Massachusetts state legislators voted Wednesday to put a “millionaires’ tax” on the November 2018 ballot, a victory for Raise Up, a coalition of progressive groups who have campaigned for over a year to bring this proposal to the constitutional convention. If voters approve the proposal next year, Massachusetts’s current flat rate income tax of 5.1% will increase by 4% for those with an annual income of $1 million or more. While the wealthy will pay higher income taxes, tax rates for those who annually earn under $1 million will not change.
The proposal, officially titled “An Amendment to the Constitution to Provide Resources for Education and Transportation through an additional tax on incomes in excess of One Million Dollars,” has been nicknamed the Millionaires’ Tax, or the Fair Share Amendment. The additional revenue from this tax – estimated to be up to $2 billion a year – would be directed solely towards education and transportation improvement efforts. The proposal states the tax’s purpose is “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.” When the proposal was filed in January of 2016, it was supported by the signatures of over 90,000 qualified voters. These signatures were collected by member groups of Raise Up, including Massachusetts Peace Action.
While the amendment has vast support among voters, businesses are less enthusiastic about the potential tax increase on the wealthy. More than 15,000 millionaires live in Massachusetts as of 2014, and critics fear this tax will encourage them to move away, taking their investments and assets with them.
Business advocates are looking to combat the potential tax increase through the court system. Groups like the Massachusetts High Technology Council, the Massachusetts Taxpayers Foundation, Associated Industries of Massachusetts, and the Massachusetts Competitive Partnership are raising money to go through with a lawsuit questioning the proposal’s constitutionality. “They argue that constitutional amendments can’t appropriate funds for specific uses,” reported the Boston Globe. “They also may also claim that the referendum question is too broad.”
Fortunately, state legislators meeting as a Constitutional Convention sided with the masses Wednesday, voting 134-55 to put the constitutional amendment on the ballot. While the state income tax rate is currently the same for everyone, a report by Massachusetts Budget and Policy Center noted that property and sales taxes have “the effect of taxing lower-income people at significantly higher rates than higher income people.” This means the state and local tax system as a whole is regressive, collecting a larger share from lower-income households than it does from upper-income households. The Millionaires’ Tax would partially offset this disparity.