 |
Post Office Box 1147
▪
Marblehead, Massachusetts 01945
▪ (781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
47 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
|
CLT UPDATE
Sunday, June 13, 2021
Fallout From
Advancing The Grad Tax
Jump directly
to CLT's Commentary on the News
|
Most Relevant News
Excerpts
(Full news reports follow Commentary)
|
|
“When the Fair Share Amendment was first introduced in 2015,
there were about 15,000 Massachusetts residents earning over
$1 million a year,” said O’Day. “Now in 2021, there
are about 18,000 residents earning over $1 million a year.
Clearly, there are millionaires and billionaires who can
afford to pay their fair share in taxes, which will support
our neighbors and local communities with investments in
public education and transportation.”
“In a brash case of the pot calling the kettle black, after
voting to move the graduated income tax to the ballot, Rep.
James O'Day said of his targets, ‘They are the ones,
obviously, that will have the ability to throw a ton of cash
at this issue and that’s probably how they’re going to try
to beat it,’” said Chip Ford, executive director of
Citizens for Limited Taxation, which led the charge
that defeated the last two attempts to impose a graduated
income tax on the 1976 and 1994 ballots. “I hope he's
right,” continued Ford. “The reliably deep-pockets
opponents of any true 'tax fairness’ and relentless
advocates for higher taxes, the teachers and labor unions
that make most ballot questions a financially lopsided
affair sound concerned to compete on a more level playing
field. So it's game-on, taxpayers, let round six of
the Tax Olympics begin. We need to hand them another
grad tax defeat on the 2022 ballot — for the sixth time.”
Beacon Hill Roll Call
Volume 46 - Report No. 24
June 7-11, 2021
Tax Millionaires Another 4 Percent (S-5)
Critics say the lack of roll calls shows the complete lack
of transparency in the Senate and place the blame on all 40
senators, both Democrats and Republicans. A roll call
vote can be requested by any one senator and that senator
needs only two other senators, for a total of three
senators, to mandate that the roll calls take place. So it
would only take three of the 37 Democratic senators or all
three Republican senators to demand a roll call. In
fact Senate rule number 56 was instituted years ago to
ensure that the minority party has the power to demand a
roll call. The rule states that “regardless of the
party affiliation of the person requesting or supporting a
call of the yeas and nays, the sense of the Senate shall be
taken by yeas and nays whenever required by one-fifth of the
members present or by a number of members equal to the total
number of members of the minority party, whichever is less.”
"Never mind lack of transparency, there's no accountability
without recorded votes," said Chip Ford, executive
director of Citizens for Limited Taxation.
"We've reached a lack of even necessity. Why
fund a 'full-time' and highly-paid legislature of 200 silent
members with all the accompanying perks, 'leadership
stipends,' chambers, offices and staff, when with growing
frequency all that's necessary today is a House speaker, a
Senate president, and a rubber stamp? The two leaders
can confer with the governor, the triumvirate decide all
state policy, and drop any pretense of 'representation'
along with its attendant costs. At least voters would
then know who’s responsible at less expense."
Beacon Hill Roll Call
Volume 46 - Report No. 24
June 7-11, 2021
Covid-19 Policy Extensions (S-2467)
A day after the Legislature advanced a Constitutional
amendment imposing a four percent surtax on incomes above $1
million, Gov. Charlie Baker said the state should not raise
taxes following a devastating pandemic, and pointed to
billions in federal aid dollars that elected officials still
need to allocate.
The House and Senate voted 159-41 Wednesday afternoon to
advance the amendment that advocates say could raise $2
billion per year for education and transportation and
opponents view as a risky move that could scare high-earning
individuals and their capital out of Massachusetts and lead
to a graduated income tax structure.
Voters are now set during the November 2022 election to
decide whether or not to approve the measure. The Republican
governor has long said he is against raising taxes, and
asked Thursday whether or not tax policy should be written
into the state's Constitution, he returned to that view.
"I said before that I don't think we should be raising
taxes," Baker said at a press conference in Roxbury. "We
have, between state and local government, we have $10
billion already in federal funds that we need to find a way
to put to work. And I really think our focus ought to be on
that." ...
"So first of all, we're coming out of a pandemic," he said.
"We have hundreds of thousands of people who are looking for
work. And we actually don't know exactly what the impact of
the pandemic is going to be on how people think about where
and how they work and the nature of how organizations are
going to set up and manage their organizations in the
future."
The state is currently deciding how nearly $5.28 billion in
federal aid should be dispensed to communities, a question
that has put the Legislature and the governor at odds in
recent weeks.
The state's tax hauls have also far exceeded benchmarks,
with revenue officials reporting twice as much revenue
during May than originally expected....
Senate Minority Leader Bruce Tarr said between 1993 and
2018, Massachusetts experienced a net outflow of $20.7
billion in taxable income. He said if the state raised taxes
on individuals earning over $1 million that outflow could
increase.
"If that's what's happening now, imagine what happens when
we change the dynamic where those earning above $1 million
dollars have their taxes increased again," Tarr said
Wednesday afternoon.
State House News Service
Thursday, June 10, 2021
Baker Points To Fed Aid As Surtax Debate
Heats Up
"I Said Before That I Don't Think We Should Be Raising
Taxes"
As remote working opportunities open up relocation
opportunities for millions of Americans, low tax states are
seeing an influx of people while high tax states are seeing
net out-migration. This trend, which according to a redfin
report has been ongoing for the last eight years at least,
saw four people entering a low tax state for each person who
left, while higher tax states saw 2.5 people leaving for
every new entry.
But with low tax states like Florida, Montana and, to a
lesser extent, Texas attracting buyers from across the
country, where does that leave mortgage professionals in
states with higher income and property taxes?
