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Post Office Box 1147
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Marblehead, Massachusetts 01945
▪ (781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
48 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
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CLT UPDATE
Monday, January 31, 2022
A "Surtax" On
"Millionaires" — And Maybe A Boost For Prop
2½
Jump directly
to CLT's Commentary on the News
|
Most Relevant News
Excerpts
(Full news reports follow Commentary)
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The battle
against the so-called “millionaires tax” has started
in earnest.
Business
groups are working hard to persuade the state’s
voters to oppose this fall’s ballot question, which
would create a constitutional amendment to increase
taxes by 4% on any Massachusetts resident’s earnings
above $1 million a year....
While
their response is predictable, their opposition to
the measure lends credence to a recent, independent
report from Tufts University’s Center for State
Policy Analysis showing that the amount of money
collected by the surtax — about $1.3 billion in 2023
if approved by voters in November — would be much
less than the amount supporters are hoping for,
which is around $2 billion.
The
reason, the report’s authors said, is that some of
the millionaires may leave the state if the surtax
goes through, taking their tax dollars with them.
High-earning households also “have the connections
and wherewithal to engage in sophisticated tax
planning” and avoid paying taxes, according to the
report....
The
question, which has the support of municipal unions,
among other groups, states that the money is to be
used to “provide the resources for quality public
education and affordable public colleges and
universities, and for the repair and maintenance of
roads, bridges and public transportation, all
revenues received in accordance with this paragraph
shall be expended, subject to appropriation.”
The Tufts
report rightly points out that “there’s tremendous
uncertainty about how the money from the
millionaires tax would actually be used, because it
would still be subject to legislative
appropriation.”
Therein
lies the rub. It is well known that the state
Legislature is heavily influenced by municipal
unions such as the Massachusetts Teachers
Association. Voters will have to decide if they want
to leave it up to legislators — with pressure from
the MTA and others — to decide how the money gets
used. The phrase “quality education” is awfully
broad and could mean just about anything — from new
buildings and improved classroom technology to
increased salaries and beefed-up benefits....
Voters may
not feel sorry for millionaires and billionaires,
but they are wise to look at the man behind the
curtain to see how that money is actually going to
be spent.
An
Eagle-Tribune editorial
Sunday, January 23, 2022
'Millionaires tax' raises
serious questions
The battle
lines are being drawn over a proposed tax hike on
high earners, with the chief executive of a
prominent Boston fund company putting down $200,000
to help the opposition, and proponents receiving
$100,000 from a firm associated with the billionaire
who founded eBay.
The Fair
Share Amendment, also known as the millionaires tax,
could raise $1 billion to $2 billion a year for
education and transportation. Supporters with the
union-backed Raise Up Massachusetts coalition say
the proposal, which would add a 4-percentage-point
surcharge on the income tax rate for earnings above
$1 million, would help make the state’s tax
structure more equitable. Opponents say the tax
increase, which regularly garners strong voter
support in polls, will penalize small-business
owners and discourage entrepreneurship.
Business
groups blocked an earlier version at the Supreme
Judicial Court in 2018, but this time the proposed
constitutional amendment is headed for a statewide
vote in November.
For that
reason, opponents funneled about $435,000 to the
newly formed Coalition for a Strong Massachusetts
Economy in late 2021. Several business groups have
signaled plans to oppose it again in 2022, including
Associated Industries of Massachusetts; chief
executive John Regan told his group’s members on
Friday that AIM is rejoining the fight, saying the
surcharge would discourage business formation at a
time when the state needs it the most....
The
biggest donation to Raise Up, which received
$260,000 in 2021, came from a businessperson as well
— albeit one from out-of-state. Raise Up received
$100,000 in October from Omidyar Network, a
California-based philanthropic investment firm
affiliated with eBay founder Pierre Omidyar. Other
large gifts came from union groups such as the
Massachusetts AFL-CIO, which contributed $65,000,
and the Massachusetts Teachers Association, which
donated $45,000. The campaign’s biggest expense last
year was the nearly $150,000 it spent with Field
First, a Boston-based community organizing firm.
The
Boston Globe
Friday, January 21, 2022
Money starts to flow into
‘millionaires tax’ ballot fight
The
campaign over the proposed Constitutional amendment
to add a surtax on household income over $1 million
took a step into the courtroom Thursday as opponents
filed suit to influence how the proposal will be
summarized for voters.
Opponents
of the so-called millionaires tax want to see how
the attorney general plans to describe the question
to voters in pre-election materials and on the
November ballot, and on Thursday filed a preemptive
lawsuit with the Supreme Judicial Court asking
justices to ensure the summary includes a cautionary
statement.
The
complaint was brought by Massachusetts High Tech
Council President Chris Anderson and 54 other
voters, including Reps. Nick Boldyga, David DeCoste,
Colleen Garry and Marc Lombardo, Christopher
Carlozzi of the Massachusetts chapter of the
National Federation of Independent Business, Paul
Craney of Massachusetts Fiscal Alliance, Jim
Stergios of the Pioneer Institute and Eileen
McAnneny of the Massachusetts Taxpayers Foundation.
It names
Attorney General Maura Healey and Secretary of State
William Galvin, two Democrats with roles in the
process, as defendants in their elected
capacities....
The suit
specifically addresses one of the opponents' main
arguments -- that the money raised by the surtax
would not be restricted to use for transportation
and education as supporters claim and that it may
not result in actual increases in spending in those
areas. It requests that the SJC order that the
ballot materials tell voters that "the Legislature
could choose to reduce funding on education and
transportation from other sources and replace it
with the new surtax revenue because the proposed
amendment does not require otherwise" and order that
Healey and Galvin not put the question on the 2022
ballot unless the summary reflects that.
"Here is
the bottom line," Anderson said. "On five previous
occasions, Massachusetts citizens have considered
ballot initiatives that would empower the
Legislature to establish a graduated income tax and
the citizens rejected all five. This sixth attempt
should not mislead voters through an unfair and
inaccurate summary into believing that the Amendment
will guarantee additional funding for either
transportation or education."
State
House News Service
Thursday, January 27, 2022
Surtax Opponents Take Summary
Case To SJC
Say High Court Needs To Police Summaries For
Accuracy, Fairness
Opponents
of a so-called millionaire tax slated for the
November ballot have filed a complaint with the
state’s highest court over potentially “misleading”
language state election officials might use to sway
voters.
“Here is
the bottom line,” Massachusetts High Tech Council
President Chris Anderson said. “On five previous
occasions, Massachusetts citizens have considered
ballot initiatives that would empower the
Legislature to establish a graduated income tax and
the citizens rejected all five. This sixth attempt
should not mislead voters through an unfair and
inaccurate summary into believing that the Amendment
will guarantee additional funding for either
transportation or education.”
Anderson
and a mix of 54 state representatives, business
groups and government finance watchdogs want to
compel election officials to inform voters that the
money raised by the surtax would not be restricted
to use for transportation and education — as
supporters claim.
The
complaint requests the SJC order that ballot
materials tell voters that “the Legislature could
choose to reduce funding on education and
transportation from other sources and replace it
with the new surtax revenue because the proposed
amendment does not require otherwise.”
The
Boston Herald
Thursday, January 27, 2022
Millionaire tax opponents file
SJC action to prevent ‘misleading’ of voters
Pioneer
Institute supports the diverse and bipartisan group
that filed a complaint with the Massachusetts
Supreme Judicial Court (SJC) challenging the summary
language meant to provide an accurate description of
the tax hike amendment to voters....
“Proponents may willfully mislabel this tax, but the
AG and the Secretary should not,” said Jim Stergios,
executive director of Pioneer Institute. “In 2018,
even the Attorney General’s office, which was
defending the proposal before the SJC argued that it
was ‘just a tax’ – it wouldn’t necessarily increase
spending on transportation and education.” ...
Pioneer
today is also releasing a video from arguments
presented during the 2018 oral arguments. In it, the
lawyer arguing the Attorney General’s case in
support of the tax amendment explicitly agrees, in
response to a question from the late SJC Chief
Justice Ralph Gants, that the amendment might not
result in any overall increase in education and
transportation.
Moreover,
Attorney General Healey’s own brief from the 2018
case reads, “the Legislature could choose to reduce
spending in specified budget categories from other
sources and replace it with new surtax revenue.”
Pioneer
Institute
Thursday, January 27, 2022
Pioneer Supports Legal Challenge
to Misleading Tax Ballot Language, Releases Video
Pioneer Institute
January 27, 2022
The Tax Trap
Governor
Charlie Baker, a second-term Republican who first
ran more than a decade ago on calls to cut
Massachusetts residents’ taxes, on Tuesday said he
will pursue a wide-ranging package of tax breaks for
low-income workers, renters, and seniors that could
come to define his final months in office.
Baker
announced the proposals during his last State of the
Commonwealth address, using the widely televised
speech to implore the Democratic-dominated
Legislature to buy into changes he said are about
making the state’s tax code fairer and enhancing its
competitive position.
