After the authors of the proposed graduated tax in Massachusetts submitted their proposal for legislative approval in 2017, the federal government placed a $10,000 limitation of deductibility of state and local taxes on federal tax returns. This unforeseen change in the federal tax code had the effect of turning what would have been a 58 percent increase in average state income tax payments among Massachusetts millionaires, from $160,786 to $254,355, into what is essentially a 147 percent increase when the federal SALT limitation is included in the calculation. This substantial change should be taken into consideration by voters when they contemplate approving the surtax proposal.
About Greg Sullivan
Gregory W. Sullivan is Pioneer’s Research Director, and oversees the Centers for Better Government and Economic Opportunity. Prior to joining Pioneer, Greg served two five-year terms as Inspector General of the Commonwealth of Massachusetts. As Inspector General, Greg directed many significant cases, including an investigation that led to the conviction of House Speaker Salvatore DiMasi, a forensic audit that uncovered substantial over-billing by health-care providers to the state uncompensated care pool, a study that identified irregularities in the approval process of the state charter school program, and a review that identified systemic inefficiencies in the state public construction bidding system.
Prior to serving as Inspector General, Greg held several positions within the state Office of Inspector General. He was a 17-year member of the Massachusetts House of Representatives, serving on the committees of Ways and Means, Human Services, and Post-Audit and Oversight. As a legislator, Greg was a fiscal conservative. Working with the Pioneer Institute, he introduced legislation that was passed by the House of Representatives and State Senate to institute a workfare requirement in Massachusetts. He also sponsored legislation that resulted in the establishment of the Massachusetts research and development tax credit.
Greg is a Certified Fraud Investigator, and holds a bachelor’s degree from Harvard College, a master’s degree in public administration from The Kennedy School of Public Administration at Harvard, and a master’s degree from the Sloan School at M.I.T., with a concentration in finance. Greg and his wife Marion live in Norwood and have four children and one grandchild.
Entries by Greg Sullivan
Advocates of the proposed surtax paint a picture of the Massachusetts tax system as highly regressive. They fail to mention that ITEP, the organization that produced the data upon which they rely, rated Massachusetts as having a more progressive tax system than 29 other states. ITEP fails to adequately explain their model’s treatment of the tax incidence of sales, excise, and property taxes, and they exclude a number of other aspects of the tax code that make it seem artificially regressive.
This report finds that, under a graduated income tax, Massachusetts’ top marginal short-term capital gains tax rate would be the highest in the nation, exacerbating a tax and regulatory environment that has made it hard for day traders and other investors to contribute to Massachusetts’ economy. By imposing a 4 percent income on all annual income over $1 million, including capital gains, the graduated income tax would penalize the capital formation that is the key to long-term growth and higher living standards for all in the Commonwealth.
This policy brief finds that the state constitutional amendment promoted by the Massachusetts Teachers Association and the Service Employees International Union to add a 4 percent surtax to all annual income above $1 million will adversely impact a significant number of pass-through businesses, ultimately slowing the Commonwealth’s economic recovery from COVID-19.
The state constitutional amendment proposed by the Service Employees International Union and the Massachusetts Teachers Association to add a 4 percent surtax to all annual income above $1 million purports to use cost-of-living-based bracket adjustments as a safeguard that will ensure only millionaires will pay. But historic income growth trends suggest that bracket creep will cause many non-millionaires to be subject to the surtax over time, according to this report, “The Great Mismatch: The graduated income tax proposal’s gravely flawed escalation factor.”
This report finds that, if passed, a constitutional amendment to impose a graduated income tax would raid the retirement plans of Massachusetts residents by pushing their owners into higher tax brackets on the sales of homes and businesses. The study aims to help the public fully understand the impact of the proposed new tax.