To find out, MPA spoke to John Donlon, co-founder of
GoldCoast Mortgage in Beverly, Massachusetts. His state has
long held a reputation as “Taxachusetts” with the 7th
highest state income tax burden in the country, according to
a Wallethub study. He explained that with remote work
opening up new options for buyers, he has to navigate in a
market where someone working in Massachusetts might rather
move to a low-tax state like Florida, or even neighboring
New Hampshire.
“We have a client who retired out of the Air Force and was
moving from Colorado, and he had the choice of any state
where he could relocate and buy a home. He chose New
Hampshire because his retirement income wasn’t going to be
taxed,” Donlon said. “He bypassed Mass. and went for New
Hampshire because it’s a low-income tax state.”
Donlon, who is licensed in New Hampshire and Maine, as well
as Massachusetts, explained that even though New Hampshire
has a higher property tax rate, his client was keen to move
where his income wouldn’t be as taxed. Donlon and his team
worked out that even with a higher property tax rate, his
client would be saving money there.
While his multi-state licensing allows Donlon to secure
deals that might not happen because of Massachusetts’ tax
rate, he explained that a looming millionaire’s tax on an
already high-income state could push more high earners away.
He explained, though, that local knowledge can help secure
deals thanks to variation in municipal tax rates and a
crucial ballot measure.
That ballot measure is called Proposition 2½, it was enacted
in 1980 and since then has prevented any city from raising
their property tax rate by more than 2.5% without first
obtaining the voters’ approval....
Donlon doesn’t think that taxes alone will drive
Massachusetts’ homebuyers to Florida, but taken with the
anguish of shovelling snow in winter it may spark the
beginning of a trend. He sees many buyers looking long term
at initiatives like this millionaire’s tax, or even at local
estate tax rates, and thinks they may move out-of-state
based on those.
Mortgage Professional America
Thursday, June 10, 2021
Buyers are flocking to low tax states -
where does that leave high tax markets?
The business community will need to regroup now that the
Legislature has overwhelmingly approved the so-called
“millionaires tax” again.
The setback is a stark contrast to the stunning legal
victory that five major business groups scored in 2018 when
the state Supreme Judicial Court sidelined efforts to impose
this new income tax surcharge on annual earnings above $1
million.
A legal victory will be much harder to come by now that the
“Fair Share Amendment” has returned. A bruising ballot
battle, pitting big business against big labor, seems more
likely. The union-funded Raise Up Massachusetts coalition
could end up facing off against a newly formed nonprofit
created to be Raise Up’s antagonist, dubbed Partnership for
Massachusetts’ Future, among other business-backed foes....
Critics say the surcharge won’t raise anywhere near that
amount. They doubt it will bind the Legislature to use the
money for the seemingly noble causes of public schools,
roads, and trains. And they claim it will hurt the state’s
economic competitiveness, maybe even resurrecting the
dreaded “Taxachusetts” label....
Raise Up had tried to advance the ballot question as a
citizens’ petition the last time around. It turned out to be
a fatal legal mistake. The Supreme Judicial Court
essentially ruled that the proponents could not bundle three
seemingly unrelated items: taxing high earners, spending
money on education, and also spending on transportation.
The tax on higher earners still looks the same. But there’s
one key change: It’s being submitted as a proposal from
state lawmakers, not the citizenry. For that reason,
supporters and critics alike say the “relatedness” question
that stymied it the last time around probably will not
apply.
That’s not to say a legal challenge has been ruled out.
Appellate lawyer Kevin Martin, whose team at Goodwin Procter
successfully championed the business community three years
ago before the SJC, confirmed Goodwin has been hired by the
Massachusetts High Technology Council to consider possible
legal options....
Voters may want to punish people like Jeff Bezos and Elon
Musk, especially after the ProPublica report this week on
how those billionaire bigwigs minimized their income taxes.
But Stergios said it’s the local small business owners who
would be most affected by Fair Share....
Will Fair Share solve that problem? Probably not. But
business leaders will likely need a strong counterargument
to win over enough voters when the long-discussed tax on top
earners finally gets on the ballot. Odds are they won’t have
the SJC’s help this time.
The Boston Globe
Thursday, June 10, 2021
After State House loss, business leaders
will need to regroup on higher-earners tax fight
Trade groups weigh legal challenges and multimillion-dollar
ballot campaign
|
Chip Ford's CLT
Commentary
Beacon Hill Roll Call, founded in 1975, exists to count and
report roll call votes in the Legislature so readers of its
statewide syndicated weekly newspaper reports can learn how
their state representative and senator voted on key issues
before them. When there are no roll call votes
— an occurrence of growing
regularity — it's impossible to
discern how a particular legislator voted. This is how
legislators like it, cultivating their constituents like
mushrooms — keeping them in the
dark and well-fertilized. This growing phenomenon is
bipartisan within The Beacon Hill Club
— governing as preferred by both Democrats and Republican
alike.
For its report this week ("Covid-19
Policy Extensions (S-2467)")
Beacon Hill Roll Call highlighted this
expanding evasion of accountability and requested comments
from a number of us (an excerpt follows
—
full report below):
. . . Critics say the lack of roll
calls shows the complete lack of transparency in the
Senate and place the blame on all 40 senators, both
Democrats and Republicans. A roll call vote can be
requested by any one senator and that senator needs only
two other senators, for a total of three senators, to
mandate that the roll calls take place. So it would only
take three of the 37 Democratic senators or all three
Republican senators to demand a roll call. In fact
Senate rule number 56 was instituted years ago to ensure
that the minority party has the power to demand a roll
call. The rule states that “regardless of the
party affiliation of the person requesting or supporting
a call of the yeas and nays, the sense of the Senate
shall be taken by yeas and nays whenever required by
one-fifth of the members present or by a number of
members equal to the total number of members of the
minority party, whichever is less.”