“We’ve
asked the people of Massachusetts to do a lot these
past few years,” Baker told hundreds of attendees
who gathered at the Hynes Convention Center. “It’s
time to invest in Massachusetts families, to give
them back some of the tax revenue that they created
through their hard work.”
Among the
most dramatic-sounding proposals he sketched Tuesday
was one to “eliminate income taxes” for the
lowest-paid 230,000 taxpayers in the state, framing
it as a way to soften the hit on those stretching to
pay for necessities such as food, housing, and
transportation in the face of rising prices.
He also
said he’d seek to double the tax break people can
claim on children and dependents; offer renters a
“bigger tax break” on their monthly payments; and
give seniors a break on property taxes and “make our
estate tax more competitive with the rest of the
country.”
Baker’s
pronouncements were short on specifics, making it
impossible to determine how much the changes could
save residents. He intends to file detailed
proposals as part of his final state budget plan on
Wednesday.
But on
their face, they appear to collectively represent
the most sweeping tax changes Baker has pursued
since he took office in January 2015, and if passed,
they could frame both his final year and the legacy
he wants to leave as a Republican governor who
campaigned on holding the line on spending in a
deep-blue state....
Baker
hasn’t sought permanent, broad-based tax cuts during
his seven years in office, despite once supporting
slicing the sales tax from 6.25 percent to 5 percent
— as an unsuccessful candidate for governor in 2010
— and voicing support for reducing it during his
2018 reelection campaign.
He last
year pitched a two-month sales tax “holiday” to give
residents a New Hampshire-style break on most
consumer goods while the state basked in billions of
dollars in unexpected revenue. But the idea died in
the Legislature almost as soon as Baker proposed it.
The
Boston Globe
Tuesday, January 25, 2022
Governor Charlie Baker
says he’ll pursue tax breaks for renters,
seniors, parents, and low-income workers
Gov.
Charlie Baker, in his eighth and final annual
budget, is seeking to pair a modest increase in
state spending with $693 million in tax policy
changes he said are aimed at providing relief to
people who need it and ensuring the state's
competitive position in the remote work era.
Baker on
Wednesday filed a $48.5 billion spending plan for
fiscal 2023, which begins on July 1, alongside
legislation proposing tax breaks for renters,
seniors, parents and low-income workers. The package
also features changes to the way Massachusetts
handles estate and capital gains taxes.
"The cost
of just about everything is going up, and these tax
breaks would help offset some of those costs for
families," he said. "From a fiscal point of view,
Massachusetts is in a very strong financial position
and able to offer this tax relief while continuing
to make big investments in our people, our schools
and our communities." ...
The
governor's tax plan would cut the tax rate on
short-term capital gains from its current 12 percent
to 5 percent and would make two changes to the
estate tax.
The
threshold at which the estate tax kicks in would
double to $2 million, and while the current tax
applies to the full value of estates over $1
million, Baker's proposal would tax only the amount
above $2 million.
The
Massachusetts Taxpayers Foundation, in its budget
analysis, described Massachusetts as an "outlier
among the states" on the estate tax, noting that the
Bay State and Oregon's $1 million taxation
thresholds are the lowest of the 12 states with
estate taxes.
Baker's
budget-filing message describes the 12 percent tax
on short-term capital gains as "markedly
uncompetitive compared to the rest of the country"
and says that a 5 percent rate would treat that
money the same as other income and align
Massachusetts with other states. In 2019, more than
150,000 filers paid the tax, more than 61,000 of
whom had incomes below $112,000, according to the
governor's budget.
Additionally, Baker wants to double tax credits for
dependent and child care, double the allowable
maximum for the senior circuit breaker property tax
credit and increase the cap on deductions for rent
payments from $3,000 to $5,000.
The
Republican governor is also looking to raise the
income level at which people are required to file
taxes, a move the Executive Office of Administration
of Finance says would affect about 234,000
low-income taxpayers and cost the state $41 million
on an annualized basis.
Currently,
Massachusetts residents must file an income tax
return if they earn $8,000 as a single filer,
$14,400 as a head of household, or $16,400 as joint
filers, according to Baker's budget office. Baker's
plan would raise the no-tax threshold to align with
the federal level, bringing it to $12,400 for single
filers, $18,650 for heads of households, and $24,800
for joint filers.
Baker
teased most of the tax breaks in his Tuesday night
State of the Commonwealth address, calling for the
state to "invest in Massachusetts families."
In an
election year, House and Senate Democrats will
decide the fate of Baker's tax policy proposals as
they assemble a budget over the winter and spring.
The blend of policies would benefit some of the
state's lowest income-workers and offer relief to
wealthier residents. The debate will play out as
campaigning heats up for and against a ballot
question that would impose a surtax on income over
$1 million....
The
Massachusetts Budget and Policy Center said Baker's
estate and capital gains tax changes would cost the
state $348 million annually, cutting revenue "at a
time when we need it to sustain the state beyond the
pandemic." ...
Baker is
recommending a $485 million hike in Chapter 70 aid
to local schools, bringing that account up to $5.989
billion. Including Chapter 70 and other money,
Baker's office said the budget includes $591.4
million to fund the next installment of the
multi-year school finance reform known as the
Student Opportunity Act.
Lt. Gov.
Karyn Polito previously announced a $31.5 million
increase in unrestricted local government aid.
State
House News Service
Wednesday, January 26, 2022
Baker Tax Cuts Would Span
Income Brackets
Estate, Cap Gains Proposals Designed To Make Mass.
More Competitive
Baker
delivered what could be his last major televised
speech as the 72nd governor of Massachusetts on
Tuesday night, and used the time and focus on his
words to begin to write the epilogue on his two
terms in office....
The
governor also filed his final annual budget
proposal, a $45.8 billion spending plan that cuts
taxes by close to $700 million, with relief for
low-income residents, seniors, renters and families
with children, and proposed alterations to the
estate tax and short-term capital gains rate.
Baker once
ran for governor, unsuccessfully, on a platform that
included reducing the sales, income and corporate
tax rates in Massachusetts all to 5 percent. That
plan was gone by the time he reinvented himself as a
successful candidate in 2014, and he hasn't often
returned to the idea of sweeping tax cuts that might
have been expected from the business-friendly
Republican.
Until now.
Baker is
daring Democrats on Beacon Hill to say no in an
election year to a package of tax cuts that some
might consider - yes, we'll say it - progressive.
State
House News Service
Friday, January 28, 2022
Weekly Roundup - Don’t Miss Me
Yet
"JR10 DAY"
BRINGS LEGISLATIVE DEADLINE: Most joint legislative
committees must decide by Wednesday whether to
advance or spike bills under their purview, a
biennial reporting deadline enshrined in Joint Rule
10.
The day
sometimes brings a flurry of activity as lawmakers
and advocates survey which proposals remain in the
mix, though the Legislature tends to deploy
extension orders to give itself more time past the
original deadline. Bills that earn favorable reports
will advance in the lawmaking process, though
clearing one committee does not guarantee a measure
will emerge for a vote in either chamber, while
adverse reports usually kill legislation until the
next two-year session....
State
House News Service
Friday, January 28, 2022
Advances - Week of Jan. 30, 2022 |
|
A graduated income tax on
"millionaires" is now being termed a "surtax"?
Do you remember the
last "surtax" on income? It was imposed (temporarily of
course) in 1975, during Michael Dukakis' first term as governor.
According to the Associated Press, it "forced individuals to pay an
extra $7.50 for every $100 paid in state income taxes."
That "temporary"
income tax hike lasted for eleven years —
until
CLT put it on the ballot and voters repealed it in 1986.
According to AP in its
December 9, 1986 report ("Economy
Allows Massachusetts to Repeal Surtax") by James Simond:
The $135 million tax cut also
removed a political millstone from Dukakis, who in his 1974
campaign had promised no new taxes. After winning the election
and inheriting a $500 million budget deficit, he approved the
surtax as part of the biggest tax increase in state history.
″I never considered it a monkey on my back. I thought it was an
unfortunate state of affairs that forced us to approve it at the
time,″ said Dukakis, who blamed the deficit and the need for the
surtax on the liberal spending policies of his Republican
predecessor, Gov. Francis Sargent.
The strength of the Massachusetts economy helped produce a $540
million budget surplus for fiscal 1986, allowing the state to
cut taxes and aiding Dukakis in rolling to re-election by a
69-31 margin last month.
The surtax initially forced individuals to pay an extra $7.50
for every $100 paid in state income taxes. Due to the repeal,
individuals will now save an average of roughly $100 when they
file their 1986 state income tax forms early next year....
Citizens for Limited Taxation, a group that won approval
of tax-limiting Proposition 2½ in 1980, gathered more than
100,000 signatures for a 1986 ballot question that would
eliminate the surtax in two years and impose a strict limit on
tax collections....
The
Massachusetts High Technology Council, which has lobbied for
surtax repeal since 1978, had used the surcharge as a symbol of
the commonwealth’s traditionally high tax rates.
