Wealth Surtax Opponents State Their Case

Residents will vote on the measure, dubbed the "fair share amendment" by proponents, during the November election after legislators voted 159-41 in June 2021 to place it on the ballot. A new poll released by the MassINC Polling Group Thursday showed 70 percent of registered voters in support of the question.

In advocating for the constitutional amendment, supporters have said it could raise $2 billion per year that would be directed towards education and transportation needs. Among other things, they have pointed to a need to fund the Student Opportunity Act, a law crafted to direct $1.5 billion to K-12 schools over seven years.

A study released Wednesday from the Center for State Policy Analysis at Tufts University showed the amendment would draw in about $1.3 billion in revenue for the state. The $700 million difference accounts for some high-earning people leaving the state and use of "tax avoidance" strategies to lower tax burdens.

At a virtual press conference Thursday hosted by the Massachusetts Fiscal Alliance, lawmakers and researchers suggested the Legislature could decide to allocate revenue from the amendment to different areas.

"The state constitution specifically prohibits earmarking funds, revenue," said Rep. David DeCoste (R-Norwell). "Since the Legislature appropriates revenue, only the Legislature will have the final word in terms of what will be spent and for what. The idea that these funds will somehow be fenced for transportation and education is really unrealistic."

The amendment's language says revenues from the surtax can only be used "for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation."

But opponents argue that even within those categories, money can be "fungible." DeCoste called education and transportation broad categories.

"Pensions could be considered to fall under these categories," he said. "And for that reason, I think this is a bad initiative and I will actively oppose it."

Sen. Jason Lewis, a co-sponsor of the amendment in the Legislature, said 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 told the News Service. "I think that gives very clear direction to future Legislatures and governors."

Rep. Colleen Garry (D-Dracut) said the amendment does not guarantee dollars will head to education and transportation.

"I think that it's extremely important that the truth be put out there that we cannot assure anyone that going forward, this money will be always spent on education and transportation," she said. "It would be up to whatever Legislature is in at that time to make that determination. And they can always say, I wasn't there when the promise was made, so I didn't make the promise."

In arguing against the ballot question, MassFiscal spokesman Paul Craney pointed to a June 2018 Supreme Judicial Court ruling that prohibited an earlier version of the income surtax from appearing on the ballot. Justices ruled the question -- as written at the time -- improperly mixed two different spending areas and a significant change in tax policy.

The court said voters who supported the tax but did not support earmarking funds for education or transportation and voters who wanted to designate funds to those areas but did not back the tax were placed in untenable positions.

Speakers at the Massachusetts Fiscal Alliance press conference also warned that high-earning individuals may end up leaving the state as a result of the 4 percent tax on incomes above $1 million.

The Tufts University study acknowledged that some high-income residents may relocate, "but the number of movers is likely to be small." The report concludes that 500 families could end up leaving the state and Massachusetts could lose roughly $100 million in tax revenue from relocation.

Rep. Nicholas Boldyga (R-Southwick) said top earners in Massachusetts "are going to flee the state in droves" as a result of the amendment and "we're going to be left in a much worse position."

"Everyone here in the commonwealth can agree upon that when the wealthiest of the residents of our state see the biggest tax increases, they are the people that actually have the resources to pack up and establish residency elsewhere," he said.

Lewis believes this line of thinking is just a scare tactic.

"That's always been a scare tactic that opponents of the fair share amendment have used, that this would drive lots of people to leave Massachusetts and I think that's not borne out by the experience in other states and other countries," Lewis said.

Rep. Marc Lombardo (R-Billerica) said Massachusetts is flush with cash as the state had over $5 billion in revenue above benchmark last fiscal year and is billions above benchmark halfway through this fiscal year.

"Massachusetts has money coming in, we have more than enough to fund these critical programs that we need without raising taxes on the hard-working families," he said.

Steve Crawford, a spokesman for Raise Up Massachusetts, the group pushing the tax proposal, predicted the more than $1 billion that will be raised "will fix our crumbling roads and bridges, improve our schools, provide vocational training for people looking for a new good-paying job, and allow Massachusetts students to graduate from college debt-free."

"In poll after poll, an overwhelming majority of Massachusetts residents consistently support an additional tax on income over one million dollars a year," Crawford said in a statement. "As Massachusetts families continue to struggle with the ongoing COVID pandemic, voters simply want the wealthy – those who have prospered during this crisis – to pay their fair share."

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01/13/2022