Proposed 'Millionaire Tax' Struck Down By Massachusetts High Court

Jun 18, 2018

Voters will not have an opportunity to impose an income surtax on the state’s wealthiest earners this November, after the Supreme Judicial Court ruled Monday that the proposal known as the “millionaire tax” cannot appear on the ballot.

The proposal, which supporters have dubbed the “Fair Share Amendment,” would have raised an estimated $2 billion via a 4 percent surtax on any income above $1 million. The amendment stipulated that money raised would be earmarked for education and transportation expenditures.

Attorney General Maura Healey ruled last year that the proposed amendment to the state’s constitution was legal, and qualified for the ballot, but opponents including executives from Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, the Massachusetts High Technology Council and others disagreed. They took the AG to court to challenge the constitutionality of the amendment.

Lawyers for the opponents argued the state constitution prohibits “logrolling,” which is the practice of placing more than one objective in a single constitutional amendment. The opponents said this amendment did that, by both imposing the tax, and then stipulating how the money could be spent.

Attorneys for the group backing the amendment, Raise Up Massachusetts, claimed the proposal is constitutional.

Attorney Kate Cook told the SJC justices in February that transportation and education are related since “they are keys to social mobility,” adding they are “chronically underfunded government services.”

Raise Up is also backing two other ballot initiatives this November: one guaranteeing paid family and medical leave for workers, and another raising the hourly minimum wage to $15 an hour.

The SJC ruling could have a bearing on negotiations to reach a compromise to avoid many of the questions from going to the ballot. A separate ballot initiative sponsored by the Massachusetts Retailers Association would roll back the state’s sales tax from 6.25 percent to 5 percent, and make permanent a “sales tax holiday” during a weekend in August. Many have viewed the two tax related referenda -- the surtax on wealthy earners and the sales tax rollback -- as counteracting each other even though the surtax is expected to bring in several million dollars more than what is expected to be lost if the sales tax roll back is approved.

A recent WBUR poll shows both initiatives would be expected to pass if put before the voters.

With the surtax ruled unconstitutional, Beacon Hill budget writers are fearful state revenues could take a huge hit if voters roll back the sales tax, with nothing available to replace the lost revenue.

Key state legislators have been working with stakeholders behind the scenes to try to reach some sort of a “grand bargain” on the tax questions, as well as the paid medical leave and minimum wage ballot questions.

The Legislature has until early to mid-July to come up with their own compromise, which if approved and signed by the governor, could prompt backers of the initiatives to accept a legislative solution in exchange for dropping their ballot questions.

This report was originally published by WBUR.