CLT and the voters
repealed the eleven-year-old Dukakis surtax on the same ballot on
which Dukakis was reelected as governor (for the third time
— Massachusetts voters never learn,
they just keep touching the hot stove). Three years later in
1989 Dukakis imposed his
"temporary" for "only 18-months" income tax hike. CLT
collected the signatures and put repeal of that one on the
2000 statewide ballot where it again won handily, though the
Legislature soon "froze" it preventing the repeal from being fully
implemented until just two years ago in 2020.
That's what happened and
happens when an income tax is imposed on all taxpayers
equally, such a flat income tax has always been required under
the state constitution since the income tax was originated in 1915,
over a century ago. When broad opposition to it reaches a
critical mass voters who've had enough can and do repeal it.
That is why The Takers are dead set on changing the state
constitution, amending it forever by imbedding this "surtax"
on so-called "millionaires" where it will become permanently
untouchable by any and all.
The last time a graduated
income tax made it onto the ballot in 1994 —
its fifth appearance — it
appeared as Questions 6 and 7. Question 6 would have amended
the state constitution to repeal the flat income tax forever and
replace it with their Graduated Income Tax. The bait was
Question 7, which proposed numerous new income brackets and tax
rates upon them. Many low- and middle-income taxpayers would
have paid a lower than or the same 5 percent rate. Everyone
else would have paid a higher tax rate.
Question 6 was a
constitutional amendment, in all practicality unchangeable forever.
Question 7 was a statute, a simple law which the Legislature could
— and we expected would — change on a
whim at a moment's notice, perhaps the next year. Voters
recognized the bait-and-switch trap and rejected it by a vote of
65%-35%.
CLT's Barbara Anderson holding our
1994 Grad Tax Opposition Campaign Lawn Sign
"It's a Tax
Trap"
This
time around is no different. The advocates' selling point is
another blatant bait-and-switch scam where all new revenue raised is
promised to be spent only on "education and transportation."
That is a promise which no legislature is bound by nor can be held
to. Again the Legislature could —
and we again expect would — ignore the promise, break it
without hesitation.
This
is the very basis on which this week the Mass. High Tech Council
filed its
lawsuit with the state Supreme Judicial Court against Attorney
General Maura Healey and Secretary of State William Galvin. If
the Grad Tax is not outright tossed off the ballot by the high court
then its advocates should at least be forced to make an honest
presentation.
Never underestimate the
power of CLT's "48 years of institutional memory"
— or our well-earned cynicism!
Pioneer Institute
January 27, 2022
"The Tax Trap"
Not many recognize that a
50% renter's tax deduction on their state income tax is a feature of
CLT's Proposition 2½ in its
Section 11 (along with the 62% reduction of the auto excise tax
in Section 9). For a change, a positive tweak to a fixture of
Prop 2½ since 1980 is being offered, an upgrade for rental
inflation. It might be a mistake for me to mention that,
perhaps dooming Gov. Baker's proposal.
On Wednesday the State House News Service reported
("Baker Tax Cuts Would Span Income
Brackets — Estate, Cap Gains Proposals
Designed To Make Mass. More Competitive"):
Baker on Wednesday filed a
$48.5 billion spending plan for fiscal 2023,
which begins on July 1, alongside legislation
proposing tax breaks for renters, seniors,
parents and low-income workers. The package also
features changes to the way Massachusetts
handles estate and capital gains taxes.
"The cost of just about
everything is going up, and these tax breaks
would help offset some of those costs for
families," he said. "From a fiscal point of
view, Massachusetts is in a very strong
financial position and able to offer this tax
relief while continuing to make big investments
in our people, our schools and our communities."
...
The governor's tax plan
would cut the tax rate on short-term capital
gains from its current 12 percent to 5 percent
and would make two changes to the estate tax.
The threshold at which the
estate tax kicks in would double to $2 million,
and while the current tax applies to the full
value of estates over $1 million, Baker's
proposal would tax only the amount above $2
million.
The Massachusetts Taxpayers
Foundation, in its budget analysis, described
Massachusetts as an "outlier among the states"
on the estate tax, noting that the Bay State and
Oregon's $1 million taxation thresholds are the
lowest of the 12 states with estate taxes....
Additionally, Baker wants
to double tax credits for dependent and child
care, double the allowable maximum for the
senior circuit breaker property tax credit and
increase the cap on deductions for rent payments
from $3,000 to $5,000.
The Republican governor is
also looking to raise the income level at which
people are required to file taxes, a move the
Executive Office of Administration of Finance
says would affect about 234,000 low-income
taxpayers and cost the state $41 million on an
annualized basis.
Along with increasing the
Proposition 2½ renter's deduction Gov.
Baker is also proposing to revise the state's estate tax to bring it
in more line with other states with such a tax. His proposal
is similar to what
we again testified for before the Joint Committee on Revenue on
January 12, so we wish him luck with that modest tax cut as well.
"JR10 DAY" It's the first time I've heard this
term but it's an important date for CLT and Proposition 2½
this year.
Five
bills stealthily undermining our
Proposition 2½ are
still buried in the Joint Committee on Revenue, carried over from
last year's sessions without a decision from the committee:
H.2978,
S.1899,
H.3086,
S.1804, and the latest,
H.3039 (An Act establishing a local option gas tax).
In
its
Advances - Week of Jan. 30, 2022
the State House News Service reported on Friday:
"JR10 DAY" BRINGS
LEGISLATIVE DEADLINE: Most joint legislative
committees must decide by Wednesday whether to
advance or spike bills under their purview, a
biennial reporting deadline enshrined in Joint
Rule 10.
The day sometimes brings a
flurry of activity as lawmakers and advocates
survey which proposals remain in the mix, though
the Legislature tends to deploy extension orders
to give itself more time past the original
deadline. Bills that earn favorable reports will
advance in the lawmaking process, though
clearing one committee does not guarantee a
measure will emerge for a vote in either
chamber, while adverse reports usually kill
legislation until the next two-year session....
Maybe we'll know more about the security and fate of Proposition
2½ for the time being by next week,
maybe not. For sure we'll be watching.
|
 |
 |
|
Chip Ford
Executive Director |
|
|
The
Eagle-Tribune
Sunday, January 23, 2022
An Eagle-Tribune editorial
'Millionaires tax' raises serious questions
The battle against the so-called “millionaires tax” has
started in earnest.
Business groups are working hard to persuade the state’s
voters to oppose this fall’s ballot question, which would
create a constitutional amendment to increase taxes by 4% on
any Massachusetts resident’s earnings above $1 million a
year.
Polls show the question has popular support, with about 70%
of voters currently in favor of it. And why not? Supporters
say it will mean more money to improve neglected public
schools, expand childcare options, and fix potholed roads
and crumbling bridges.
The millionaires themselves, however, are not too keen on
it.
During a recent live-streamed event last Thursday sponsored
by the Massachusetts Fiscal Alliance and the state chapter
of the National Federation of Independent Businesses, area
business owners spoke out against the tax.
Jeffrey Sheehy, who owns the Lawrence-based mineral
processor Whittemore Company, said it would cut into profits
and “kill the incentive to grow” for his company and many
other employers in the region and state.
CJ Ganji, general manager of Fresh Valley Foods Corporation
in Haverhill, agreed. “Every penny that they take out of our
pockets, that’s another job we can’t create and more
investment that we can’t put back into our business,” he
said in a story by Statehouse reporter Christian Wade. “This
income surtax would be another slap in the face”
While their response is predictable, their opposition to the
measure lends credence to a recent, independent report from
Tufts University’s Center for State Policy Analysis showing
that the amount of money collected by the surtax — about
$1.3 billion in 2023 if approved by voters in November —
would be much less than the amount supporters are hoping
for, which is around $2 billion.
The reason, the report’s authors said, is that some of the
millionaires may leave the state if the surtax goes through,
taking their tax dollars with them. High-earning households
also “have the connections and wherewithal to engage in
sophisticated tax planning” and avoid paying taxes,
according to the report.
In addition to looking at the potentially negative impact on
businesses, voters may also want to carefully read the
ballot question itself before deciding how to vote.
The question, which has the support of municipal unions,
among other groups, states that the money is to be used to
“provide the resources for quality public education and
affordable public colleges and universities, and for the
repair and maintenance of roads, bridges and public
transportation, all revenues received in accordance with
this paragraph shall be expended, subject to appropriation.”
The Tufts report rightly points out that “there’s tremendous
uncertainty about how the money from the millionaires tax
would actually be used, because it would still be subject to
legislative appropriation.”
Therein lies the rub. It is well known that the state
Legislature is heavily influenced by municipal unions such
as the Massachusetts Teachers Association. Voters will have
to decide if they want to leave it up to legislators — with
pressure from the MTA and others — to decide how the money
gets used. The phrase “quality education” is awfully broad
and could mean just about anything — from new buildings and
improved classroom technology to increased salaries and
beefed-up benefits.
It’s also interesting that the money would be used for
“maintenance of roads and bridges” when just about every
community in the state is getting millions of dollars for
infrastructure improvements from federal pandemic relief
funds.