"Never mind lack of transparency,
there's no accountability without recorded votes," said
Chip Ford, executive director of Citizens for
Limited Taxation. "We've reached a lack of
even necessity. Why fund a 'full-time' and
highly-paid legislature of 200 silent members with all
the accompanying perks, 'leadership stipends,' chambers,
offices and staff, when with growing frequency all
that's necessary today is a House speaker, a Senate
president, and a rubber stamp? The two leaders can
confer with the governor, the triumvirate decide all
state policy, and drop any pretense of 'representation'
along with its attendant costs. At least voters
would then know who’s responsible at less expense."
A day
earlier
Beacon Hill Roll Call contacted me for a comment on a report
it was working on ("Tax
Millionaires Another 4 Percent (S-5)"). I couldn't
resist going after a previous comment made by this sixth
Grad Tax's lead advocate in the House,
Rep. James O'Day, D-West Boylston. An
excerpt follows
(the
full report can be found below):
“When the Fair Share Amendment was
first introduced in 2015, there were about 15,000
Massachusetts residents earning over $1 million a year,”
said O’Day. “Now in 2021, there are about
18,000 residents earning over $1 million a year.
Clearly, there are millionaires and billionaires who can
afford to pay their fair share in taxes, which will
support our neighbors and local communities with
investments in public education and transportation.”
“In a brash case of the pot calling
the kettle black, after voting to move the graduated
income tax to the ballot, Rep. James O'Day said of his
targets, ‘They are the ones, obviously, that will have
the ability to throw a ton of cash at this issue and
that’s probably how they’re going to try to beat it,’”
said Chip Ford, executive director of Citizens
for Limited Taxation, which led the charge that
defeated the last two attempts to impose a graduated
income tax on the 1976 and 1994 ballots. “I hope
he's right,” continued Ford. “The reliably
deep-pockets opponents of any true 'tax fairness’ and
relentless advocates for higher taxes, the teachers and
labor unions that make most ballot questions a
financially lopsided affair sound concerned to compete
on a more level playing field. So it's game-on,
taxpayers, let round six of the Tax Olympics begin.
We need to hand them another grad tax defeat on the 2022
ballot — for the sixth time.”
The State House News Service on Thursday reported ("Baker
Points To Fed Aid As Surtax Debate Heats Up
— 'I Said Before That I Don't
Think We Should Be Raising Taxes'"):
A day after the Legislature
advanced a Constitutional amendment imposing a four
percent surtax on incomes above $1 million, Gov. Charlie
Baker said the state should not raise taxes following a
devastating pandemic, and pointed to billions in federal
aid dollars that elected officials still need to
allocate.
The House and Senate voted 159-41
Wednesday afternoon to advance the amendment that
advocates say could raise $2 billion per year for
education and transportation and opponents view as a
risky move that could scare high-earning individuals and
their capital out of Massachusetts and lead to a
graduated income tax structure.
Voters are now set during the
November 2022 election to decide whether or not to
approve the measure. The Republican governor has long
said he is against raising taxes, and asked Thursday
whether or not tax policy should be written into the
state's Constitution, he returned to that view.
"I said before that I don't think
we should be raising taxes," Baker said at a press
conference in Roxbury. "We have, between state and local
government, we have $10 billion already in federal funds
that we need to find a way to put to work. And I really
think our focus ought to be on that." ...
"So first of all, we're coming out
of a pandemic," he said. "We have hundreds of thousands
of people who are looking for work. And we actually
don't know exactly what the impact of the pandemic is
going to be on how people think about where and how they
work and the nature of how organizations are going to
set up and manage their organizations in the future."
The state is currently deciding how
nearly $5.28 billion in federal aid should be dispensed
to communities, a question that has put the Legislature
and the governor at odds in recent weeks.
The state's tax hauls have also far
exceeded benchmarks, with revenue officials reporting
twice as much revenue during May than originally
expected....
Senate Minority Leader Bruce Tarr
said between 1993 and 2018, Massachusetts experienced a
net outflow of $20.7 billion in taxable income. He said
if the state raised taxes on individuals earning over $1
million that outflow could increase.
"If that's what's happening now,
imagine what happens when we change the dynamic where
those earning above $1 million dollars have their taxes
increased again," Tarr said Wednesday afternoon.
All the top
politicos around the state are trying to read the tea leaves
to determine whether Gov. Baker will run for re-election or
not especially in light of his dismal fund-raising. I
think we have an answer with this report: He's not.
Why do I come to this conclusion? Charlie Baker just
took a position.
He's been
mum over the new grad tax push over recent years while it
was wending its way toward the ballot. Now that it's
been endorsed by the Legislature and is heading there Baker
has come out in opposition, though tepid still sort of.
It's the most out on a limb he's ventured in a very long
time.
We've heard
political opponents the expectation that passage of a
graduated income tax, aka., "Millionaire's Tax" of "Fair
Share Amendment," will lead to a swelling exodus to lower
tax states. But how do those with boots on the ground
see its effects? I came across an insightful report
from mortgage experts concerning what they expect should it
pass on the 2022 ballot.
Mortgage Professional America describes itself as
follows:
MPA is the mortgage & finance
industry’s most trusted source of news, opinion and
analysis.
Created exclusively for the
mortgage & finance industry, MPA provides a real-time
web service that keeps time-poor mortgage & finance
professionals up to date with the latest breaking news,
cutting-edge opinion, and expert analysis affecting both
their business, and their industry as a whole.
In its
report on Thursday the national organization went to
John Donlon, co-founder of GoldCoast Mortgage in Beverly,
Massachusetts, for his analysis. MPA reports ("Buyers
are flocking to low tax states —
where does that leave high tax markets?"):
As remote working opportunities
open up relocation opportunities for millions of
Americans, low tax states are seeing an influx of people
while high tax states are seeing net out-migration. This
trend, which according to a redfin report has been
ongoing for the last eight years at least, saw four
people entering a low tax state for each person who
left, while higher tax states saw 2.5 people leaving for
every new entry.
