Massachusetts Begins Round Two in Its Fight to Tax Millionaires
After a devastating court loss dragged the Fair Share Amendment off the 2018 ballot, activists are back in front of the legislature to demand a fairer tax system.
Research & Commentary
April 12, 2019
by Jen Wofford
Activists in Massachusetts were disappointed when the state’s Supreme Court struck down a ballot initiative last year to increase taxes on millionaires. But they’re already gearing up for round two. Their second try for the Fair Share Amendment – also known as the millionaire’s tax – began with a legislative hearing Thursday.
Two hundred people, led by the Raise Up Massachusetts Coalition, packed the statehouse for a hearing on the Fair Share Amendment. The proposal, first brought about as a citizen’s amendment that would have appeared on the 2018 ballot, would impose an additional 4 percent tax on incomes over 1 million. The resulting revenue would fund public education and transportation infrastructure.
But a surprising and crushing decision by the state’s high court last fall held that the people’s ballot petition could not go forward. The state restricts citizens’ amendments from combining multiple objectives – in this case, the tax itself and the stipulation on where the money is spent.
But Raise Up Massachusetts won’t abandon the millionaire tax. Now, the coalition has turned to the legislative sponsors to introduce the Fair Share Amendment to change the state’s constitution, which would allow the initiative to be put on the ballot without any restrictions.
More than 20 state legislators stood before the revenue committee to state their support for the Fair Share Amendment. Senator Lewis, a lead sponsor, told the committee that Massachusetts has “an upside-down tax system, where the wealthiest pay a lower share than the poorest households.” Senator Lewis told the crowd that lower and middle income families are tapped out by the high cost of housing, health care, and managing multiple jobs. The FSA “asks households earning over 1 million to pay just a little more,” Lewis said, to help ease the burden. “We cannot build the economy on the backs of low and middle income families” said Representative O’Day, another lead sponsor.
The Raise Up Massachusetts coalition had its own members give testimony, including labor and religious leaders, economic analysts, and community leaders. Alex Hoyt, a public school teacher with the Massachusetts Teachers Association, spoke about the dire state of school funding. Hoyt said he was allotted only one sheet of paper per student per day, and asked whether anyone could perform their duties with one sheet of paper per day. He was laid off last year along with a third of the core teaching staff at a public school due to budget cuts.
“At stake is fundamental fairness,” Marie-Frances Rivera, president of the Massachusetts Budget and Policy Center told the committee. The funds could be used, Rivera said, to fix the 482 bridges found to be structurally deficient or to fund public transit.
Massachusetts Budget and Policy Center senior analyst Phineas Baxandall explained that the millionaire tax could help “right-side” the state’s unfair tax structure. The current top 1 percent of income earners pay only 6.8 percent of their income in taxes, according to research from the Institute for Taxation and Economic Policy. The Fair Share Amendment would increase their tax burden to about 8 to 8.5 percent, bringing them level with the current range of the top 5 percent of income earners.
Even still, those effected would still pay a far smaller share of their income than the bottom 95 percent of state residents. This upside-down tax structure also impedes racial equity. Black and Latinx taxpayers are overrepresented in the low-income tax range and pay, on average, higher portions of their income in taxes.
Additionally, Baxandall reported that the windfall millionaires have received from the Tax Cuts and Jobs Act of 2017 still outweighs the additional taxes they’d pay if the Fair Share Amendment were in place. To bring it into perspective, he said the tax would affect people who earn more than $20,000 per week.
The millionaire tax is highly popular in Massachusetts, but the amendment still has a long road ahead. Legislators must give the Fair Share Amendment two consecutive blessings – both in the 2019-2020 legislature and again in the 2021-2022 session. If the amendment has more than 50 percent of the vote from state legislators both times, it will finally make it to the November 2022 ballot.