There are other questions, too. Did the drafters of the
ballot question purposely leave public safety out? How about
health care? If any sector of the economy needs help now
it’s hospitals and clinics.
Voters may not feel sorry for millionaires and billionaires,
but they are wise to look at the man behind the curtain to
see how that money is actually going to be spent.
The Boston
Globe
Friday, January 21, 2022
Money starts to flow into ‘millionaires tax’ ballot fight
Putnam’s Reynolds gives $200K to fight so-called
millionaires tax in Mass.,
while eBay founder Omidyar donates $100K in support.
By Jon Chesto. Globe Staff
The battle lines are being drawn over a proposed tax hike on
high earners, with the chief executive of a prominent Boston
fund company putting down $200,000 to help the opposition,
and proponents receiving $100,000 from a firm associated
with the billionaire who founded eBay.
The Fair Share Amendment, also known as the millionaires
tax, could raise $1 billion to $2 billion a year for
education and transportation. Supporters with the
union-backed Raise Up Massachusetts coalition say the
proposal, which would add a 4-percentage-point surcharge on
the income tax rate for earnings above $1 million, would
help make the state’s tax structure more equitable.
Opponents say the tax increase, which regularly garners
strong voter support in polls, will penalize small-business
owners and discourage entrepreneurship.
Business groups blocked an earlier version at the Supreme
Judicial Court in 2018, but this time the proposed
constitutional amendment is headed for a statewide vote in
November.
For that reason, opponents funneled about $435,000 to the
newly formed Coalition for a Strong Massachusetts Economy in
late 2021. Several business groups have signaled plans to
oppose it again in 2022, including Associated Industries of
Massachusetts; chief executive John Regan told his group’s
members on Friday that AIM is rejoining the fight, saying
the surcharge would discourage business formation at a time
when the state needs it the most.
Putnam Investments CEO Bob Reynolds gave $200,000 to the
cause, making him the biggest donor to the opposition
campaign as of Dec. 31, according to campaign finance
documents filed with the state on Thursday. He said he’s
concerned the surcharge could nick as many as 65,000
taxpayers over a nine-year period.
“If implemented, the Fair Share Amendment would have
wide-ranging negative impact on thousands of small
businesses, retirees, home sellers, and others — many as a
result of a one-time event,” Reynolds said in a statement.
“In addition, the Fair Share Amendment would likely be an
economic drag on the state and send a signal that
Massachusetts is not a business-friendly destination.”
Other big donors included real estate investor Nino Micozzi,
who gave $100,000. Data center owner Jeffrey Markley kicked
in $50,000, and venture capitalist Mark Casady gave $25,000.
National Development managing partner Brian Kavoogian, one
of three businessmen who made $10,000 donations last month,
said he worries the proposal would lead to job and
population losses, including to income-tax-free New
Hampshire.
The biggest donation to Raise Up, which received $260,000 in
2021, came from a businessperson as well — albeit one from
out-of-state. Raise Up received $100,000 in October from
Omidyar Network, a California-based philanthropic investment
firm affiliated with eBay founder Pierre Omidyar. Other
large gifts came from union groups such as the Massachusetts
AFL-CIO, which contributed $65,000, and the Massachusetts
Teachers Association, which donated $45,000. The campaign’s
biggest expense last year was the nearly $150,000 it spent
with Field First, a Boston-based community organizing firm.
“Raise Up has built an unprecedented grass roots
organization that has won historic victories for the state,”
spokesman Steve Crawford said. “We’re focused on speaking to
voters in communities where they live. What we’re hearing is
that people understand that recovering from the COVID
pandemic is going to take many years of significant state
investment, [including] fixing our schools, fixing our
roads.”
The opponents will highlight the impact on small businesses,
including those whose profits get taxed as personal income
or whose owners might want to sell. That impact is why
Carleton Burr, of Burr Brothers Boats in Marion, gave $1,000
and spoke at a Mass. Fiscal Alliance virtual event on
Thursday.
“If my family ever decides to sell this boatyard, having put
our life into it, we will be paying an extra 4 percent, that
will reduce our retirement income,” Burr said. “I don’t
think people realize the extent to which this tax is a
penalty to small business.”
State House News
Service
Thursday, January 27, 2022
Surtax Opponents Take Summary Case To SJC
Say High Court Needs To Police Summaries For Accuracy,
Fairness
By Colin A. Young
The campaign over the proposed Constitutional amendment to
add a surtax on household income over $1 million took a step
into the courtroom Thursday as opponents filed suit to
influence how the proposal will be summarized for voters.
Opponents of the so-called millionaires tax want to see how
the attorney general plans to describe the question to
voters in pre-election materials and on the November ballot,
and on Thursday filed a preemptive lawsuit with the Supreme
Judicial Court asking justices to ensure the summary
includes a cautionary statement.
The complaint was brought by Massachusetts High Tech Council
President Chris Anderson and 54 other voters, including
Reps. Nick Boldyga, David DeCoste, Colleen Garry and Marc
Lombardo, Christopher Carlozzi of the Massachusetts chapter
of the National Federation of Independent Business, Paul
Craney of Massachusetts Fiscal Alliance, Jim Stergios of the
Pioneer Institute and Eileen McAnneny of the Massachusetts
Taxpayers Foundation.
It
names Attorney General Maura Healey and Secretary of State
William Galvin, two Democrats with roles in the process, as
defendants in their elected capacities.
Healey has not released the summary of the proposal that
would shift Massachusetts away from its flat income tax rate
structure and her office did not respond Thursday to
inquiries about its status. If the amendment is approved by
voters, the first $1 million of household income would still
be taxed at the current 5 percent tax rate and household
income above that first $1 million would be taxed at an
effective rate of 9 percent.
While state law only requires that Galvin officially publish
the summaries by the second Wednesday of May, the Supreme
Judicial Court has previously asked that the attorney
general's office make them available early enough so that
opponents can launch legal challenges. The court said it
prefers a Feb. 1 deadline to avoid "a mad scramble" of
trying to resolve challenges before voter information
booklets are sent to the printer, often in July.
The plaintiffs said that because there is no summary yet
available and Feb. 1 is next week they "had no choice but to
ask the SJC to exercise its authority to require a fair,
accurate description" of the proposal be provided to voters
and printed on the November ballot itself.
The suit specifically addresses one of the opponents' main
arguments -- that the money raised by the surtax would not
be restricted to use for transportation and education as
supporters claim and that it may not result in actual
increases in spending in those areas. It requests that the
SJC order that the ballot materials tell voters that "the
Legislature could choose to reduce funding on education and
transportation from other sources and replace it with the
new surtax revenue because the proposed amendment does not
require otherwise" and order that Healey and Galvin not put
the question on the 2022 ballot unless the summary reflects
that.
"Here is the bottom line," Anderson said. "On five previous
occasions, Massachusetts citizens have considered ballot
initiatives that would empower the Legislature to establish
a graduated income tax and the citizens rejected all five.
This sixth attempt should not mislead voters through an
unfair and inaccurate summary into believing that the
Amendment will guarantee additional funding for either
transportation or education."
Sen. Jason Lewis, a co-sponsor of the amendment in the
Legislature, told the News Service two weeks ago that he
"fully expects" future Legislatures to spend the additional
funding on education and transportation.
"The language of the ballot question, which again, will be
in our state Constitution, says very clearly that this money
needs to be spent only on education and transportation," he
said. "I think that gives very clear direction to future
Legislatures and governors."
Rep. Garry, a Dracut Democrat who has repeatedly voted
against the Constitutional amendment as it worked its way
through the Legislature, noted that even if current
lawmakers say they intend to use the additional money on
transportation and education, "future legislators may change
their minds."
"Voters need to be accurately informed that it is only the
Legislature that can allocate how tax money is spent," Garry
said. She added, "I hope the SJC agrees with us on the
importance of providing accurate information to the public
voting in November's election."
Surtax opponents, especially those associated with the Mass.
High Tech Council, were successful in getting the SJC to
toss the surtax proposal from the 2018 ballot. In June of
that year, the SJC ruled that the question improperly mixed
two different spending priorities and a major change in tax
policy -- a no-no for initiative petitions. Democrats have
gotten around that rule this year by having legislators, who
are not bound by the same restrictions on initiative
petitions, file the petition directly as a legislative
amendment.
In June 2019, House and Senate members voted 147-48 in favor
of the amendment and voted 159-41 in favor of it again in
June 2021, clearing the way for voters to decide on the 2022
statewide ballot whether to impose the new 4 percent surtax
on annual household income over $1 million.
While surtax opponents have been busy making their case
against the policy, the Raise Up Massachusetts organization
that supports the surtax has been mostly quiet. A poll
released by the MassINC Polling Group this month showed that
70 percent of registered voters support the effort to amend
the Constitution.
"Massachusetts families are struggling just to stay ahead in
the ongoing COVID pandemic, but instead of proposing real
solutions our opponents are playing word games in the courts
to confuse voters," Raise Up said in a statement. "It won't
work. People know the rich got richer during the COVID
pandemic and we expect them to pay their fair share."
