Globe columnist Shirley Leung makes our argument on the tax hike amendment

Share on Facebook
Share on Twitter
Share on

In today’s Boston Globe, business columnist Shirley Leung raises important questions about who exactly will be impacted by the tax hike amendment that will appear on the Massachusetts ballot in November. Shirley notes:

Yet the first ad from the opposition, which debuted last week, paints a different picture of who could get hit with the proposed hike: farmers, lobstermen, small business owners, and even homeowners. That’s because “they” include so-called one-time millionaires.

She cites a Tufts University analysis showing that “the pool of wealthy households in Massachusetts changes dramatically year to year with only about half consistently earning incomes of more than $1 million,” and describes some of the people who oppose it.  Pioneer presented the actual numbers, from Massachusetts Department of Revenue data, in its The Graduated Tax Trap study (April 2021): The majority (60 percent) of the families that would be impacted by the tax proposal earned more than a million dollars once or twice in the 10-year period surveyed through 2017; these are retirees and small businesses selling assets to build a nest egg that will have to serve them over 20 or 30 years.  Fewer than 25 percent of families regularly earned more than $1 million.

These people include Ann Sullivan, who owns Metro Equipment Corp. in Braintree. As Shirley describes,

Ann also does not consider herself a millionaire, but she will be classified as one when she sells her excavation business… Sullivan figures that if she sells her company and nets $2 million, the first million will be taxed at the rate everyone pays, which is 5 percent, and then the next million dollars would be taxed at 9 percent. Instead of paying $50,000 in taxes on the next million dollars, she would owe $90,000 if the ballot question passes. Although a $2 million payday may seem like a lot of money to most people, Sullivan, 61, said the sale proceeds would constitute her retirement. “This is my nest egg,” Sullivan said. “When I stop working, I stop working. So every dollar is going to count.”

Pioneer’s research going back several years has shown that 46 percent of Massachusetts taxpayers who earn more than $1 million in a year do so just once over a decade, and it is derived from profits from the one-time sale of a business or home, usually – as with Ann Sullivan – to fund retirement.

Pioneer’s Jim Stergios and Mary Connaughton explain that very same point in this June video:


Pioneer’s book, Back to Taxachusetts?, devotes a whole chapter to this topic. As the book’s fact sheet summary notes,

The tax mainly impacts retirees and small business owners—not “millionaires” The majority of households ensnared by the tax hike are not “millionaires”—they do not regularly have incomes exceeding $1 million. They are households selling a business or seniors selling their home and assets to fund retirement. Pass-through businesses—partnerships, sole proprietorships, S or limited liability corporations that are taxed via individual returns—account for 70% of all for-profit entities and employ half of Massachusetts’ workforce. When added to other taxes that only apply to such entities, these small businesses would pay taxes at a higher rate than large corporations.

More recently, Pioneer’s Jim Stergios has noted this in The Wall Street Journal:

That tax revenue would come at a steep cost. Because the amendment’s definition of income includes capital gains and “pass-through” income from entities taxed via individual returns, such as partnerships, sole proprietorships and S corporations, the proposed tax would primarily affect retirees and small businesses.

And in a debate on Keller @ Large.


As Shirley notes at the conclusion of her column, how Massachusetts voters come down on this issue will be related to whether they themselves or someone they know expect to earn $1 million in a single year, and she argues, importantly, that “in an entrepreneurial economy and a housing market like ours, the answer is perhaps not that clear.”

Suddenly, as we’ve been showing through our research, more people are seeing that the impact of this tax is much greater than they thought – it’s not just the super wealthy.

We look forward to a robust discussion about this important topic, as we believe that if the public understands the full implications of this proposal – the faces of the retirees and small business owners who will lose their nest eggs and hard-won earnings – they will reject it decisively.

Get Updates on Our Economic Opportunity Research

Additional Pioneer reports on this topic:

Related Posts

Skill-based immigration could ease labor shortage

A recent Biden administration executive order that amends the Schedule A list, which identifies occupations experiencing labor shortages and allows immigrants in those occupations to expedite their employment in the U.S., could positively impact the hiring of skilled international workers for years to come — a welcome development as the country and Massachusetts struggle to attract talent amidst a worsening labor shortage.