But with low tax states like
Florida, Montana and, to a lesser extent, Texas
attracting buyers from across the country, where does
that leave mortgage professionals in states with higher
income and property taxes?
To find out, MPA spoke to John
Donlon, co-founder of GoldCoast Mortgage in Beverly,
Massachusetts. His state has long held a reputation as
“Taxachusetts” with the 7th highest state income tax
burden in the country, according to a Wallethub study.
He explained that with remote work opening up new
options for buyers, he has to navigate in a market where
someone working in Massachusetts might rather move to a
low-tax state like Florida, or even neighboring New
Hampshire.
“We have a client who retired out
of the Air Force and was moving from Colorado, and he
had the choice of any state where he could relocate and
buy a home. He chose New Hampshire because his
retirement income wasn’t going to be taxed,” Donlon
said. “He bypassed Mass. and went for New Hampshire
because it’s a low-income tax state.”
Donlon, who is licensed in New
Hampshire and Maine, as well as Massachusetts, explained
that even though New Hampshire has a higher property tax
rate, his client was keen to move where his income
wouldn’t be as taxed. Donlon and his team worked out
that even with a higher property tax rate, his client
would be saving money there.
While his multi-state licensing
allows Donlon to secure deals that might not happen
because of Massachusetts’ tax rate, he explained that a
looming millionaire’s tax on an already high-income
state could push more high earners away. He explained,
though, that local knowledge can help secure deals
thanks to variation in municipal tax rates and a crucial
ballot measure.
That ballot measure is called
Proposition 2½, it was enacted in 1980 and since
then has prevented any city from raising their property
tax rate by more than 2.5% without first obtaining the
voters’ approval....
Donlon doesn’t think that taxes
alone will drive Massachusetts’ homebuyers to Florida,
but taken with the anguish of shovelling snow in winter
it may spark the beginning of a trend. He sees many
buyers looking long term at initiatives like this
millionaire’s tax, or even at local estate tax rates,
and thinks they may move out-of-state based on those.
Donlon has
sagely hedged his bets, not locked himself into the
Massachusetts economy or real estate market. He has
expanded his operation into New Hampshire and Maine as well.
What's his recommendation to his real estate colleagues for
remaining successful?
As
mortgage professionals in other high tax states like New
York and California stare down similar prospects, Donlon
said that they can safeguard their businesses by
obtaining licenses in multiple states. Low-tax Nevada
might be a perfect addition for a California based
mortgage pro, as Florida or South Carolina might be for
someone based in New York. Even as these markets should
be preparing for a high to low tax relocation shift,
Donlon is confident that the national housing market
will find its equilibrium again.
Equilibrium
may average out well overall for the national market,
but not so much for over-taxed Massachusetts even with CLT's
Proposition 2½. Think what
"equilibrium" is doing to California, New York, New
Jersey, Connecticut and other over-taxed states. The Bay State
Diaspora is quickening.
Just a day
after the Legislature moved the graduated income tax
constitutional amendment to the 2022 ballot the business
community is expected to join the opposition battle,
apparently gearing up to fight and defeat the 6th graduated
income tax attempt.
The Boston Globe reported on Thursday ("After
State House loss, business leaders will need to regroup on
higher-earners tax fight —
Trade groups weigh legal challenges and multimillion-dollar
ballot campaign"):
The business community will need to
regroup now that the Legislature has overwhelmingly
approved the so-called “millionaires tax” again.
The setback is a stark contrast to
the stunning legal victory that five major business
groups scored in 2018 when the state Supreme Judicial
Court sidelined efforts to impose this new income tax
surcharge on annual earnings above $1 million.
A legal victory will be much harder
to come by now that the “Fair Share Amendment” has
returned. A bruising ballot battle, pitting big business
against big labor, seems more likely. The union-funded
Raise Up Massachusetts coalition could end up facing off
against a newly formed nonprofit created to be Raise
Up’s antagonist, dubbed Partnership for Massachusetts’
Future, among other business-backed foes....
Critics say the surcharge won’t
raise anywhere near that amount. They doubt it will bind
the Legislature to use the money for the seemingly noble
causes of public schools, roads, and trains. And they
claim it will hurt the state’s economic competitiveness,
maybe even resurrecting the dreaded “Taxachusetts”
label....
Raise Up had tried to advance the
ballot question as a citizens’ petition the last time
around. It turned out to be a fatal legal mistake. The
Supreme Judicial Court essentially ruled that the
proponents could not bundle three seemingly unrelated
items: taxing high earners, spending money on education,
and also spending on transportation.
The tax on higher earners still
looks the same. But there’s one key change: It’s being
submitted as a proposal from state lawmakers, not the
citizenry. For that reason, supporters and critics alike
say the “relatedness” question that stymied it the last
time around probably will not apply.
That’s not to say a legal challenge
has been ruled out. Appellate lawyer Kevin Martin, whose
team at Goodwin Procter successfully championed the
business community three years ago before the SJC,
confirmed Goodwin has been hired by the Massachusetts
High Technology Council to consider possible legal
options....
Voters may want to punish people
like Jeff Bezos and Elon Musk, especially after the
ProPublica report this week on how those billionaire
bigwigs minimized their income taxes. But Stergios said
it’s the local small business owners who would be most
affected by Fair Share....
Will Fair Share solve that problem?