The surtax would add about $1.3 billion in revenue for the
state, according to a report published this month by the
Center for State Policy Analysis at Tufts University,
revenues that would be worked into a state budget that
currently totals about $47.6 billion.
The Boston
Herald
Thursday, January 27, 2022
Millionaire tax opponents file SJC action to prevent
‘misleading’ of voters
By Erin Tiernan
Opponents of a so-called millionaire tax slated for the
November ballot have filed a complaint with the state’s
highest court over potentially “misleading” language state
election officials might use to sway voters.
“Here is the bottom line,” Massachusetts High Tech Council
President Chris Anderson said. “On five previous occasions,
Massachusetts citizens have considered ballot initiatives
that would empower the Legislature to establish a graduated
income tax and the citizens rejected all five. This sixth
attempt should not mislead voters through an unfair and
inaccurate summary into believing that the Amendment will
guarantee additional funding for either transportation or
education.”
Anderson and a mix of 54 state representatives, business
groups and government finance watchdogs want to compel
election officials to inform voters that the money raised by
the surtax would not be restricted to use for transportation
and education — as supporters claim.
The complaint requests the SJC order that ballot materials
tell voters that “the Legislature could choose to reduce
funding on education and transportation from other sources
and replace it with the new surtax revenue because the
proposed amendment does not require otherwise.”
The proposal is expected to generate about $1.3 billion
annually, according to recent studies.
Reps. Nick Boldyga, David DeCoste, Colleen Garry and Marc
Lombardo; Christopher Carlozzi of the Massachusetts chapter
of the National Federation of Independent Business, Paul
Craney of Massachusetts Fiscal Alliance, Jim Stergios of the
Pioneer Institute and Eileen McAnneny of the Massachusetts
Taxpayers Foundation, also signed onto the complaint that
names election officials Attorney General Maura Healey and
Secretary of State William Galvin as defendants in their
elected capacities.
Healey has yet to release a summary of the proposal that
would add a 4% surtax on all income over $1 million.
Currently, all income is taxed at a flat 5% rate, the wealth
tax means any household income above that first $1 million
would be taxed at an effective rate of 9%.
While state law only requires the secretary of state
officially publish summaries by the second Wednesday of May,
the Supreme Judicial Court has previously asked that the
attorney general’s office make them available by Feb. 1 to
avoid “a mad scramble” of trying to resolve challenges
before voter information booklets are sent to the printer,
often in July.
Opponents maintain they “had no choice but to ask the SJC to
exercise its authority to require a fair, accurate
description” of the millionaire tax proposal be provided to
voters and printed on the November ballot with no such
summary yet available and Feb. 1 fast approaching.
Pioneer
Institute
Thursday, January 27, 2022
Pioneer Supports Legal Challenge to Misleading Tax Ballot
Language, Releases Video
Summary language fails to point out
that new surtax revenue could just replace cuts, not
increase overall education and transportation spending
BOSTON – Pioneer Institute supports the diverse and
bipartisan group that filed a complaint with the
Massachusetts Supreme Judicial Court (SJC) challenging the
summary language meant to provide an accurate description of
the tax hike amendment to voters. The language was approved
by the Attorney General and Secretary of the Commonwealth
when a similar amendment was proposed in 2018, and unless
the lawsuit is successful, will likely appear on the
Massachusetts ballot in November.
The amendment to the state Constitution would add an
additional 4 percent tax on all annual income over $1
million. The proposed summary language put forward by the
Attorney General and the Secretary states that the revenue
from the tax will be dedicated to fund public education and
transportation and, in doing so, neglects to disclose that
while receipts from the tax would be directed to those
areas, the legislature would be free to redirect current
funding for public education and transportation to other
priorities. It does not require an additional cent to be
spent on our schools, roads, bridges and public
transportation.
“Proponents may willfully mislabel this tax, but the AG and
the Secretary should not,” said Jim Stergios, executive
director of Pioneer Institute. “In 2018, even the Attorney
General’s office, which was defending the proposal before
the SJC argued that it was ‘just a tax’ – it wouldn’t
necessarily increase spending on transportation and
education.”
A 2018 effort to bring the amendment before voters ended
when the SJC found that the proposed amendment violated a
ban on citizen-initiated ballot initiatives that combine
unrelated subjects; in this case a new graduated income tax
and a directive about where revenue from the tax would be
spent. That ban does not apply to constitutional amendments
proposed by the legislature, and in 2019 and 2021 the
legislature voted to put the tax amendment on the November
2022 ballot.
Pioneer today is also releasing a video from arguments
presented during the 2018 oral arguments. In it, the lawyer
arguing the Attorney General’s case in support of the tax
amendment explicitly agrees, in response to a question from
the late SJC Chief Justice Ralph Gants, that the amendment
might not result in any overall increase in education and
transportation.
Moreover, Attorney General Healey’s own brief from the 2018
case reads, “the Legislature could choose to reduce spending
in specified budget categories from other sources and
replace it with new surtax revenue.”
Today’s complaint is based on the argument made in the 2021
Pioneer Institute White Paper, “The
Graduated Income Tax Amendment – A Shell Game?“
The study was authored by Kevin Martin, the attorney who
prepared and filed today’s complaint for the plaintiffs.
“It’s hard to dismiss the possibility of legislators simply
using the surtax money to backfill education and
transportation cuts when they twice rejected amendments that
would have required that the revenue be over and above
what’s already been appropriated,” said Pioneer Research
Director and former Massachusetts Inspector General Greg
Sullivan.
During their debates on the proposed ballot measure,
legislators made their intentions crystal clear regarding
how new tax revenues will be spent by rejecting two
amendments that would have required that the new revenues be
invested in addition to existing expenditures. Both
amendments were defeated – one by a 154-39 vote, the other
by a 156-40 margin.
“As an employer, I’m most concerned about the devastating
impact this tax hike would have on businesses and
re-investment in growth,” said Cape Cod Lumber CEO Harvey
Hurvitz. “But the thing that’s troubling about it is that
it’s not even about education and transportation
investments.”
Pioneer Institute
January 27, 2022
The Tax Trap
The Boston
Globe
Tuesday, January 25, 2022
Governor Charlie Baker says he’ll pursue tax breaks for
renters,
seniors, parents, and low-income workers
By Matt Stout and Emma Platoff
Governor Charlie Baker, a second-term Republican who first
ran more than a decade ago on calls to cut Massachusetts
residents’ taxes, on Tuesday said he will pursue a
wide-ranging package of tax breaks for low-income workers,
renters, and seniors that could come to define his final
months in office.
Baker announced the proposals during his last State of the
Commonwealth address, using the widely televised speech to
implore the Democratic-dominated Legislature to buy into
changes he said are about making the state’s tax code fairer
and enhancing its competitive position.
“We’ve asked the people of Massachusetts to do a lot these
past few years,” Baker told hundreds of attendees who
gathered at the Hynes Convention Center. “It’s time to
invest in Massachusetts families, to give them back some of
the tax revenue that they created through their hard work.”
Among the most dramatic-sounding proposals he sketched
Tuesday was one to “eliminate income taxes” for the
lowest-paid 230,000 taxpayers in the state, framing it as a
way to soften the hit on those stretching to pay for
necessities such as food, housing, and transportation in the
face of rising prices.
He also said he’d seek to double the tax break people can
claim on children and dependents; offer renters a “bigger
tax break” on their monthly payments; and give seniors a
break on property taxes and “make our estate tax more
competitive with the rest of the country.”
Baker’s pronouncements were short on specifics, making it
impossible to determine how much the changes could save
residents. He intends to file detailed proposals as part of
his final state budget plan on Wednesday.
But on their face, they appear to collectively represent the
most sweeping tax changes Baker has pursued since he took
office in January 2015, and if passed, they could frame both
his final year and the legacy he wants to leave as a
Republican governor who campaigned on holding the line on
spending in a deep-blue state.
Baker said in December that he would not seek an
unprecedented third consecutive four-year term.
As in past addresses, Baker laced Tuesday’s speech with
appeals for bipartisanship, knowing he’ll need approval from
the Legislature to realize the plans.
Asked about their appetite for the tax breaks Baker
proposed, Democratic legislative leaders were noncommittal
Tuesday, saying they would wait to see the details.
“We realize that people are still hurting from COVID, so
we’ll take a hard look,” Senate President Karen E. Spilka
said.
House Speaker Ronald J. Mariano said the Legislature has to
make sure that any tax breaks target those who need it most.
“The devil is always in the detail in these things,” he
said.
Baker also advocated for a batch of public safety bills he’s
repeatedly filed, including one to outlaw so-called revenge
porn or the nonconsensual sharing of sexually explicit
photos or videos. And he cited a desire to push legislation
addressing the treatment of mental health in the state’s
health care system, a priority he shares with many
legislators.
It’s his tax proposals, however, that will likely dominate
discussion about state spending in the days and weeks ahead.
