Passing of Mass' 'Millionaire Tax' Changes State's Flat Tax Rate - The Boston Globe

Passing of Mass’ ‘Millionaire Tax’ Changes State’s Flat Tax Rate – The Boston Globe

Question 1 will amend the Massachusetts Constitution by adding 4 percentage points to the 5% state income tax, for annual incomes over $1 million, to provide more funds to the budget for transportation and education. The union-backed Raise Up Massachusetts coalition, which has pursued the measure for the better part of a decade, said the increase could generate as much as $2 billion a year, while other estimates point to a lower carriage, with an official state projection estimating possibly $1.2. billion.

The tax increase would affect approximately 20,000 taxpayers each year.

Fair Share for Massachusetts campaign manager Jeron Mariani called the endorsement “a once-in-a-generation opportunity that took years to prepare.” And the Massachusetts Teachers Association, the main funder of the Question 1 campaign, released a statement calling it “an important step forward in creating tax fairness.”

The focus now shifts to the Legislative Assembly, which will determine how the proceeds of increased tax revenue will be spent and how it may be divided between transportation and education. Lawmakers also have the power to change tax laws in ways that affect how many people will end up paying the increased income tax, such as increasing the amount of capital gains that can be deducted for the sale. of a house.

Teachers’ unions have spent big on funding the “yes” campaign, while transportation advocates have a long list of upgrades they’d like to see made to the state’s aging roads and rails.

Those needs were cited by supporters who made calls and knocked on doors in some of the state’s largest cities. Jessica Andors, executive director of Lawrence CommunityWorks, estimated her group had reached around 3,000 people.

“There is clearly additional funding needed to support infrastructure and public education in our community,” Andors said. “We felt it was a very fair way to ask those who earned orders of magnitude more income than most people in the state earn to contribute.”

Meanwhile, some business leaders lamented the vote’s outcome on Wednesday, saying the new tax will damage Massachusetts’ reputation as a place to do business.

“The Commonwealth tried for years to get rid of the Taxachusetts label,” said Brooke Thomson, executive vice president of Associated Industries of Massachusetts. “Today is a step in the wrong direction.”

Others feared it would encourage high earners to leave the state or expand their businesses elsewhere, especially in states like Florida and New Hampshire that have no income tax.

“Especially in this era of remote working, I think a lot of wealthy people are going to leave Massachusetts because they can work from anywhere,” said Leanne Scott, tax director at accounting firm Baker Newman Noyes.

It was the sixth attempt to persuade voters to overturn the state’s flat rate income tax – which can only be done through a ballot question as it requires an amendment constitutional. In all previous eras, first in 1962 and most recently in 1994, the efforts have been resoundingly defeated.

This time around, the communities inside Route 128, for the most part, voted for support tax increases. In Boston, 65% voted yes, with even higher margins in Cambridge and Somerville, where more than 70% in each city voted “yes”. In several other major cities, including Springfield and Worcester, Question 1 won by clear majorities. But many Boston-area suburbs as well as many central and southeast cities Massachusetts leaned more to oppose it.

The Fair Share Massachusetts committee easily surpassed the opposition committee, raising more than $27 million in donations this year. Most of this money came from teachers’ unions, namely the Massachusetts Teachers Association and the National Education Association. The business-backed Coalition to Stop the Tax Hike Amendment, meanwhile, raised $14 million this year, mostly from business leaders, particularly in the development and investment sectors. The heavy spending fueled waves of TV ads, with Fair Share spots starting in August and the opposition joining the fray in September.

Joe Baerlein, a communications strategist who worked on 10 voting questions, noted that the tight margin is a sign that the opponents’ message was not reaching enough people.

“Given they went two to one and got 48% of the vote, that suggests to me it was a winnable fight for the no,” Baerlein said.

He said opponents have failed to adequately explain how there is no guarantee state lawmakers will end up increasing spending on transportation and education by the full amount generated by the new tax. He noted another shortcoming: Opponents failed to get much money from corporate donors and instead relied heavily on wealthy individuals.

“It allowed the yes side to portray the no side as interested millionaires,” Baerlein said. “Corporate contributions would have argued that this is bad for business and economic growth.”

Several business leaders have also wondered why Governor Charlie Baker, despite personal objections to Question 1, has not been more publicly involved in the campaign against her. (Maura Healey, who was elected to succeed Baker as governor, supported him.)

Leaders of the Raise Up Massachusetts coalition have pursued the cause for nearly eight years. They were rebuffed by a legal challenge from several business groups in 2018, but refiled the proposal in a way to circumvent the issue that had tripped them up. Since an amendment to the state constitution was required, the proposal had to be approved by two votes of the Legislative Assembly before it could be submitted to voters.

Not all companies were opposed to Question 1. Karsen Eckweiler, a partner at Democracy Brewing in Boston, featured in some of the Fair Share ads. She said she hopes at least some of the new funds could be used to support the MBTA, as its staff rely on public transportation to get to work.

“It’s just a lot of happiness and good spirits here,” Eckweiler said. “I think it’s a step in the right direction, and it’s exciting to see people agree with that and step up.”

Jon Chesto can be contacted at Follow him on Twitter @jonchesto. Dana Gerber can be contacted at Follow her on Twitter @danagerber6.

#Passing #Mass #Millionaire #Tax #States #Flat #Tax #Rate #Boston #Globe

Leave a Comment

Your email address will not be published. Required fields are marked *