Advocates of a constitutional amendment that would apply a 4 percent tax on all annual individual income over $1 million argue that similar taxes in other states have had little impact on the migration of millionaires, citing the research of Cornell University Associate Professor Cristobal Young, which suggests that “millionaires’ taxes” enacted in other states similar to the one being proposed in Massachusetts have had little impact on millionaire mobility. This paper demonstrates that he drastically undercounts millionaires, and outlines several ways in which he and tax advocates underestimate the number of people who will at some point in their lives be subject to a so-called millionaire’s tax and tax flight trends.
Advocates claim a proposed 4 percent surtax on high earners will raise nearly $2 billion per year for education and transportation, but similar tax hikes in other states resulted in highly discretionary rather than targeted spending. That same result or worse is possible in Massachusetts because during the 2019 constitutional convention state legislators rejected — not just one, but two — proposed amendments requiring that the new revenues be directed to these purposes. After a 2012 tax hike in California aimed to increase education investments, the state legislature dedicated little more than the minimum required by law to education and redirected the majority of the funds to general government operations. The result was a soaring state payroll.
Massachusetts had a net outflow of $20.7 billion in adjusted gross income (AGI) between 1993 and 2018. The biggest beneficiaries of the wealth that fled the Commonwealth were Florida, which captured 47.5 percent of it, and New Hampshire, which captured 26.1 percent. Between 2012 and 2018, Florida saw a net AGI inflow of $88.9 billion. Affluent taxpayers are responsible for an outsized proportion of state tax revenue. The data also show a strong correlation between state taxes and migration. States like Florida and New Hampshire that have no state income tax have seen a net inflow of AGI from higher-tax states like Massachusetts.
This report presents evidence that Connecticut’s embrace of an aggressive tax policy to pay for ballooning government expenditures — including a sharp corporate tax rate increase — has been a major driver in the loss of bedrock employers. Higher corporate tax rates, combined with hikes in the personal income tax and, especially, the estate tax, also appear to be a factor driving away a growing number of the state’s wealthiest residents.
As the initial economic recovery from the COVID-19 pandemic has slowed, a new study from Pioneer Institute finds that governments must continue to provide short-term relief to stabilize small businesses as they simultaneously consider longer-term reforms to hasten and bolster recovery – all while facing a need to shore up public sector revenues.
This new guide to economic recovery in the retail and hospitality industries published by Pioneer Institute calls for the federal and state governments to consider consumption-based refundable tax credits for brick and mortar businesses; the federal government to conduct a detailed study of the costs and benefits of suspending employer-side payroll taxes; businesses to pay special attention to developing and marketing their cleanliness, hygiene and contactless procedures; and third-party customer review sites to include comments about the implementation of COVID safety measures to provide options and reassurance to safety-minded consumers.
At a time when state tax revenues are plummeting, a plan to modernize sales tax collection could get money into state coffers more quickly. This report analyzes the merits of a two-part proposal Governor Baker included in his January state budget submission to streamline state sales tax collections. Sullivan and Mikula find that the first part of Baker’s plan makes sense and is entirely feasible because advances in electronic data processing and electronic funds transfer have eliminated the need for protracted remittance timetables.
Data released today by the U.S. Department of Labor shows that 38.8 percent of the Massachusetts workforce and 28.3 percent of the U.S. workforce have filed unemployment claims since the COVID-19 unemployment surge began ten weeks ago.
Data released today by the U.S. Department of the shows that 33.0 percent of the Massachusetts workforce and 26.2 percent of the U.S. workforce have filed unemployment claims since the COVID-19 unemployment surge began nine weeks ago.
This study shows that standards enforced at the federal and state levels are insufficient to address chronic staffing issues reported by staff and residents’ families at the Holyoke Soldiers’ Home, making that facility particularly vulnerable to the COVID-19 pandemic.
Data released yesterday by the U.S. Department of Labor and the Massachusetts Executive Office of Workforce Development show that 28.9 percent of the Massachusetts workforce and 24.1 percent of the U.S. workforce have filed unemployment claims over the past eight weeks.