Probably not. But business leaders will likely need a
strong counterargument to win over enough voters when
the long-discussed tax on top earners finally gets on
the ballot. Odds are they won’t have the SJC’s help this
time.
|
 |
 |
|
Chip Ford
Executive Director |
|
|
|
Full News Reports
(excerpted above) |
|
Beacon Hill Roll Call
Volume 46 - Report No. 24
June 7-11, 2021
Tax Millionaires Another 4 Percent (S-5)
By Bob Katzen
House and Senate held a Constitutional convention and
approved 159-41, (House approved 121-39, Senate approved
38-2), a proposed constitutional amendment that would allow
a graduated income tax in Massachusetts and impose an
additional 4 percent income tax, in addition to the current
flat 5 percent one, on taxpayers’ earnings of more than $1
million annually. Language in the amendment requires that
“subject to appropriation” the revenue will go to fund
quality public education, affordable public colleges and
universities, and for the repair and maintenance of roads,
bridges and public transportation.
The proposal, dubbed by sponsors as “the Fair Share
Amendment” is sponsored by Sen. Jason Lewis (D-Winchester)
and Rep. James O’Day (D-West Boylston). Opponents reject
that label and call it another unnecessary excessive tax.
The proposal was also approved by the 2019-2020 Legislature
and is now scheduled to go on the November 2022 ballot for
voters to decide.
Supporters said the amendment will affect only 18,000
extremely wealthy individuals and will generate up to $2
billion annually in additional tax revenue. They argued that
using the funds for education and for the repair and
maintenance of roads, bridges and public transportation will
benefit millions of Bay State taxpayers. They noted the hike
would help lower income families which are now paying a
higher share of their income in taxes.
Opponents argued the new tax will result in the loss of
9,500 private sector jobs, $405 million annually in personal
disposable income and some millionaires moving out of state.
They said that the earmarking of the funds for specific
projects is illegal and said all the funds will go into the
General Fund and be up for grabs for anything.
“When the Fair Share Amendment was first introduced in 2015,
there were about 15,000 Massachusetts residents earning over
$1 million a year,” said O’Day. “Now in 2021, there are
about 18,000 residents earning over $1 million a year.
Clearly, there are millionaires and billionaires who can
afford to pay their fair share in taxes, which will support
our neighbors and local communities with investments in
public education and transportation.”
“In a brash case of the pot calling the kettle black, after
voting to move the graduated income tax to the ballot, Rep.
James O'Day said of his targets, ‘They are the ones,
obviously, that will have the ability to throw a ton of cash
at this issue and that’s probably how they’re going to try
to beat it,’” said Chip Ford, executive director of
Citizens for Limited Taxation, which led the charge
that defeated the last two attempts to impose a graduated
income tax on the 1976 and 1994 ballots. “I hope he's
right,” continued Ford. “The reliably deep-pockets opponents
of any true 'tax fairness’ and relentless advocates for
higher taxes, the teachers and labor unions that make most
ballot questions a financially lopsided affair sound
concerned to compete on a more level playing field. So it's
game-on, taxpayers, let round six of the Tax Olympics begin.
We need to hand them another grad tax defeat on the 2022
ballot — for the sixth time.”
“The Fair Share Amendment once again received strong support
from legislators and, in public polling, typically receives
support from more than 70 percent of voters in
Massachusetts,” said Lewis. “The reason it is so popular is
that most people recognize that our wealthiest residents can
afford to pay a bit more in taxes to fund investments in
public education and improve our transportation
infrastructure that will grow our economy, expand
opportunity and make our commonwealth more just and
equitable for all.”
“Only Beacon Hill politicians want to raise taxes by 80
percent, while simultaneously collecting more tax revenue
than they know how to spend,” said Paul Craney, spokesperson
for the Massachusetts Fiscal Alliance. “The voters should
not forget or forgive this level of greed and they will have
another chance to hold them accountable in 2022.”
“Right now, our economy is working great for those at the
very top, but it’s not working for the rest of us,” said
Andrew Farnitano, a spokesman for the Raise Up Massachusetts
coalition which has led the campaign for the proposal.
“Giving every student access to a high-quality public
education, upgrading our crumbling transportation
infrastructure and making our public colleges and
universities affordable again is the best way to lift up our
economy for everyone, and to ensure Massachusetts remains a
great place to live, work and raise a family. The Fair Share
Amendment would provide sustainable, long-term revenue for
investments in transportation and public education, without
asking low- and middle-income families to pay a penny more.”
A report released by the Beacon Hill Institute read, “The
proposed surtax would decrease the demand for labor services
and the quantity of labor services supplied. It would
further increase the cost of obtaining capital services by
reducing the after-tax profits that owners could plan on
receiving from investments in their business. These effects
would further manifest themselves as a reduction in private
sector jobs, in disposable income and in state gross
domestic product. In 2023, for example, more than 4,000
families would leave the Bay State with employment dipping
by nearly 9,000 jobs. Workers will have $963 million less in
disposable income and the state’s gross domestic project
would shrink by $431 million.”
“To make a fully informed decision, voters should understand
what the tax changes embedded in the law will mean in terms
of costs to the state’s economy,” notes David Tuerck,
President of the institute and a co-author of the report.
“Supporters of the millionaire’s tax ignore the reality that
high-income taxpayers adjust their work effort and their
decisions to save and invest, particularly when they are
more willing to move.”
Beacon Hill Roll Call
Volume 46 - Report No. 24
June 7-11, 2021
Covid-19 Policy Extensions (S-2467)
By Bob Katzen
The Senate, on a voice vote without a roll call on the bill
itself or on any proposed amendments, approved and sent to
the House legislation that would extend many of the measures
instituted in Massachusetts during the COVID-19 state of
emergency that are slated to expire when the emergency
declaration ends on June 15. During debate, the Senate
approved eight amendments, rejected 23 while 13 were
withdrawn by the sponsors.
