Wealth Report'
In Massachusetts, a millionaire tax amendment
would change a 1917 provision that requires a
uniform tax rate for all citizens. The state
currently has a flat 5.1 percent income tax
rate.
The Massachusetts Taxpayers Foundation has
estimated about 19,600 tax filers will be
affected by the 4 percent tax, generating about
$1.9 billion a year.
The latest "Wealth Report" by the Boston
Business Journal found there were hundreds of
tax filers on Cape Ann, 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 millionaires tax have filed a
legal challenge with the state Supreme Judicial
Court.
Chris Geehern, vice president of Associated
Industries of Massachusetts, said, despite all
the talk about taxing the rich, the proposal
would mostly hurt small and medium business
owners who create jobs and keep the state's
economy humming — "not a bunch of fat cats
sitting on the beach somewhere."
"We're not talking about multi-billion-dollar
corporations, but corner grocery stores and
small manufacturing companies," he said. "This
tax would hollow out the sector that we point to
as the cornerstone of our economy."
Christian M. Wade covers the Massachusetts
Statehouse for North of Boston Media Group’s
newspapers and websites.
State House News Service
Monday, February 12, 2018
MTF: Surtax will worsen state's "migration
problem"
By Michael P. Norton
Federal state and local tax deduction changes
combined with a proposed 4 percent surtax on
high earners loom as an "upcoming shockwave to
high-earners" in Massachusetts, according to a
business group opposed to the surtax.
The Massachusetts Taxpayers Foundation on Monday
released a report concluding that a $10,000 cap
on state and local tax deductions combined with
a 4 percent surtax on household income above $1
million would lead to a 300 percent increase in
the effective state income tax rate for
individuals making more than $1 million - from 3
percent to 9 percent.
Asserting Massachusetts has a "migration
problem," the report says a net 475,000 people
and $18.9 billion in adjusted gross income left
the state from 1993 through 2016, and a surtax
will "surely drive" more people out of
Massachusetts.
"Given the state's persistent out-migration
issues absent a massive tax hike, the state is
rapidly entering uncharted territory with no
ability to mitigate the damage for years," MTF
wrote in its report.
Proponents of the surtax, proposed as a
constitutional amendment, would ensure that the
wealthiest taxpayers pay their "fair share" and
say the measure's passage ensure about $2
billion a year in new education and
transportation funds.
The Springfield Republican
Tuesday, February 13, 2018
Millionaires would leave Massachusetts if their
tax rate is hiked, studies say
By Shira Schoenberg
Two fiscally conservative think tanks are
pushing back against a proposed state
constitutional amendment that would raise taxes
on income over $1 million, with new studies
arguing that the policy would hurt the
Massachusetts economy.
Pioneer Institute Executive Director Jim
Stergios warned that the amendment, combined
with the recent federal tax overhaul, could
double the effective tax rate for wealthy
Massachusetts residents. "That is not a good
calling card for Massachusetts," Stergios said.
Unless it is ruled unconstitutional by the
Supreme Judicial Court, a constitutional
amendment is set to appear on the 2018 ballot,
which would raise the state's income tax rate by
4 percentage points on income over $1 million.
The business-backed Massachusetts Taxpayers
Foundation argues in a report that higher taxes
could encourage wealthy individuals to leave
Massachusetts.
The report states that now that the federal
government is capping federal deductions for
state and local taxes, the effective state
income tax rate for individuals earning more
than $1 million would go from 3 percent to 9
percent.
"Given the high cost of living along with
increased property and income tax costs
resulting from the federal limitation on (state
and local tax) deductions, onerous estate taxes,
and a surge in the number of potential retirees,
the imposition of the additional 4 percent
income surtax will surely drive more
Massachusetts taxpayers to change their state of
tax residency," the Massachusetts Taxpayers
Foundation wrote.
The report said that four states that increased
taxes on income over $1 million -- California,
Connecticut, New Jersey and New York --
collectively saw taxpayers with adjusted gross
income of $17.1 billion leave the state in 2016.
Five of the nine states that gained adjusted
gross income in 2016, a group led by Florida,
have no state income taxes.
The study notes that Massachusetts already has
more people leaving the state than moving in,
with significant migration to New Hampshire and
Florida, which have no income or estate tax.
The free market Pioneer Institute argued
similarly that the federal tax overhaul's cap on
state and local tax deductions makes the
proposed tax hike on millionaires more
significant. The Pioneer Institute called it a
"double whammy."
With both of those changes, the average state
tax paid by someone earning over $1 million in
Massachusetts would jump from $153,100 to
$318,000, according to the Pioneer Institute.
The Pioneer Institute notes that having a tax
rate of 9.1 percent, up from the current 5.1
percent, on income over $1 million would give
Massachusetts the fifth-highest top nominal tax
rate in the country and the highest marginal tax
rate. (The marginal tax rate is the rate
actually paid after deductions.)
"The long-term economic well-being of
Massachusetts is at risk should this tax hike
pass, as more of the state's population and
businesses would be motivated to move to states
such as New Hampshire and Florida, which have no
state income tax," the Pioneer Institute wrote.
"Others would be deterred from locating or
expanding businesses in Massachusetts."
But Steve Crawford, a spokesman for Raise Up
Massachusetts, which is advocating for the
constitutional amendment, responded with a study
from the liberal leaning Massachusetts Budget
and Policy Center, which found that few wealthy
individuals actually move because of tax policy.
"Millionaire migration is a proven myth,"
Crawford said. "The highest-quality studies
using actual tax data from the IRS shows that
millionaires move less often then the rest of
us, and that state income tax rates have only a
very limited impact on the residence decisions
of millionaire households. Like the rest of us,
the rich move to be near their families and
their jobs, not to save a small percentage of
their income in taxes."
Crawford also cited data from the Massachusetts
Budget and Policy Center to argue that wealthy
individuals received benefits from the federal
tax overhaul that outweigh the harm from capping
the state and local tax deduction. "They can
clearly afford to pay more to make the
investments we need," Crawford said.
Raise Up Massachusetts, which is pushing for the
tax, is funded primarily by unions: SEIU, the
Massachusetts Teachers Association and others.
It has support from liberal organizing groups
such as Neighbor to Neighbor and Massachusetts
Jobs with Justice.
Noah Berger, president of the Massachusetts
Budget and Policy Center, donated staff time
worth $9,600 to the coalition, according to
campaign finance reports.
Raise Up Massachusetts is also supporting ballot
questions to institute paid family and medical
leave and raise the minimum wage.
As of the end of January, a ballot committee had
not been formed with the Office of Campaign and
Political Finance to oppose the constitutional
amendment. |
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NOTE: In accordance with Title 17 U.S.C. section 107, this
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interest in receiving this information for non-profit research and educational purposes
only. For more information go to:
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Citizens for Limited Taxation ▪
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▪ 508-915-3665
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