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

In a letter released earlier this week, the Massachusetts High Technology Council called for Massachusetts Attorney General Maura Healey to ensure that the language of a tax hike amendment scheduled to appear on the state ballot next year is sufficiently transparent. The Attorney General is charged with presenting an accurate and transparent summary of all ballot initiatives.

If approved by voters, the ballot question would place a 4 percent surtax on households and thousands of Massachusetts businesses that in any one year have income exceeding $1 million. Proponents of the initiative claim the measure would raise an additional $2 billion annually for education and transportation.

As the MHTC letter and a Pioneer report issued in March demonstrate, the reality isn’t that simple.

In 2018, the SJC struck down an identically worded version of the tax proposal.  During oral argument, lawyers for the Attorney General and those arguing that the proposed amendment’s wording was unconstitutional responded affirmatively when the late Chief Justice Ralph Gants asked if, under the proposal, it was possible for legislators to divert current education and transportation funds to other purposes and simply make up the shortfalls with the revenues from the new tax.

Tellingly, states that have passed new taxes ostensibly meant to increase investments in specific priority areas have done exactly that.  In California, which approved a new tax in 2012 supposedly “dedicated” to education, overall education funding remained largely unchanged because funds previously dedicated to education were diverted to other purposes.

In Massachusetts attempts to require that new revenues associated with the tax amendment go to education and transportation have been rebuffed. In fact, state lawmakers have twice rejected proposals to direct all new tax revenues to education and transportation.

People deserve to know what they’re voting for.  A description of next year’s ballot initiative that misleads voters into believing that a “yes” vote will automatically increase overall education and transportation funding in Massachusetts falls short of that basic standard.

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Pioneer Institute Expects That Massachusetts Taxpayers Will Be Refunded $3.2B Due To State Revenue Cap

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Survey of Business Sentiment: MA Income Tax Hike Would Lead to Employer Exodus

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Nearly three quarters (73 percent) of Massachusetts business leaders think business associates will leave the state if a constitutional amendment appearing on the November ballot to hike taxes is successful, according to a survey conducted by Pioneer Institute.

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As States Compete for Talent and Families, Massachusetts Experienced a Six-Fold Increase in Lost Wealth Compared to a Decade Earlier

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With competition for businesses and talent heating up across the country, in 2020 Massachusetts shed taxpayers and wealth at a clip six times faster than even just a decade ago. Between 2010 to 2020, Massachusetts’ net loss of adjusted gross Income (AGI) to other states due to migration grew from $422 million to $2.6 billion, according to recently released IRS data now available on Pioneer Institute’s Massachusetts IRS Data Discovery website. Over 71 percent of the loss was to Florida and New Hampshire, both no income tax states.

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Book Reveals How Tax Hike Amendment Would Damage Commonwealth’s Economic Competitiveness

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Study: Legislature Likely to Reduce Spending on Education and Transportation from Other Revenue Sources, Replace Cuts with Surtax Money

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Pioneer Supports Legal Challenge to Misleading Tax Ballot Language, Releases Video

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

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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.

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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.

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

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