The clock is ticking towards December 30, 2017.  As part of…

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.

The Massachusetts labor force has transformed in recent decades, with some of the biggest changes being the advancement of women, workers getting older and more diverse, and a divergence in labor force participation rates based on levels of educational achievement, according to “At a Glance: The Massachusetts Labor Force,” a white paper written by Pioneer's Economic Research Associate Aidan Enright.

If adopted, a constitutional amendment to hike state taxes that will appear on the ballot in November could erase the hard-earned progress Massachusetts has achieved toward economic competitiveness over the last 25 years and may not result in any additional education and transportation funding, according to a new book from Pioneer Institute, entitled Back to Taxachusetts?: How the proposed tax amendment would upend one of the nation’s best economies, which is a distillation of two dozen academic studies.

This report finds that analyses from the Massachusetts Department of Revenue (MADOR, 2016) (and more recently, Tufts University’s Center for State Policy Analysis (2022)) dramatically underestimated the number of households and businesses impacted by the constitutionally-imposed tax hike that the legislature is putting before voters in November 2022. The proposed tax would impact multiples of the number of people previously estimated, over a nine-year period, since the majority of “millionaires” only earn $1 million once during that time.

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.

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 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 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.