Provisions of the bill include extending mail-in voting
until December 15, 2021 and allowing cities and towns to
extend early in-person voting through the same date;
allowing public bodies subject to the open meeting law to
continue to hold remote meetings until April 1, 2022; making
remote town meetings and meetings of nonprofits and public
corporations an option through December 15, 2021; allowing
cities and towns to approve and extend permits for outdoor
dining through April 1, 2022; allowing restaurants to offer
alcoholic beverages, including mixed drinks, for off-site
consumption with the purchase of food until March 1, 2022;
extending several protections that have been granted to
tenants who have difficulty paying rent; and extending until
December 15 a requirement that certain in-network telehealth
services be reimbursed at the same rate as equivalent
in-person services.
“This bill represents responsible and proactive action by
the Senate to ensure that important safeguards remain in
place after June 15th,” said Sen. Cindy Friedman
(D-Arlington). “The effects of this public health crisis are
not over. We must continue to protect the public’s health
and well-being. This bill maintains the rapid availability
of our strong health care workforce and provides financial
support to those most impacted by the pandemic, like those
who struggle to secure adequate childcare as in-person work
resumes.”
“We learned a lot during the COVID experience, and we may be
able to use some of those lessons going forward,” said
President Pro Tempore Sen. Will Brownsberger (D-Belmont).
“This legislation gives us the time to sort out which
changes we should make permanent.”
Proposed amendments defeated on voice votes without a roll
call include keeping the cap on delivery fees charged to
restaurants by third parties like Grubhub, DoorDash and Uber
Eats at 15 percent of the order price; prohibiting delivery
of alcohol to municipal or state parks and beaches; and
allowing cities and towns to approve and extend permits for
outdoor dining through November 1, 2022 instead of April 1,
2022.
Critics say the lack of roll calls shows the complete lack
of transparency in the Senate and place the blame on all 40
senators, both Democrats and Republicans. A roll call vote
can be requested by any one senator and that senator needs
only two other senators, for a total of three senators, to
mandate that the roll calls take place. So it would only
take three of the 37 Democratic senators or all three
Republican senators to demand a roll call. In fact Senate
rule number 56 was instituted years ago to ensure that the
minority party has the power to demand a roll call. The rule
states that “regardless of the party affiliation of the
person requesting or supporting a call of the yeas and nays,
the sense of the Senate shall be taken by yeas and nays
whenever required by one-fifth of the members present or by
a number of members equal to the total number of members of
the minority party, whichever is less.”
"Never mind lack of transparency, there's no accountability
without recorded votes," said Chip Ford, executive
director of Citizens for Limited Taxation. "We've
reached a lack of even necessity. Why fund a 'full-time' and
highly-paid legislature of 200 silent members with all the
accompanying perks, 'leadership stipends,' chambers, offices
and staff, when with growing frequency all that's necessary
today is a House speaker, a Senate president, and a rubber
stamp? The two leaders can confer with the governor, the
triumvirate decide all state policy, and drop any pretense
of 'representation' along with its attendant costs. At least
voters would then know who’s responsible at less expense."
“Voters will have more faith in state lawmakers if they are
willing to stand up and be counted on their votes,” said
Paul Craney, spokesman for the Massachusetts Fiscal
Alliance. “Procedural gimmicks like voice votes on
controversial policies do nothing to strengthen state
democracy.”
Beacon Hill Roll Call made repeated attempts to get a
comment from several senators, including the leadership
members of each party on the fact that there were no roll
calls during the debate on this bill which will affect every
Massachusetts resident. Not a single senator responded.
We did not hear from the following six senators who are high
ranking in the Senate Democratic leadership or from a staff
member for each senator who was included in the e-mail:
Senate President Karen Spilka, Majority Leader Cindy Creem,
President Pro Tempore Will Brownsberger, Assistant Majority
Leaders Joan Lovely, Mike Barrett and Sal DiDomenico.
Nor did we hear from any of the three Republican senators in
the Senate or a staff member who was included in the e-mail:
Minority Leader Bruce Tarr and Assistant Minority Leaders
Ryan Fattman and Patrick O’Connor.
State House News Service
Thursday, June 10, 2021
Baker Points To Fed Aid As Surtax Debate Heats Up
"I Said Before That I Don't Think We Should Be Raising
Taxes"
By Chris Van Buskirk
A day after the Legislature advanced a Constitutional
amendment imposing a four percent surtax on incomes above $1
million, Gov. Charlie Baker said the state should not raise
taxes following a devastating pandemic, and pointed to
billions in federal aid dollars that elected officials still
need to allocate.
The House and Senate voted 159-41 Wednesday afternoon to
advance the amendment that advocates say could raise $2
billion per year for education and transportation and
opponents view as a risky move that could scare high-earning
individuals and their capital out of Massachusetts and lead
to a graduated income tax structure.
Voters are now set during the November 2022 election to
decide whether or not to approve the measure. The Republican
governor has long said he is against raising taxes, and
asked Thursday whether or not tax policy should be written
into the state's Constitution, he returned to that view.
"I said before that I don't think we should be raising
taxes," Baker said at a press conference in Roxbury. "We
have, between state and local government, we have $10
billion already in federal funds that we need to find a way
to put to work. And I really think our focus ought to be on
that."
Baker's opposition to new taxes, and the potential veto tax
hikes might encounter, has diminished tax-raising
possibilities for the Democrat-controlled Legislature, but
the governor has seen situations where he has favored tax
increases, including on opioid manufacturers and to help
fund climate change adaptation efforts. Baker also agreed to
a payroll tax for paid family and medical leave, and special
assessments on hospitals.
The governor also put the tax measure in the context of the
pandemic and its impacts.
"So first of all, we're coming out of a pandemic," he said.
"We have hundreds of thousands of people who are looking for
work. And we actually don't know exactly what the impact of
the pandemic is going to be on how people think about where
and how they work and the nature of how organizations are
going to set up and manage their organizations in the
future."
