‘Millionaire’s tax’ wins key vote on Beacon Hill
By Evan Lips | May 18, 2016, 19:24 EST
BOSTON – It wasn’t a question of “if” but rather “how” lawmakers on Beacon Hill would advance the “millionaire’s tax” proposal, a measure that calls for altering the state Constitution’s flat tax to smack a surcharge on the commonwealth’s highest earners.
Needing just a combined 50 votes from the Senate and House of Representatives to move forward, the proposed ballot question breezed through the Legislature’s Constitutional Convention Wednesday, passing by 135 yeas to 57 nays. The Senate voted for the measure 33-7 while it won 102-50 among House members.
Some of the most spirited debate, however, focused on how to ensure that lawmakers make good on the proposal’s promise to allocate the surtax revenue solely to education and transportation needs. One potential solution, proposed by Republican leaders, would have added a specific requirement to that effect.
Democrats rejected the move, arguing that it wasn’t needed and claiming that a change in the proposed ballot measure’s wording “means this would no longer be a citizen’s petition,” to quote Sen. Ruth Balser, a Newton Democrat.
“While there may be some sympathy for this amendment, I want to remind my colleagues that adopting any amendment will take this away from this very impressive popular movement,” Balser added, referring to changes sought by Republicans.
Rep. Bradley Jones, the Republican House leader from North Reading, who introduced the proposed change, argued that a safeguard is needed to show voters the Legislature is committed to directing all additional revenue raised by the measure to education and transportation improvements.
“If you truly want to represent to the voters of the commonwealth that this really isn’t a Trojan tax-horse, that this is really as intended, then you should vote for this amendment,” Jones said during the debate. His proposal failed, 54-138.
The surtax may raise $1.9 billion a year, according to a Department of Revenue projection. But millionaire taxes have failed to produce the expected yield in other jurisdictions where they have been enacted, including California, where state data shows a 21 percent drop in taxes owed by those earning $1 million or more from 2012 to 2013, and their ranks thinned by 7 percent. The year before, the number of millionaire filers had risen by 26 percent and the amount they owed almost doubled.
In the debate, Jones also recalled a conversation he had with “the proponent of the underlying question” whom he didn’t identify. Jones said he asked whether advocates “felt obliged to spend the money” only on education and transportation.
“‘Well, we’re not obliged to,’” came the reply, Jones said. “So they’re already starting to talk about that Trojan Horse.”
“If you really believe the campaign rhetoric from those who support this, if you really believe it, then you absolutely should support” the proposed change to lock in the uses of the revenue, he said.
Sen. Michael J. Rodrigues, a Fall River Democrat, called Jones’ proposal “redundant.” He also cited Balser’s argument against altering the wording of the proposed initiative, saying any change would mean “that this question is no longer a citizen’s petition – this question before us becomes a legislative petition,” if the language changes.
Opponents of the proposal say that the state Constitution bars ballot measures that would seek to spend tax dollars for specific purposes. Some lawmakers on Wednesday suggested that the initiative at issue should be reviewed by the state’s Supreme Judicial Court to make sure it would be legal, if passed by voters.
The ballot proposal calling for an amendment to the state Constitution was spearheaded by Raise Up Massachusetts, a union-driven coalition that gathered about 157,000 signatures from registered voters in support of the measure. It would change a 99-year-old policy requiring a uniform income-tax rate for all taxpayers in the state.
Jones replied to Rodrigues by pointing out the Legislature’s track record, which shows that there is a small chance additional tax revenue will actually be used for prespecified needs such as transportation and education.
“What I predict will happen is that money we currently spend on education and transportation will be siphoned off elsewhere,” he said.
Citizens for Limited Taxation, an advocacy group that opposes the proposal, has cited a previous move by the Legislature to increase a tax for a specific purpose, saying that more than 90 percent of the revenue brought in by the change – a near doubling of the state gas tax – wasn’t spent as promised.
Rep. Shaunna O’Connell, a Republican from Taunton, said it was “not clear by any stretch of the imagination” that the money will be used solely for education and transportation.
“It will be a free-for-all, it will be like a new, shiny piggy bank for this Legislature to spend that money in any way that they choose,” she asserted.
Several Democrats voted against the Raise Up Massachusetts petition, including Lowell Rep. David Nangle.
“It is the introduction of class warfare,” Nangle said during the debate. “It is stealing from the rich to give to the poor.”
“We are legislators, not Robin Hood,” he added.
Just 17 Democrats in the House and two in the Senate voted against the proposal. The sole Republican vote for the measure came from Weymouth Sen. Patrick O’Connor, who was sworn in minutes before the debate began. O’Connor won a recent special election to replace outgoing Sen. Richard Hedlund.
All four changes sought by Republicans to alter the proposed ballot measure went down in defeat.
Those included one that would have locked in the flat tax rate for earners making less than $1 million, to counter an issue raised by critics that should the proposed ballot measure pass, it would usher in a fully graduated income tax structure like that imposed at the federal level.
Immediately following Wednesday’s final vote, the Massachusetts Fiscal Alliance, a taxpayer watchdog group, ripped lawmakers who backed the proposal.
“Earmarking revenue and specifying tax brackets aren’t the sorts of things that belong in our Constitution,” Paul Craney, the group’s executive director, said in a statement. “Putting such a muddled mess on the ballot is unfair to voters.”
Citizens for Limited Taxation, the group that backed the Proposition 2 ½ tax-capping measure passed by voters in 1980, criticized lawmakers for rejecting a change to prevent spending money the proposed measure would raise on anything other than education and transportation.
“This would have prevented fungible revenue from being taken out of one pocket and stashed into another – leaving that additional revenue free to be spent anywhere, on the whim of any future Legislature,” the group, also known as CLT, said in a statement. “It would have locked in the proponents’ promise.”
“That such unambiguous clarity was so resoundingly defeated by so many supporters of this scheme only underscores the bait-and-switch nature of their proposal,” CLT said. “That such a majority of supporters refused to demonstrate to voters their sincerity of purpose in fact now defines their true motivation.”
The proposal still must clear more hurdles before it can reach the November 2018 ballot, including going before lawmakers and winning 50 votes at another Constitutional Convention during the next legislative session. Should voters pass it in 2018, it would take effect starting in 2019.
Massachusetts voters have previously rejected all five ballot efforts aimed at changing the state Constitution in order to enact a graduated state income tax, most recently in 1994. After lawmakers adopted a higher flat rate of 5.9 percent, voters in 2000 passed a ballot measure to roll it back to 5 percent, a legislatively delayed process that continued with a cut this year to 5.1 percent from 5.15 percent in 2015.