Baker hasn’t sought permanent, broad-based tax cuts during
his seven years in office, despite once supporting slicing
the sales tax from 6.25 percent to 5 percent — as an
unsuccessful candidate for governor in 2010 — and voicing
support for reducing it during his 2018 reelection campaign.
He last year pitched a two-month sales tax “holiday” to give
residents a New Hampshire-style break on most consumer goods
while the state basked in billions of dollars in unexpected
revenue. But the idea died in the Legislature almost as soon
as Baker proposed it.
His new proposals come as the state is facing the potential
for another hefty surplus by the end of the fiscal year, and
as inflation squeezes people’s spending power even further.
Consumer prices nationally have surged 7 percent over the
past year, the fastest pace of inflation in nearly 40 years.
Massachusetts is also already among the costliest states in
the country for child care or to retire, and prices in the
greater Boston housing market set a new record last year.
Baker said his proposals are a bid to not only help those
struggling, but encourage people to stay in the state. “The
pandemic has proven that we now live in a new world where
people have more flexibility about where they live and
work,” he said.
He’s now asking Democratic leaders for buy-in just months
after they voted to advance a measure to the November ballot
that would raise taxes on the state’s wealthiest residents
and spur billions in more revenue.
There was also an emotional emphasis in Tuesday’s address,
during which Baker waxed about the seven-plus years since he
became Massachusetts’ 72nd governor on a chilly January day
in 2015.
He claimed victories in fixing the state’s Health Connector
and touted the state’s embrace of offshore wind. He also
said his administration “rescued a bankrupt and
unaccountable” MBTA following the devastating winter of 2015
— an assertion Democrats and transit advocates may challenge
given the T’s continued problems.
Baker also underscored that he accomplished many things with
Democratic legislators’ help. And he took the opportunity to
go off-script. Greeting US Labor Secretary Martin J. Walsh,
Boston’s former Democratic mayor with whom he forged a close
working relationship, Baker said, “I miss you, man.”
And as he began to recite the administration’s
accomplishments, he warned a laughing audience: “It’s a long
list, folks.”
But like most of the last two years, Baker’s address was
consumed at times by the pandemic. He has faced questions
about how he intends to navigate the ever-prevalent virus,
both in the interim as Omicron continues to rack the state’s
hospitals and before handing the reins of the state to his
successor less than 12 months from now.
Baker described the state and his administration as being
nimble over the last 22 months, navigating unprecedented
challenges to limit the virus’s impact and eventually get
more than 80 percent of eligible residents fully vaccinated.
He said the state is a “national leader,” which prompted a
standing ovation from the crowd of political luminaries.
“Together, we set the course for a comeback — and it’s
working,” Baker said.
The confines of the speech also veered from tradition,
shifting from the Massachusetts House chamber to the
downtown convention center in an effort to safely house the
hundreds of people in attendance amid the pandemic. It also
moved because the State House remains closed to the public
nearly two years after legislative leaders shuttered it at
the onset of the pandemic.
After Baker’s address, hundreds of attendees gathered for a
reception, mingling at the bar, over a selection of passed
hors d’oeuvres, and at buffet stations offering a selection
of sliders, as well as three varieties of mac and cheese.
The response to Baker’s speech from Democrats seeking to
succeed him was muted. Senator Sonia Chang-Díaz, a Jamaica
Plain Democrat, said Baker did not show “urgency” in his
speech, particularly in addressing the pandemic.
Danielle Allen, a Harvard professor and Cambridge Democrat,
said it was “good to see” Baker propose the tax breaks, but
that there was still more to do to lower the cost of living
for residents.
And Attorney General Maura Healey offered no critiques,
saying she was “honored” to be at the address and to hear
Baker’s “message of collaboration and resilience on the part
of so many across Massachusetts.”
Baker, as he has in nearly every State of the Commonwealth
speech, said it’s collaboration and trust that matter,
reminding those in the room that at a time when much of the
public dialogue is designed “to manipulate facts and to pull
people apart,” political leaders in Massachusetts have found
ways to work together.
“Trust,” he said, “is where possibility in public life comes
from.”
State House News
Service
Wednesday, January 26, 2022
Baker Tax Cuts Would Span Income Brackets
Estate, Cap Gains Proposals Designed To Make Mass. More
Competitive
By Katie Lannan
Gov. Charlie Baker, in his eighth and final annual budget,
is seeking to pair a modest increase in state spending with
$693 million in tax policy changes he said are aimed at
providing relief to people who need it and ensuring the
state's competitive position in the remote work era.
Baker on Wednesday filed a $48.5 billion spending plan for
fiscal 2023, which begins on July 1, alongside legislation
proposing tax breaks for renters, seniors, parents and
low-income workers. The package also features changes to the
way Massachusetts handles estate and capital gains taxes.
"The cost of just about everything is going up, and these
tax breaks would help offset some of those costs for
families," he said. "From a fiscal point of view,
Massachusetts is in a very strong financial position and
able to offer this tax relief while continuing to make big
investments in our people, our schools and our communities."
Among notable features in Baker's budget bill (H 2) is a
major boost to housing programs. He included $80 million for
the Residential Assistance for Families in Transition
program, a $58 million increase over fiscal 2022, and $56.9
million for HomeBASE Household Assistance, for a $30.9
million increase.
The governor's tax plan would cut the tax rate on short-term
capital gains from its current 12 percent to 5 percent and
would make two changes to the estate tax.
The threshold at which the estate tax kicks in would double
to $2 million, and while the current tax applies to the full
value of estates over $1 million, Baker's proposal would tax
only the amount above $2 million.
The Massachusetts Taxpayers Foundation, in its budget
analysis, described Massachusetts as an "outlier among the
states" on the estate tax, noting that the Bay State and
Oregon's $1 million taxation thresholds are the lowest of
the 12 states with estate taxes.
Baker's budget-filing message describes the 12 percent tax
on short-term capital gains as "markedly uncompetitive
compared to the rest of the country" and says that a 5
percent rate would treat that money the same as other income
and align Massachusetts with other states. In 2019, more
than 150,000 filers paid the tax, more than 61,000 of whom
had incomes below $112,000, according to the governor's
budget.
Additionally, Baker wants to double tax credits for
dependent and child care, double the allowable maximum for
the senior circuit breaker property tax credit and increase
the cap on deductions for rent payments from $3,000 to
$5,000.
The Republican governor is also looking to raise the income
level at which people are required to file taxes, a move the
Executive Office of Administration of Finance says would
affect about 234,000 low-income taxpayers and cost the state
$41 million on an annualized basis.
Currently, Massachusetts residents must file an income tax
return if they earn $8,000 as a single filer, $14,400 as a
head of household, or $16,400 as joint filers, according to
Baker's budget office. Baker's plan would raise the no-tax
threshold to align with the federal level, bringing it to
$12,400 for single filers, $18,650 for heads of households,
and $24,800 for joint filers.
Baker teased most of the tax breaks in his Tuesday night
State of the Commonwealth address, calling for the state to
"invest in Massachusetts families."
In an election year, House and Senate Democrats will decide
the fate of Baker's tax policy proposals as they assemble a
budget over the winter and spring. The blend of policies
would benefit some of the state's lowest income-workers and
offer relief to wealthier residents. The debate will play
out as campaigning heats up for and against a ballot
question that would impose a surtax on income over $1
million.
The lame-duck governor said lawmakers have filed a number of
bills that are similar to the measures in his plan, and that
as he was leaving the Hynes Convention Center after
Tuesday's speech, "several folks in the Legislature" tapped
him on the shoulder to point out they had a related bill.
"I think there's a lot of interest in some of these
proposals because they are designed to do two very simple
things -- one is to provide some tax relief to some people
who I think most people would agree would benefit from it,
and secondly, to deal with some very significant issues that
play into our competitive position at a point in time when a
lot of people are figuring out that they can live and work
practically anywhere," Baker said. "And there are a lot of
Dems and Republicans who support a variety of these
proposals, some different than ours but basically,
conceptually, I think there's a fair amount of interest in
this."
He said the estate tax question is of particular interest on
Cape Cod, where there are many seasonal residents.
With Baker not running for reelection, the fiscal 2023
budget will be his last one as governor. He noted during the
press conference that, counting the years he served as
administration and finance secretary under Govs. Bill Weld
and Paul Cellucci, it is his 12th state spending plan.
Baker's budget chief, Mike Heffernan, said that the
administration had crafted, "for us nerds at A and F, a
really exciting budget where we're fully funding lots of
initiatives and creating a number of new ones."
Heffernan said the budget does "not sacrifice services and
programs for this $700 million" in tax relief.
"Not at all," he said. "As a matter of fact, we put a lot
into this budget. We're doing a lot administratively, we're
doing a lot programmatically, better and bigger than we have
done before. There are no broad-based tax increases
somewhere else in the budget, there are no hidden cuts in
this budget to make this affordable."
