Local legislators split on proposed tax amendment

Date: 6/15/2021

HAMPDEN COUNTY – While generally strong on Beacon Hill, support for the advancement of a proposed amendment to the state constitution that would increase taxes for the state’s richest residents was split among Hampden County legislators.

With support from several Western Massachusetts legislators and the statewide coalition Raise Up Massachusetts, the so-called “Fair Share Amendment” would move the commonwealth away from its current flat tax structure and place an additional surtax on annual household income exceeding $1 million beginning in 2023.

With a 159-41 vote, a joint session of the House and Senate decided to put the issue on the ballot for the statewide election in 2022.

Termed by some as the “Millionaire’s Tax,” the move would not alter the current 5 percent tax rate for residents making less than $1 million. An additional 4 percent tax would be assessed on the portion of income above $1 million. The $1 million threshold would also be adjusted annually to account for cost-of-living increases.

The tax revenue from this additional surcharge, which they estimate to be as much as $2 billion annually, would be earmarked for public education and infrastructure investments, according to the proposal.

The major supporter, Raise Up Massachusetts, made up of community organizations, faith-based groups, and labor unions, has argued that the state’s wealthiest 1 percent have benefitted from paying state and local taxes on less of their income than any other group while also benefitting from federal tax cuts.

Citing the Tax Policy Center’s analysis of the 2017 tax cuts and Jobs Act and the Americans for Tax Fairness’ opposition to the 2020 CARES Act, the group has asserted Massachusetts’ top 1 percent benefitted from 87 percent of the 2017 tax cuts and $135 billion in tax breaks in  2020.

Second Hampden and Hampshire District State Sen. John Velis said putting the question to voters was valid and given the state’s fiscal situation following the pandemic, the proposal was part of a necessary exploration of new opportunities to bolster the state economy.

“COVID-19 has decimated so many sectors of our economy and has made so much of our commonwealth’s future uncertain,” he said. “The entire conversation about our state’s finances and revenue sources has changed dramatically in this past year; so much so, that I believe this issue definitely merits being placed in front of the voters so that all of my constituents can have their voices heard.  We – as legislators – are not making the final decision here; the voters are.”

However, while the vote generally followed party lines, not all Western Massachusetts Democrats were on board, including several Hampden County legislators.

State Reps. Michael Finn of the Sixth Hampden District and Nicholas Boldyga of the Third Hampden District as well as Brian Ashe and Angelo Puppolo opposed the measure with some questioning the proposal’s legal standing as well as its intended impact.

“While I understand the intent of today’s proposal, I have concerns about whether the proposal will even survive a constitutional challenge, and I am also concerned about achieving the desired result, when the people we are talking about taxing more have the ability to move states now easier than ever. One example being New Jersey’s whose attempt at a similar tax failed to live up to expectations,” Finn said.

In a prepared document sent to the media, Boldyga questioned the need for a tax increase when revenues are “coming in well over projections and the state is receiving a significant influx of federal aid,” pointing to the state received additional federal funding through the American Rescue Plan Act and a 130 percent increase in state tax revenue in May compared to a year ago.

He also opined that revenue estimates touted by proponents may be inflated, citing a June study by the Beacon Hill Institute for Public Policy Research, an independent economic research organization.

The study, which was supported by a grant from the Fiscal Alliance Foundation, projected $1.2 billion in revenue in 2023 and $1.5 billion by 2027. The study also estimated the state would lose more than 4,000 families and that, combined with “a reduction in labor hiring and labor-force participation,” would result in more than 9,000 lost jobs.

Boldyga, again citing the Beacon Hill Institute’s study, also questioned whether the revenue raised would actually be allocated to education and infrastructure as promised, arguing the proposal does not offer any safeguards preventing the diversion of these funds.

Additionally, Boldyga referenced an April 1 report by the non-partisan, fiscally conservative Pioneer Institute that stated, “Despite its purported goal of taxing only the uber-rich, the graduated income tax would fail to protect people of more modest means from overtaxation on one-time windfalls” including those who sell a home or business.

Likewise, the Massachusetts Fiscal Alliance, a non-partisan financial watchdog, criticized the proposal as a politician-led push of an agenda that has already failed in previous votes and deemed unconstitutional by the Massachusetts Supreme Court.

Additionally, the 501(c)(4) nonprofit has argued the tax will have an adverse impact on small businesses.

Paul Diego Craney, spokesperson for the Massachusetts Fiscal Alliance, said, in part, “The middle class and working families will be the key constituency that will ultimately reject this proposal. Massachusetts’s middle class and working families have the most to lose under this tax hike proposal. While lawmakers want the public to think it’s a tax hike only for the rich, the state’s most affluent will quickly flee while the middle class and working families will be left to cover the bill. As more middle class and working families realize this is an attempt to tax them next, this will eventually fail for the seventh time and be a victory that all taxpayers can relish.”

December 2020 research conducted by the Mass Inc. Polling Group indicated 72 percent of 1,522 Massachusetts registered voters polled supported the surtax and the firm noted they have “surveyed this issue on many occasions and found consistently broad support.”

However, the same poll also noted that more than half of respondents (55 percent) feel the commonwealth’s taxes are higher than other states while 64 percent believe it is “very important” that state decision makers make the best use of existing resources before resorting to tax increases.

Reminder Publishing was unable to reach Hampden District state Sen. Adam Gomez for comment.