The state is currently deciding how nearly $5.28 billion in
federal aid should be dispensed to communities, a question
that has put the Legislature and the governor at odds in
recent weeks.
The state's tax hauls have also far exceeded benchmarks,
with revenue officials reporting twice as much revenue
during May than originally expected.
Sen. Jason Lewis, another supporter of the tax proposal,
said polling has shown high public support for the
amendment, adding the amendment "would make our tax system
more equitable and it would raise substantial new revenue to
support public investments."
"The reason why the fair share amendment is so popular is
that most people recognize that our wealthiest residents can
afford to pay a bit more in taxes to help fund investments
that expand opportunity and make our commonwealth more just
and more equitable for everyone," the Winchester Democrat
said.
Senate Minority Leader Bruce Tarr said between 1993 and
2018, Massachusetts experienced a net outflow of $20.7
billion in taxable income. He said if the state raised taxes
on individuals earning over $1 million that outflow could
increase.
"If that's what's happening now, imagine what happens when
we change the dynamic where those earning above $1 million
dollars have their taxes increased again," Tarr said
Wednesday afternoon.
Mortgage Professional America
Thursday, June 10, 2021
Buyers are flocking to low tax states - where does that
leave high tax markets?
by David Kitai
As remote working opportunities open up relocation
opportunities for millions of Americans, low tax states are
seeing an influx of people while high tax states are seeing
net out-migration. This trend, which according to a redfin
report has been ongoing for the last eight years at least,
saw four people entering a low tax state for each person who
left, while higher tax states saw 2.5 people leaving for
every new entry.
But with low tax states like Florida, Montana and, to a
lesser extent, Texas attracting buyers from across the
country, where does that leave mortgage professionals in
states with higher income and property taxes?
To find out, MPA spoke to John Donlon, co-founder of
GoldCoast Mortgage in Beverly, Massachusetts. His state has
long held a reputation as “Taxachusetts” with the 7th
highest state income tax burden in the country, according to
a Wallethub study. He explained that with remote work
opening up new options for buyers, he has to navigate in a
market where someone working in Massachusetts might rather
move to a low-tax state like Florida, or even neighboring
New Hampshire.
“We have a client who retired out of the Air Force and was
moving from Colorado, and he had the choice of any state
where he could relocate and buy a home. He chose New
Hampshire because his retirement income wasn’t going to be
taxed,” Donlon said. “He bypassed Mass. and went for New
Hampshire because it’s a low-income tax state.”
Donlon, who is licensed in New Hampshire and Maine, as well
as Massachusetts, explained that even though New Hampshire
has a higher property tax rate, his client was keen to move
where his income wouldn’t be as taxed. Donlon and his team
worked out that even with a higher property tax rate, his
client would be saving money there.
While his multi-state licensing allows Donlon to secure
deals that might not happen because of Massachusetts’ tax
rate, he explained that a looming millionaire’s tax on an
already high-income state could push more high earners away.
He explained, though, that local knowledge can help secure
deals thanks to variation in municipal tax rates and a
crucial ballot measure.
That ballot measure is called Proposition 2½, it was enacted
in 1980 and since then has prevented any city from raising
their property tax rate by more than 2.5% without first
obtaining the voters’ approval. What that’s meant is cities
that either went bankrupt or needed to raise taxes to pay
for new schools and amenities have been able to raise taxes
with voters’ consent, while many others have kept their
property tax rates low. Donlon explained that because of
Proposition 2½ the tax rate per $1,000 is roughly $4 in
Nantucket but $20 in Amesbury. He can use this knowledge of
local administration and city variance to help guide his
tax-averse borrowers to a city that suits them better.
A crucial part of dealing with clients like this, too, is
explaining what they get with their tax rate. Young parents,
for example, might see a tax rate in a city as onerous until
they look at the quality of the local public schools. For
the education their kids will receive there, they might be
willing to pony up a little more in income tax. Donlon also
works with his clients to develop long-term plans to manage
their tax burden as they shift into retirement. Even after
they’ve paid off their mortgage, the tax might be onerous
for these clients as they move on to a fixed income. Donlon
connects them with real estate professionals who can help
them sell a piece of their property or tax professionals who
can negotiate their tax rate down.
Donlon doesn’t think that taxes alone will drive
Massachusetts’ homebuyers to Florida, but taken with the
anguish of shovelling snow in winter it may spark the
beginning of a trend. He sees many buyers looking long term
at initiatives like this millionaire’s tax, or even at local
estate tax rates, and thinks they may move out-of-state
based on those. Even if new freedom of movement does allow
some people to move to lower tax states, though, Donlon is
confident that new buyers can fill the gap knowing that even
if it comes with a high tax rate, living in a state like
Massachusetts is worth it.
As mortgage professionals in other high tax states like New
York and California stare down similar prospects, Donlon
said that they can safeguard their businesses by obtaining
licenses in multiple states. Low-tax Nevada might be a
perfect addition for a California based mortgage pro, as
Florida or South Carolina might be for someone based in New
York. Even as these markets should be preparing for a high
to low tax relocation shift, Donlon is confident that the
national housing market will find its equilibrium again.
“If taxes spike, I would think that the values would correct
at some point in places like Boston or New York City,”
Donlon said. “That’ll help make it more palatable for people
paying heavy real estate or income tax bills. It may
represent opportunity as those markets fill back in, you
just always have to be looking for it. The downside velocity
of these trends can be impressive, but not if you’re just
peddling one product. You’ve got to look for other options,
different types of clients, different styles of selling and
different demographics.”
https://www.mpamag.com/news/buyers-are-flocking-to-low-tax-states--where-does-that-leave-high-tax-markets-257550.aspx
About us:
Mortgage Professional America (MPA) is the mortgage &
finance industry’s most trusted source of news, opinion and
analysis.
