Democrats Scrambling To Find New Taxes in Massachusetts Governor’s Race

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By Michael P. Norton

When the state’s highest court on June 18 knocked off the 2018 ballot a proposed surtax on the wealthy the court also torpedoed a core element of the campaign platforms of the two Democrats running for governor this year, Jay Gonzalez and Robert Massie.

Now the candidates are floating alternative ways to raise revenue. Gonzalez, who does not plan to propose a specific tax plan until after he’s elected, has mentioned a graduated income tax under which people in different income brackets pay different rates, or just raising the 5.1 percent income tax, or wiping out unspecified existing business tax breaks.

Massie told the News Service he favors higher registration fees on heavy vehicles, property transfer taxes, freeing up revenue by eliminating government waste, and revenues he anticipates Massachusetts could eventually secure by growing its renewable energy base and then exporting power.

The tax-and-spend plans of the two Democrats will contrast in the campaign with Governor Charlie Baker’s claim that he opposes new or higher taxes. While the governor has agreed to some taxes and assessments, he opposes raising broad-based taxes such as the income, sales or corporate taxes, and says he supports a reduction in the sales tax, although he has not proposed such a reduction. Baker, unlike his opponents, has also not outlined any re-election promises.

Gonzalez and Massie eyed the so-called millionaire’s tax, and its projected $2 billion a year in new revenues, to pay for their education and transportation spending plans. The infusion of revenues could have also freed up other state revenues to accommodate other priorities and campaign spending promises.

Gonzalez reacted to the Supreme Judicial Court (SJC) by saying he would propose “another progressive way to generate meaningful revenue.” Pressed more recently about specific ways he would raise revenue, Gonzalez responded by saying he would propose his new way to generate revenue in his first budget, but he did not offer specifics. If elected, he added, he would immediately direct the state Department of Revenue “to develop recommendations to accomplish the goal of generating new revenue from those in this state who are doing very well and who today pay the lowest percentage of their income in taxes.”

“There will be a very clear choice for voters in this election:  a choice between someone who is only there for the privileged and the powerful, and someone who will fight for all the ‘little guys’ out there; a choice between someone who is dragging Massachusetts backwards, and someone who will make Massachusetts a leader again,” Gonzalez said in a statement, using some of the same language he used in his response three weeks earlier to the SJC ruling.

Gonzalez, who also supports a carbon pricing reform that some equate to a new tax, did not respond when asked to confirm there would be no concrete revenue plan until after he’s elected, but it appears that will be the case.

During an appearance on WGBH last month, Gonzalez said a graduated income tax, which would require a constitutional amendment, would be the “best way” to come up with new revenue. He also mentioned increasing the income tax and increasing deductions and exemptions “so that it doesn’t impact lower and middle income people,” which would be similar to a tax plan put forward in his second term by Gonzalez’s former boss, then-Governor Deval Patrick.

Gonzalez also said there are business tax breaks that the state is “giving away,” estimating there are “billions of dollars that we’re foregoing that we should be looking at.” He knocked Governor Baker for supporting reductions in the income tax called for under existing laws.

“You can’t have a detailed proposal for how to do this where you understand what the consequences are in terms of revenues and impacts, in terms of which people are impacted, without the Department of Revenue doing that analysis,” Gonzalez said during his interview with Boston Public Radio.

Gonzalez has a robust list of spending plans. He has vowed to give access to high quality, affordable child care and pre-school by the end of his first term to every child in the state under six years old. He supports switching to a single-payer health care system, citing “many inefficiencies and unnecessary complexities” in the existing system. He wants new revenue “to fix our broken MBTA system,” repair roads and bridges, and invest in regional transit authorities, and he says the state needs to “seriously explore high-speed rail to Springfield, the North-South Rail Link and the Blue Line extension to Lynn.”

In addition to expanding arts funding, Massie backs plans to electrify the transit system, provide free public higher education, ensure high quality care for infants and toddlers from birth to age three and provide free pre-school to all kids beginning at age 3, expand the MassHealth insurance program, and move aggressively toward a single payer health care system.

Massie, in addition to bashing “pro-business judges” appointed to the Supreme Judicial Court by Baker, said it was now up to House Speaker Robert DeLeo and the rest of the Legislature to draft and pass a “progressive income tax amendment” for potential consideration by voters statewide in 2022.

While Gonzalez will use a trust-me approach to new taxes during the campaign, Massie is offering voters a glimpse of proposals he’ll pursue, if elected.

Massie responded to a News Service inquiry about alternative revenue-raising plans with a 1,448-word essay that included some concrete revenue proposals.

In addition to restarting a four-year process to potentially bring a redrafted surtax on wealthy households to the 2022 ballot, Massie would also adjust transportation fees “so that different vehicles pay their fair share.”

Massie says registration fees for higher gross weight vehicles should be raised since heavy weight trucks and bus owners “are essentially putting huge train-like vehicles on asphalt and they do huge damage to roads that require expensive repairs.” Massie said, “Adjusting these fees would go a long way to closing the overall transportation funding gap. At the same time, we should lower registration fees for people who buy fuel-efficient and electric cars that both save money and our planet.”

Property transfer taxes should be explored, “which would impose a small cost when properties owned by developers and owned by investors (not home owners!) change hands,” Massie said. He referred to a proposal offered in his hometown of Somerville.

Saying taxpayer dollars are “going into a collection bucket with holes in it,” Massie said eliminating waste would free up money to be spent on government services. He cited fraudulent Massachusetts State Police overtime payments and a “sham” Baker administration report outlining anticipated costs of an underground rail link between North Station and South Station in Boston. The report, Massie alleged, “was designed to prove that this important step would cost too much.”

Massie also supports a movement toward more renewable energy that he says, at full buildout, would allow Massachusetts to export electricity, “thus generating as much as $6 billion a year in new tax revenue.” He said, “We need to rein in our ‘public’ utilities who are costing us billions of dollars by preserving a broken business model that benefits their shareholders, but not us.”

Gonzalez and Massie face each other in the September 4 Democratic primary, with the winner facing the winner of the GOP primary between Baker and Scott Lively.

Lively supports a “complete and permanent elimination of property tax on homes” offset by a “graduated income property tax favoring reinvestment of earnings.” According to his campaign, his other fiscal policy priorities include local control of tax collection, local control of spending on most government services, and a “dramatic reduction” in state bureaucracies. Lively also supports a 10 percent budget reduction in every state agency, and an annual sales tax refund that his campaign says will return 50 percent of “downsizing savings” to taxpayers with the remainder used to pay down state debt.