The Massachusetts Budget and Policy Center said Baker's
estate and capital gains tax changes would cost the state
$348 million annually, cutting revenue "at a time when we
need it to sustain the state beyond the pandemic."
MassBudget President Marie-Frances Rivera said federal
funding during the pandemic has been "critical for meeting
the state's unmet needs" in areas like housing, education,
health care and transportation.
"However, these one-time federal funds will not continue
indefinitely, and we will need to rely on ongoing revenues
to meet our ongoing needs," she said. "The wealthiest
individuals in our state shouldn't be able to enjoy huge
windfalls during the pandemic while students, teachers,
small business owners, renters, and small landlords wait for
relief from this crisis."
House Minority Leader Brad Jones said he was "pleased" with
Baker's tax plan. The North Reading Republican said Baker
"delivered a fiscally sound and responsible budget proposal"
that will serve as "a strong starting point on which the
House and Senate can now build their own spending proposals
for the upcoming fiscal year."
On the policy front, Baker's budget includes sections that
would increase the per-pupil facilities component of charter
school reimbursements, create a new, 24/7 behavioral health
help line, and expand eligibility for the Medicare Savings
Program.
Baker is also refiling outside sections that have failed to
gain traction with the Legislature, including proposals to
allow Lottery products to be purchased with debit cards and
to allow MassHealth to directly negotiate rebate agreements
for drugs not subject to the Medicaid Drug Rebate Program.
The Mass. Taxpayers Foundation said Baker's budget assumes
$30 million in revenue from cashless Lottery, along with
another $35 million from taxes on sports betting. The House
has voted to legalize sports wagering but that bill has been
hung up in the Senate since last summer.
Baker is recommending a $485 million hike in Chapter 70 aid
to local schools, bringing that account up to $5.989
billion. Including Chapter 70 and other money, Baker's
office said the budget includes $591.4 million to fund the
next installment of the multi-year school finance reform
known as the Student Opportunity Act.
Lt. Gov. Karyn Polito previously announced a $31.5 million
increase in unrestricted local government aid.
The budget includes $802 million for the Department of Early
Education and Care, $440 million for workforce development,
$115 million to expand outpatient and urgent behavioral
health services, $10 million in grants to local health
departments to support their COVID-19 response, $94 million
for regional transit authorities, $543 million for addiction
prevention and treatment, and $123 million for sexual
assualt and domestic violence services.
State House News
Service
Friday, January 28, 2022
Weekly Roundup - Don’t Miss Me Yet
Recap and analysis of the week in state government
By Matt Murphy
Geoff Diehl would have used the word "resilient." Sen. Sonia
Chang-Diaz didn't appreciate the shine the governor put on
things. And Attorney General Maura thought it was, well,
just "terrific."
But let's face it. No matter what one thinks of the
direction the state is headed, did anyone think Gov. Charlie
Baker, in his final State of the Commonwealth address, would
say that the state of the Commonwealth was anything other
than "strong." That's what governors always say.
Baker delivered what could be his last major televised
speech as the 72nd governor of Massachusetts on Tuesday
night, and used the time and focus on his words to begin to
write the epilogue on his two terms in office.
"If we've tried to do anything over the past seven years,
we've tried to build trust. Others can debate whether we've
succeeded or not. I believe we have. And I believe it shows
in the work we've done during good times and difficult ones
over the past seven years," Baker said from the unusual
setting of the Hynes Convention Center.
But that work is not done. Baker prodded the Legislature to
stop dragging its feet on making "revenge porn" a crime in
Massachusetts, and urged them to consider his proposal to
rethink the types of accused criminals allowed to "walk
free" while awaiting trial. Both ideas have been percolating
since 2018.
The governor also filed his final annual budget proposal, a
$45.8 billion spending plan that cuts taxes by close to $700
million, with relief for low-income residents, seniors,
renters and families with children, and proposed alterations
to the estate tax and short-term capital gains rate.
Baker once ran for governor, unsuccessfully, on a platform
that included reducing the sales, income and corporate tax
rates in Massachusetts all to 5 percent. That plan was gone
by the time he reinvented himself as a successful candidate
in 2014, and he hasn't often returned to the idea of
sweeping tax cuts that might have been expected from the
business-friendly Republican.
Until now.
Baker is daring Democrats on Beacon Hill to say no in an
election year to a package of tax cuts that some might
consider - yes, we'll say it - progressive. House Speaker
Ron Mariano and Senate President Karen Spilka were
predictably non-committal, but it will be interesting to see
in the coming weeks where this debate moves. Ben Downing, no
longer a candidate for governor, posted a lengthy take on
social media describing the tax cuts as short-sighted.
No, the cuts won't help the wealthy. But Downing argues that
the minimum-wage worker would be better off with that money
invested in lowering the cost of services like child care,
rather than just having a few extra bucks in their pocket.
Chris Doughty, the founder of Wrentham-based metal
manufacturer Capstan Atlantic, has more than a few bills in
his wallet, shelling out $500,000 in seed money this week to
jumpstart his Republican campaign for governor. Doughty will
provide competition for Diehl in the GOP primary, fashioning
himself in the mold of Romney or Baker as the moderate,
business-minded candidate.
While Doughty is the newcomer on the block, Secretary of
State William Galvin is anything but. The Brighton Democrat
announced this week that he would go for an eighth term as
the state's chief election officer, to go along with his 12
years in the House.
Galvin will have competition on the Democratic side from
lawyer and Boston NAACP President Tanisha Sullivan, but
there won't be much debate between the two on same-day voter
registration.
Galvin and Sullivan both want to see Massachusetts scrap its
20-day pre-election voter registration blackout period and
allow people to register and cast their ballots in-person in
the days leading up to an election and on election day.
The House, however, is not ready to make that leap, and
voted Thursday to the dismay of advocates and elected
leaders like U.S. Rep. Ayanna Pressley to task Galvin (or
whoever occupies his office) to once again study the
potential cost and impact of such a policy.
The 93-64 vote - close by House standards - in favor of
further study blocked up-or-down votes on same-day
registration, and a more limited Election Day registration
proposal offered by Rep. Nika Elugardo. That vote came in
spite of town clerks backing the latter, the same clerks
whose concerns over the more expansive same-day registration
proposal were used by House leaders as the rationale for
more study.
The lengthy and intense debate over voter registration
reform this week didn't stop the House from overwhelmingly
backing other changes to improve voter access, including
mail-in voting, expanded in-person early voting and
jail-based voting support.
The House version of the VOTES Act will now be pitted
against one passed by the Senate in October (which included
same-day registration) as the debate moves behind closed
doors and into conference committee.
The two branches will probably have an easier time
reconciling a COVID-19 relief spending bill after the Senate
this week padded the legislation with an extra $20 million
for masks, testing and vaccinations, bringing its total to
$75 million.
Baker said he believes Massachusetts is on the "back side"
of the omicron surge as case rates and hospitalizations
begin to tick down, but the virus is still circulating
widely. With that in mind, Boston Mayor Michelle Wu said she
hopes the city's vaccination mandate to enter restaurants
and other venues will be a short-term policy, but one she's
not willing to backtrack on yet.
Wu has faced enormous pushback over the policy, as well as
the vaccination requirement for city employees and she was
dealt a double-blow this week when Boston Police patrolmen's
union rejected a proposed settlement offer and an appeals
court judge temporarily halted the city's enforcement of a
vaccine mandate as a condition of employment.
Vaccination status continues to be a divisive issue at the
state and municipal level, but Senate President Karen Spilka
and House Speaker Ron Mariano may have their eye on a new
mandate for the public to enter the State House as they
continue to weigh when and how to reopen the building.
Spilka said she believes now that the building should be
open, and could be willing to move in that direction as soon
as next month.
But while the public is not allowed to enter the "People's
House," business proceeds in the building where the
Governor's Council hosted a hearing this week to consider
Baker's recommendation that the first degree murder sentence
of 54-year-old Thomas Koonce be commuted to second-degree
murder, making him eligible for parole.
Koonce told the council he takes "full responsibility" for
shooting and killing a New Bedford man in 1987, and would
spend the remaining free years of his life atoning to
society for his actions. The council is expected to vote on
Feb. 16.
Mass General Brigham, the largest health care system in the
state as well as one of the most highly-regarded and
highest-priced, also has some making up to do, according to
the Health Policy Commission. The hospital system received a
new distinction this week when it became the first entity to
be put on a performance improvement plan by the HPC, which
gave MGB until March to outline how it will tackle what HPC
Chair Stuart Altman deemed a "spending problem."
Coupled with the release of the HPC's findings that MGB's
expansion plans could add millions to the state's overall
health care spending and siphon patients and revenue from
other providers, it was a strong rebuke against the health
care giant. But it's too soon to tell what the consequences
may be.
The former Partners Healthcare is not new to state scrutiny,
and the unknown variable is how effective the newly deployed
PIP process will be towards its goal of generating cost
savings.
On the expansion front, Mass General Brigham is pushing back
on the HPC analysis and asking Department of Public Health
regulators not to give that greater weight than other
submissions as they decide whether to approve the project.