Created exclusively for the mortgage & finance industry,
MPA provides a real-time web service that keeps time-poor
mortgage & finance professionals up to date with the latest
breaking news, cutting-edge opinion, and expert analysis
affecting both their business, and their industry as a
whole.
The Boston Globe
Thursday, June 10, 2021
After State House loss, business leaders will need to
regroup on higher-earners tax fight
Trade groups weigh legal challenges and multimillion-dollar
ballot campaign
By Jon Chesto
The business community will need to regroup now that the
Legislature has overwhelmingly approved the so-called
“millionaires tax” again.
The setback is a stark contrast to the stunning legal
victory that five major business groups scored in 2018 when
the state Supreme Judicial Court sidelined efforts to impose
this new income tax surcharge on annual earnings above $1
million.
A legal victory will be much harder to come by now that the
“Fair Share Amendment” has returned. A bruising ballot
battle, pitting big business against big labor, seems more
likely. The union-funded Raise Up Massachusetts coalition
could end up facing off against a newly formed nonprofit
created to be Raise Up’s antagonist, dubbed Partnership for
Massachusetts’ Future, among other business-backed foes.
The Fair Share proposal has followed a tortuous path. Its
supporters need nothing less than a change in the state
constitution. This is a laborious process that requires two
votes by the Legislature in consecutive sessions and another
one by the people of Massachusetts. The Legislature took
that second vote on Wednesday, priming Fair Share for the
ballot in November 2022.
Ostensibly, the surcharge would raise about $2 billion a
year, to be used for education and transportation purposes,
by imposing a higher income tax on nearly 20,000 married
couples and individual taxpayers who make more than $1
million a year: 9 percent on all earnings above that
threshold, with the standard 5 percent tax on income below
it.
Critics say the surcharge won’t raise anywhere near that
amount. They doubt it will bind the Legislature to use the
money for the seemingly noble causes of public schools,
roads, and trains. And they claim it will hurt the state’s
economic competitiveness, maybe even resurrecting the
dreaded “Taxachusetts” label.
The advocacy has been intense in recent days and weeks. The
Massachusetts Competitive Partnership argued that the rise
of remote work during the pandemic makes high-cost areas
more vulnerable to job losses if taxes go up. The
Massachusetts Taxpayers Foundation cautioned against state
budget writers relying on high-earner taxes, because of the
potential volatility of that revenue stream. And the Greater
Boston Chamber of Commerce warned about enshrining such a
public policy in the constitution, essentially setting it in
stone and leaving little flexibility for change.
At the very least, business lobbyists had hoped lawmakers
would put off this vote until the fall, or early next year.
Better, the thinking went, to wait and see how hard-hit
businesses recover from the COVID-19 pandemic and how the $5
billion-plus in federal aid that the state has received gets
divvied up. There was even talk of reaching another “Grand
Bargain,” like the one the business groups struck with labor
and community activists in 2018.
But it was not meant to be. The Fair Share proponents — led
by the Raise Up coalition of labor, community, and religious
groups — simply had too much momentum.
Raise Up had tried to advance the ballot question as a
citizens’ petition the last time around. It turned out to be
a fatal legal mistake. The Supreme Judicial Court
essentially ruled that the proponents could not bundle three
seemingly unrelated items: taxing high earners, spending
money on education, and also spending on transportation.
The tax on higher earners still looks the same. But there’s
one key change: It’s being submitted as a proposal from
state lawmakers, not the citizenry. For that reason,
supporters and critics alike say the “relatedness” question
that stymied it the last time around probably will not
apply.
That’s not to say a legal challenge has been ruled out.
Appellate lawyer Kevin Martin, whose team at Goodwin Procter
successfully championed the business community three years
ago before the SJC, confirmed Goodwin has been hired by the
Massachusetts High Technology Council to consider possible
legal options.
Chris Anderson, president of Mass. High Tech, said it’s too
soon to know what kind of legal avenues the business groups
can pursue. In the meantime, he is corralling companies to
sign an open letter opposing new business taxes (about 170
companies are listed so far) and is helping a related effort
to launch a new nonprofit called the Partnership for
Massachusetts’ Future. Anderson said the Partnership — not
to be confused with the Mass. Competitive Partnership, the
group of high-powered chief executives — is designed to
bring together like-minded organizations interested in the
state’s competitiveness and pose a counterpoint to the Raise
Up umbrella organization; the new Partnership’s president is
Stephen Fantone, the chief executive of Optikos in
Wakefield.
Meanwhile, Pioneer Institute executive director Jim Stergios
has put his free-market-oriented think tank to work, with
repeated reports this year emphasizing Fair Share’s
potential economic downsides. He estimates as many as 14,000
of the likely affected taxpayers are actually owners of
small businesses whose profits are taxed at the individual
level and would be subject to the new surcharge.
Voters may want to punish people like Jeff Bezos and Elon
Musk, especially after the ProPublica report this week on
how those billionaire bigwigs minimized their income taxes.
But Stergios said it’s the local small business owners who
would be most affected by Fair Share.
Jared Walczak of the D.C.-based Tax Foundation adds that 45
percent of all pass-through income in Massachusetts —
primarily income from small businesses — is reported on
returns of $1 million or more, making Fair Share a
significant new tax on employers. (Eight other states, he
said, have single-rate income taxes while 32 have graduated
ones, with California leading by assessing as much as 13.3
percent for top earners.)
Fair Share proponents such as state Senator Jason Lewis make
a valid point that will inevitably resonate. The economic
inequities inherent in this state’s economy have only grown
over time. The gaps between the haves and have-nots have
only widened.
Will Fair Share solve that problem? Probably not. But
business leaders will likely need a strong counterargument
to win over enough voters when the long-discussed tax on top
earners finally gets on the ballot. Odds are they won’t have
the SJC’s help this time.
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