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

Public Statement on Massachusetts High Technology Council’s Challenge to the Graduated Income Tax Ballot Language

The Massachusetts High Technology Council is right to insist on transparency in the language of a tax hike amendment scheduled to appear on the Massachusetts state ballot next year.

Study: “Millionaire’s Tax” Would Have Far-Reaching Effects on “Pass-Through” Businesses

A proposed graduated income tax that will appear on the statewide ballot in November 2022 will have much more far-reaching implications than most people realize because the surtax also extends to “pass-through” income from entities such as S and limited liability corporations, partnerships, and sole proprietorships that are taxed on individual tax returns, according to a new study published by Pioneer Institute.

Supply Chains Understood: Covid’s Global Demand Stress Test This…
Welcome to New Hampshire Sign: Live Free or Die

Study Warns that New Hampshire Tax Policies Would Exacerbate Impacts of a Graduated Income Tax

Drawing on migration patterns between Massachusetts and states like Rhode Island and Tennessee, Pioneer Institute is releasing a study showing a direct correlation between personal income tax rates and household domestic migration patterns between 2004 and 2019. The study suggests that instituting a graduated income tax will shrink the tax base and deter talented workers and innovative employers from coming to and staying in the Bay State.

Study Finds SALT Deduction Cap, Graduated Income Tax Will Combine to More Than Double Tax Burden on Some Households

A provision of the federal Tax Cuts and Jobs Act of 2017 strictly limiting deductions for state and local taxes (SALT) will greatly exacerbate the adverse effects of a proposal to create a constitutionally mandated graduated income tax, according to a new study published by Pioneer Institute.

Trevor Mattos Shows How Massachusetts Runs on Immigrants

This week on JobMakers, Host Denzil Mohammed talks with Trevor Mattos, research manager at Boston Indicators, the research center at The Boston Foundation, which educates state and local leaders on the important contributions immigrants are making. They discuss the urgency of this work, particularly in a time of divisive disinformation about immigrants and the uncertainty of the pandemic, and some of the surprising findings on the disproportionately large impact immigrant workers, entrepreneurs and innovators are having on the local economy

Study Suggests How to Advance Fairness, Predictability of “Payment in Lieu of Taxes” Programs Aimed at Nonprofits

A new white paper by Pioneer Institute calls for increased transparency over the basis for payment in lieu of taxes (“PILOT”) agreements between municipal governments and nonprofit organizations, while also encouraging nonprofits to publicize and expand the community benefits they provide.

Public Statement on Implementation of the Charitable Giving Deduction

Despite being awash in cash, the state Legislature just overrode Gov. Charlie Baker’s veto of a provision to delay by yet another year a tax deduction for charitable donations. Rep. Mark Cusack, House chair of the Joint Committee on Revenue, said “it doesn’t mean no, just not now.” If not now, when?

Employment trends in the Greater Boston Area and Touristy Massachusetts Counties during the COVID-19 Pandemic

Using MassEconomix, Pioneer Institute’s database on employment…

Ely Kaplansky Goes from Immigrant to Inc. 5000 Insurance Entrepreneur

This week on JobMakers, host Denzil Mohammed talks with Ely Kaplansky, President & CEO of Kaplansky Insurance. Since 1974, Ely has created hundreds of jobs in Massachusetts and beyond, with 85 employees in 15 offices across the state today, and he has grown his business during the pandemic, such that Kaplansky Insurance was named to Inc. magazine’s "5000 Fastest-Growing Private Companies in America" list. His success fulfilled the dreams of his parents when they moved from Israel to America in 1955, with just the clothes on their backs and an aunt to take them in. Their journey began in the concentration camps of Germany, and Ely’s story is all about the opportunity and freedom America offers.

Umesh Bhuju Seeks a Fair Deal for Immigrants, Farmers & the Environment

This week on JobMakers, Host Denzil Mohammed talks with Umesh Bhuju, owner of Zumi’s Espresso in Ipswich, Massachusetts, about how a business model based on selling nothing but fair-trade products can thrive in a world driven by profit. He describes his early experiences in his homeland of Nepal, where he witnessed child labor, and how that has shaped his pursuit of the American dream.

Study Says Massachusetts Surtax Proposal Could Reduce Taxable Income in the State by Over $2 Billion

As voters now begin to weigh the potential impact of a ballot proposal to increase taxes on business owners, retirees and wealthier households, a new literature review by Pioneer Institute shows that many existing academic studies find that wealthy individuals are particularly sensitive to changes in tax policy. Other studies explicitly warn policymakers that behavioral responses to taxing the rich could erode the tax base and ultimately strain state budgets.