Raise Taxes On The Ultra-Wealthy? Charlie Baker Explains His Opposition To It

Printed from: https://newbostonpost.com/2021/09/17/raise-taxes-on-the-ultra-wealthy-charlie-baker-explains-his-opposition-to-it/

Raising taxes on millionaires?

That’s not part of Governor Charlie Baker’s agenda.

In November 2022, there will be a question on the statewide ballot asking Bay Staters if they want to create a second state income tax bracket. It would tax household income earned exceeding $1 million at a 9 percent rate. The state currently has a flat 5 percent income tax.

Baker reiterated his opposition to the proposal in an interview with GBH’s “Boston Public Radio” on Thursday.

While supporters of the idea say it would raise $2 billion in revenue for the state, according to State House News Service, Baker thinks it could shrink the tax base.

“If we’ve learned anything over the course of the past 18 months, and it certainly showed up in our future of work study, people can work from anywhere,” Baker said. “Companies can locate anywhere, and many of them can be just as successful working that way as they were once upon a time when everybody went to the office and everybody lived in the same place.”

Unlike Massachusetts, New Hampshire has no state income tax.

The millionaires surtax proposal says that the revenue from the tax would  “provide the resources for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation, all revenues received in accordance with this paragraph shall be expended, subject to appropriation, only for these purposes.”

Baker noted that the question doesn’t mandate that the money has to be spent on transportation and revenue. He thinks it would become “general appropriation money that people can spend on whatever they want.”

He cited a 2018 Massachusetts Supreme Judicial Court ruling from 2018 as evidence for this claim. The court rejected a millionaire tax question from the ballot because the proposal sought to mandate spending on education and transportation.

“I could be wrong about this, but my recollection is that was the main reason the SJC said that was unconstitutional, because you can’t write legislation under the Constitution,” Baker said. “You can’t say that this tax should be raised to fund these programs, that that usurps the authority of the Legislature, which is the fundamental appropriating entity.”

Baker expressed this opposition hours after the Massachusetts Taxpayers Foundation released a report that said that the Massachusetts Bay Transportation Authority may face budget deficits by 2023.

The Massachusetts Taxpayers Foundation says that the T may need as much as $1.2 billion to $1.3 billion more per year to cover its operating budget and to complete its capital projects.

“Despite all the reforms, restructuring, and revenues that have been poured into the system, you face the hard reality that the MBTA’s finances were never fundamentally fixed — ever,” the Massachusetts Taxpayers Foundation said in a written statement. “You’re compelled to ask:  how much longer can the T function without a complete financial overhaul?”

Andrew Farnitano, a spokesman for Raise Up Massachusetts, a group supporting the tax increase ballot question, told State House News Service that the projected MBTA budget shortfall is part of the reason why his organization supports a tax increase.

“Liberal and conservative researchers agree that the MBTA needs new long-term funding to operate trains, buses, and the commuter rail without fare increases, to invest in the modern infrastructure necessary for faster, more reliable service, and to protect critical infrastructure from the effects of climate change,” Farnitano said. “One-time budget surpluses and federal aid won’t be enough; Massachusetts needs a sustainable source of funding to invest in the MBTA and regional transit authorities across the state, and to repair our roads, bridges, and tunnels. The Fair Share Amendment is the answer.”

Part of the T’s budgeting problems have to do with decreased ridership amid the coronavirus pandemic. In August 2021, for example, subway ridership was at about 42 percent of where it was at in August 2019, bus ridership was at 60 percent, and commuter rail ridership was at 30 percent of pre-pandemic levels.

Baker said that the “biggest question on ridership” is how many employers embrace remote work moving forward.

He noted that the state has nearly $5 billion from the American Rescue Plan and a budget surplus. He also noted that the federal government is working on an infrastructure bill which could pump more money into transit.

“The state has a lot of resources here, and a big open question on how those resources could be and should be deployed will be driven to some extent by what happens to ridership and how we in the Legislature and others decide to spend the money that is available,” Baker said. “The federal piece is big. It’s really big. Even in the bipartisan bill, which is sort of the smallest of the infrastructure bills, it’s very significant resources to the commonwealth for transportation. I don’t think we should panic quite yet.”


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