Rosenberg tips hand on ‘millionaire tax’ strategy

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BOSTON — Senate President Stanley Rosenberg on Monday described to a breakfast crowd of union leaders his vision of how the Senate’s work on education, transportation and housing issues is laying the groundwork for a debate over adding a “millionaire tax” to the state constitution.

In discussing a proposed ballot measure to authorize the amendment, which would change the state’s flat income-tax structure to add a 4 percent surtax on those taxpayers who earn more than $1 million in a year, the Amherst Democrat provided insights into the proponents’ strategy to win voter approval for the tax hike — something the Bay State electorate has steadfastly refused to provide in five out of five attempts in recent years.

“We need to rebuild the middle class in America and Massachusetts,” Rosenberg told the Greater Boston Labor Council breakfast Monday morning at the Omni Parker House on Tremont Street. “We can’t do it without the investment in education and transportation and housing and energy, and it’s going to require us to shift the paradigm and change people’s minds that they can and should support a change in the constitution to allow us to change the tax system so that those who earn the most pay the most.”

The proposal to ask voters to add the surtax to the state constitution is wending its way through the legislative process to reach the November 2018 ballot. On Wednesday, Beacon Hill lawmakers will have the chance to push the citizen petition forward when they meet in a joint session of the Legislature. To reach the 2018 ballot, at least 50 lawmakers from the House and Senate must vote in consecutive sessions to advance the amendment. Rosenberg, a longtime advocate of a graduated income tax structure, will preside over the Constitutional Convention.

Opponents of the change in tax policy argue that it will hinder state economic development efforts by giving entrepreneurs another reason why they should look elsewhere to start a promising business. Adding the proposed surtax would put Massachusetts below only California and Minnesota in terms of top income-tax rates out of “peer technology” states, according to the Massachusetts High Technology Council.

Currently, the state ranks in the middle in terms of its business tax climate, according to the council’s Massachusetts Technology, Talent and Economic Growth Reporting System. Both California and Minnesota rank near the bottom among all states, the MATTERS data show.

Conservative policy analysts including David Tuerck of the Beacon Hill Institute at Suffolk University say adding the tax could kill jobs in the state as well.

“We find that the amendment would cause the loss of 9,500 private-sector jobs and $1 billion annually in personal disposable income,” Tuerck told a legislative hearing on the measure in January. He said it would generate about 25 percent less revenue than projected, at about $1.5 billion, and that there is no way to ensure any revenue raised by the surtax would be used only to fund transportation or education “investments,” as the proposal stipulates.

The Associated Industries of Massachusetts, the state’s biggest organization of employers, has said that the surtax, if adopted, would likely affect investment decisions and resulting jobs, echoing the assessment of the Beacon Hill Institute and of the High Tech council.

The High Tech council also contends that if lawmakers advance the amendment, known as Proposition 80, and it is approved by voters, the Legislature’s hands will be tied for many years because income tax thresholds will be enshrined in the constitution, which is difficult to amend.

Raise Up Massachusetts, an advocacy group, has pushed the ballot proposal. According to the state Department of Revenue, the measure would generate between $1.6 billion and $2.2 billion in extra state revenue from about 19,500 tax returns, or 0.5 percent of all filers. Most — 86 percent — of the affected taxpayers  would be married couples filing jointly, while 11 percent would be individuals, according to state estimates.

Rosenberg, a longtime advocate of a graduated income tax structure, explained how the Senate has formed working groups to study issues and make policy recommendations. A working group looking at charter schools and the education funding system last week released a reform bill, and Rosenberg said he expects a group delving into transportation matters will have a full report ready in about a year.

Armed with those reports laying out the needs of the state’s education and transportation systems, he said, supporters will have the ammunition needed to convince the public, especially lower-income voters, to back the amendment.

“When we have the education plan and we have the transportation plan, we’re going to have all the elements we need to be able to go out and argue for the fair-share tax plan,” Rosenberg said.

The constitutional amendment could go before voters in November 2018 at the earliest. On Wednesday, Beacon Hill lawmakers will have the chance to push the citizen petition forward when they meet in a joint session of the Legislature. To reach the 2018 ballot, at least 50 lawmakers from the House and Senate must vote in consecutive sessions to advance the amendment.

Rosenberg will preside over the Constitutional Convention. On Monday he was again non-committal about how far into the calendar the joint session will go on Wednesday. The 4 percent surtax proposal is behind four other proposed amendments on the joint session’s calendar.

“I’m not sure we can get that far. But if we do, we do,” he told the News Service. “There’s going to be debate on a number of other items.”

Rosenberg’s comments Monday about the so-called “millionaire’s tax” were cloaked in the broader debate over income inequality, an issue that has been a constant topic of conversation on Beacon Hill this session and across the country.

Gov. Charlie Baker has not taken a position on the surtax amendment, but ran on a campaign platform pivoting on his opposition to new or higher taxes. Baker touted the absence of higher taxes in his $39.55 billion fiscal 2017 budget. Speaker Robert DeLeo in the House of Representatives has ruled out higher taxes in the House budget that will be unveiled this month and which he says is expected to call for only a 3 percent spending hike.

State House News Service contributed to this report.