Tired, yet? Us too. Bring on the snow.
— Katie Lannan contributed
reporting and analysis
State House News
Service
Friday, January 28, 2022
Advances - Week of Jan. 30, 2022
Wednesday, Feb. 2, 2022
"JR10 DAY" BRINGS LEGISLATIVE DEADLINE: Most joint
legislative committees must decide by Wednesday whether to
advance or spike bills under their purview, a biennial
reporting deadline enshrined in Joint Rule 10.
The day sometimes brings a flurry of activity as lawmakers
and advocates survey which proposals remain in the mix,
though the Legislature tends to deploy extension orders to
give itself more time past the original deadline. Bills that
earn favorable reports will advance in the lawmaking
process, though clearing one committee does not guarantee a
measure will emerge for a vote in either chamber, while
adverse reports usually kill legislation until the next
two-year session....
There's often much fanfare about the biennial bill-reporting
deadline enshrined in Joint Rule 10, but like most other
legislative rules, it's really advisory in nature. Wednesday
is the day that most joint committees are called upon to
make up-or-down decisions on bills they've been reviewing
for almost a year, but there are workarounds available to
committees, namely extension orders, that enable them to
routinely put off decisions and hold on to bills for as long
as they wish.
Sen. Sonia Chang-Diaz, also a candidate for governor this
year, posted a Joint Rule 10 Day explainer Friday on
Twitter. She laid out the four possible outcomes for a bill
-- an adverse report or rejection, an extension order, a
study order ("a gentler rejection than an adverse report")
or a favorable report.
"This session, more than 7,000 bills were filed before the
Legislature. A favorable report is how a bill can go from
being one of the thousands to one of a small fraction that
gets talked about on the news or gets debated or receives a
floor vote or gets passed into law," she said. "A favorable
report doesn't guarantee those things will happen, but those
things don't happen without a favorable report."
And for supporters of bills that do escape joint committees
with favorable reports, another committee awaits, typically
Ways and Means, which is often a burial ground for
legislative proposals. Ultimately, bills that make it
through Ways and Means do so with a fair amount of consensus
behind them and usually end up getting floor votes in the
branches.
But those bills don't move out of Ways and Means without the
support of the top tier of Democrats who run the House and
Senate. That's where House Speaker Ronald Mariano and Senate
President Karen Spilka exercise their power by crafting the
formal session agendas, usually week by week, that dictate
the Legislature's fiscal and policy agendas.
Early in 2022, legislators in both branches have coalesced
around spending bills to address the COVID-19 pandemic (H
4345 / S 2622) and voting and election reform bills (H 4359
/S 2554), which could land next week before six-person
conference committees for resolution.
February's dawning on Tuesday means there are six months
remaining to hold formal sessions this year. It's also the
time of year when one bill, the annual state budget (H 2),
moves on to center stage, demanding the attention of
lawmakers and distracting them from other legislation.
Legislators will vet Gov. Charlie Baker's $48.5 billion
fiscal 2023 budget with a series of public hearings. The
budget is due July 1, but the historical timetable in which
the House debates its plan in April and the Senate in May
has often led to the budget not getting done on time and
then colliding with other priorities in July, leading to an
overloaded legislative jumble.
Associated
Press
December 9, 1986
Economy Allows Massachusetts to Repeal Surtax
By James Simond
BOSTON (AP) - Gov. Michael S. Dukakis signed a bill Tuesday
repealing the state’s 11-year-old surtax, ending a levy that
helped the commonwealth recover from a budget deficit in the
mid-1970s but later became a symbol of its reputation as ″Taxachusetts.″
The $135 million tax cut also removed a political millstone
from Dukakis, who in his 1974 campaign had promised no new
taxes. After winning the election and inheriting a $500
million budget deficit, he approved the surtax as part of
the biggest tax increase in state history.
″I never considered it a monkey on my back. I thought it was
an unfortunate state of affairs that forced us to approve it
at the time,″ said Dukakis, who blamed the deficit and the
need for the surtax on the liberal spending policies of his
Republican predecessor, Gov. Francis Sargent.
The strength of the Massachusetts economy helped produce a
$540 million budget surplus for fiscal 1986, allowing the
state to cut taxes and aiding Dukakis in rolling to
re-election by a 69-31 margin last month.
The surtax initially forced individuals to pay an extra
$7.50 for every $100 paid in state income taxes. Due to the
repeal, individuals will now save an average of roughly $100
when they file their 1986 state income tax forms early next
year.
It took the Legislature three attempts, and some outside
pressure from a ballot question, to get rid of the tax.
Citizens for Limited Taxation, a group that won
approval of tax-limiting Proposition 2½
in 1980, gathered more than 100,000 signatures for a 1986
ballot question that would eliminate the surtax in two years
and impose a strict limit on tax collections.
After the referendum qualified for the ballot, Dukakis and
the Legislature agreed to a two-year phaseout of the levy.
Half of the tax was eliminated in January 1986, thereby
reducing it to 3.75 percent, and the remainder was due to be
eliminated on Jan. 1, 1987.
In October, state officials then agreed to speed up the
repeal, making it retroactive to Jan. 1, 1986, as part of a
tax package designed to undercut support for strict tax cap
that was still on the ballot.
Voters on Nov. 4 decided to approve the tougher tax cap
referendum, but by doing so they also reinstated the tax
until Jan. 1, 1987.
Dukakis and the Legislature then agreed to pass still
another bill that repeals the surtax retroactive to last
Jan. 1, but does not change the tax cap.
The Massachusetts High Technology Council, which has lobbied
for surtax repeal since 1978, had used the surcharge as a
symbol of the commonwealth’s traditionally high tax rates.
Ballotpedia
Massachusetts Repeal Surtax, Question 3 (1986)
State House News Service
ADVANCES (Nov. 10, 1986)
https://www.statehousenews.com/news/19868
One ballot question, that won voter approval by a 10 percent
margin, will likely be the subject of much discussion this
week. While the House and Senate are not due back into
session until later this month, key lawmakers and the
Governor's staff will be talking about Question 3,
which places on state government a tax cap that is more
restrictive than a legislative limit passed some 10 days
before the election.
The new voter-approved law,
written by Citizens for Limited Taxation (CLT), also
provides for a two-year phaseout of the 7.5 percent income
surtax, while the bill signed in late October by Dukakis
called for total repeal this year of that levy. The Governor
has said he will press for reinstatement of the total repeal
and Rep. John Flood (D-Canton), chairman of the Taxation
Committee, has already filed legislation to accomplish that
repeal.
CLT endorses the complete
elimination of the surcharge but has warned that state
officials should not tamper with provisions in the revenue
cap, which restricts the future growth in state taxes to the
average rate of increases in wages and salaries. Hours after
the voters endorsed the CLT proposal, Dukakis said he would
work toward a blending of the two cap versions. But CLT
Director Barbara Anderson countered that the only
blending she would agree to is approval of the Dukakis
surtax repeal along with her unchanged tax cap.
State House News Service
Roundup (Dec. 5, 1986)
https://www.statehousenews.com/news/1986178
The Governor was scheduled to quickly sign the tax cut,
which completely eliminates this year the 7.5 percent income
surtax. Half of the 11 year-old levy, which had already been
repealed by lawmakers in October, was reinstated by voters
on Nov. 4th when they endorsed a proposed cap on future
state revenues. The two-year surtax phaseout had been
attached to the Citizens for Limited Taxation's tax cap
at a time when the surcharge was scheduled to be wiped out
over two years.
That plan for gradual repeal changed when the state's
revenue collections far exceeded earlier estimates and when
state officials sought unsuccessfully to convince voters not
to approve the strict CLT revenue limit. State leaders had
vowed to press for the full repeal regardless of voter
action, since complete elimination of the surtax had been
the eventual goal of the ballot question.
CLT Executive Director Barbara Anderson, while urging
the lawmakers to speed up the surtax repeal, expressed
outrage this week that lawmakers were considering bills to
exempt local aid and local option taxes from the revenue
limit endorsed a month ago by voters. The new cap will limit
growth in state taxes to the rate of growth in personal
income. Those seeking the exemptions argued that, in the
years since Proposition 2½ limited local taxing authority,
local aid increased by 103 percent while wages and salaries
grew by 65 percent.
State House News Service
ADVANCES (12-1-1986)
https://www.statehousenews.com/news/19863
SURTAX.....The Senate on Monday is expected to act on a
House-approved bill repealing, once and for all, the 7.5
percent income surtax. As a result of voter action earlier
this month, the surcharge is now scheduled for a two-year
phaseout and taxpayers must pay half of it for the 1986
year. In October, lawmakers had wiped out the entire tax in
hopes of preventing the voters from approving a strong state
tax cap to which the phaseout was attached. Following the
Nov. 4th passage of the combined tax cap/surtax phaseout,
Gov. Dukakis and legislative leaders agreed that the
Commonwealth should follow through with efforts to give the
taxpayers an additional $135 million in relief. |
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ (781) 639-9709
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