Statement on Massachusetts Falling from 34th to 46th on Tax Foundation’s 2024 Business Tax Climate Index

Massachusetts policymakers should pay close attention to the latest evidence of the Commonwealth’s declining competitiveness. Last week, the Tax Foundation published its 2024 State Business Tax Climate Index, which showed Massachusetts’ ranking falling more than any other state, from 34th to 46th.

Poll: MA Voters Oppose Legislative Proposals to Change Tax Rebate Law

A strong majority of registered Massachusetts voters oppose a plan recently announced by state legislative leaders that would change the way tax rebates are distributed in Massachusetts under a state law approved by voters in 1986, according to a new poll sponsored by Pioneer Institute and the Massachusetts High Technology Council.

Installing bike and bus lanes requires public debate

The problem isn’t with the concept of bike lanes but, rather, the lack of public conversation or transparency. Municipal governments are changing the infrastructure and character of entire neighborhoods and small commercial centers with little input from those most affected.

Study: Immigrant Entrepreneurs Benefit N.E. Economy, Despite Facing Obstacles to Growth

BOSTON – Immigrants in Massachusetts and New England are more likely to be self-employed, but the businesses they own tend to be in different industries than those owned by the U.S. born, according to a new study published by Pioneer Institute.

Public Statement on the House’s Proposed Tax Reform and Budget

Pioneer Institute applauds key tax reform provisions advanced by the Speaker and House leadership, including a reduced short-term capital gains tax rate and implementation of a single sales factor apportionment. But leadership must do more to bolster the state’s economic competitiveness and slow out-migration of wealth and business owners that endangers the commonwealth’s economic future.

Licensing burdens thwart economic growth in Massachusetts

Immigrants account for 17% of Massachusetts residents but start a quarter of the Commonwealth’s new businesses. These entrepreneurs could create even more jobs that further lift wages and standard of living if not for the unnecessary obstacle of restrictive state and local occupational licensing laws.

Report: Immigrant Entrepreneurs Provide Economic Benefits, but Face Significant Obstacles

Immigrants have started a quarter of all businesses in Massachusetts despite making up just 17 percent of the state workforce, and those establishments appear to be more innovative than those founded by native-born Americans. Despite these contributions, shrinking federal visa caps and red tape are among the factors making it more difficult for immigrants to come to the U.S., according to “Immigrant Entrepreneurs and the Barriers They Face: An Academic Literature Review,” published by Pioneer Institute. 

Pioneer Institute Statement on Question 1

Yesterday, voters came closer than many expected to rejecting the largest tax increase in Massachusetts history, even though opponents were dramatically outspent by the unions that bankrolled the amendment to the state Constitution. 

Taxachusetts Must Be Stopped

Going back to the bad old days of Taxachusetts would be an almost unfathomable mistake. Between the $3 billion bombshell that upended the recent legislative session, the ambiguity about how the tax revenue will actually be spent, and the contrasting examples of neighboring New Hampshire and Connecticut, Bay State voters have plenty of reasons to come back to reality and reject the ill-conceived proposal to amend the Massachusetts constitution this November.

Study: Legislators Must Answer Key Questions Before Setting Policy for App-Based Rideshare/Delivery Workers

After Massachusetts’ Supreme Judicial Court declared an initiative that was to appear on the November ballot unconstitutional, the issue of how to classify app-based rideshare/delivery workers is back in the hands of the state Legislature.  A new study published by Pioneer Institute distills from the research literature eight questions legislators must answer before determining how to address this fast-growing industry.

WSJ op-ed: Don’t Make Massachusetts ‘Taxachusetts’ Again

Unlike many blue states, Massachusetts has resisted the temptation to raise taxes on high earners. That antitax fortitude is about to be tested. In November, state legislators will ask voters to approve an amendment to the Massachusetts constitution adding a 4% surcharge to annual income over $1 million.