The U.S. Department of Labor released its weekly report on jobless claims Thursday morning at 8:30 a.m., reporting that Massachusetts received 55,448 initial unemployment insurance (UI) claims during the week ended May 2. This brings the total of regular UI claims filed in Massachusetts since March 14, the beginning of the unemployment surge, to 781,110.
The U.S. Department of Labor released its weekly report on jobless claims this morning at 8:30 a.m., reporting that Massachusetts received 70,714 initial unemployment insurance (UI) claims during the week ended April 25. This brings the total of unemployment claims filed in Massachusetts since March 14, the beginning of the unemployment surge, to 725,018.
Based on today’s jobless claims report, Pioneer Institute projects that the current unemployment rate in Massachusetts is at least 20.4 percent, with a minimum of 762,299 currently unemployed individuals.
A new report using recent data provided by the Massachusetts Executive Office of Labor and Workforce Development shows that hospitality, retail trade, healthcare and social assistance, and construction are the industries that have suffered the most unemployment as a result of the coronavirus outbreak.
The U.S. Department of Labor reported today that in the week ended April 4, the advance number of seasonally-adjusted initial jobless claims was 6,606,000. This follows 6,867,000 initial claims filed in the week ended March 28 and 3,307,000 in the week ended March 21.
The COVID-19 recession could cause Massachusetts’ unemployment rate to skyrocket to 25.4 percent by this June, according to a new policy brief published by Pioneer Institute. The Commonwealth’s unemployment rate was 2.5 percent in February.
The unprecedented surge of COVID-19- related unemployment claims that began two weeks ago is on pace to wipe out the MA unemployment Reserve Fund within three months, which will force state leaders to turn to the federal government for a bailout loan.
Congress has passed the Coronavirus Aid, Relief, and Economic Security Act, providing $2.2 trillion in financial relief to laid-off workers, hospitals, and distressed industries. The bill provides an extra $600 per week in unemployment benefits to each recipient for up to four months and extends benefits to previously ineligible categories of workers, including independent contractors, those with limited work history, and self-employed persons.
This op-ed by Greg Sullivan and Charlie Chieppo appeared in the Boston Business Journal on March 27, 2020. While passage of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Actis surely good news, it will come nowhere near fully addressing the pandemic’s impact on the commonwealth’s finances. Large block grants would be the best way to provide states with much needed relief. Thanks to the virus, state revenue sources from sales taxes to pension fund receipts are plummeting. At the same time, expenses connected to the outbreak are rising sharply. Just look at unemployment insurance. Weekly state unemployment claims rose from 4,712to 147,995in just two weeks. And while the new stimulus bill will add $600 to each unemployment check for up to four months and […]
Co-authored by Andrew Mikula and Greg Sullivan Everett’s Encore Boston Harbor has entered its third quarter of business with two pieces of good news. First, there has been renewed interest in the construction of a footbridge connecting the Orange Line to the shimmering resort casino, a major step towards improving accessibility and reducing traffic congestion in the vicinity. Second, USA Today named Encore as one of the best casinos outside of Las Vegas. But there is also some bad news. The most recent Massachusetts Gaming Commission revenue report indicates that state revenue from Encore Boston Harbor will fall far short of the $201 million that the casino owner projected for fiscal year 2020 when it was vying for a […]
Going from much larger capital budgets to delivering the actual projects needed to repair and modernize the MBTA will require a “Marshall Plan” that includes improving T hiring practices and internal organization, as well as the strategic use of external resources.
The Massachusetts Legislature must free the MBTA from overly restrictive procurement methods and the T must dramatically increase its project and contract management capacity if it is to reach aggressive capital spending targets aimed at upgrading the system and accommodating more riders.
Efforts to update the Commonwealth’s K-12 education funding formula should focus on narrowing the gap between affluent and low-income school districts and be accompanied by reforms designed to improve student outcomes and enhance accountability.