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Advocates debate millionaire tax

Funds would go to transportation, education

Sandra Larson | 1/27/2016, 10:41 a.m.
Supporters and opponents testified at the State House last week on a proposed constitutional amendment that would impose an extra ...
Rodney Mohammed, a Brockton health care worker and parent of two young children, testifies at the Massachusetts State House Jan. 19 in support of a proposed state constitutional amendment to add a 4 percent tax on income over $1 million. The new revenue would support education and transportation initiatives. Photo by Sandra Larson

Supporters and opponents testified at the State House last week on a proposed constitutional amendment that would impose an extra 4 percent state tax on annual income over $1 million in order to generate funds for public education and transportation projects.

Initiated by the Raise Up Massachusetts coalition and predicted to generate approximately $1.9 billion in new revenue, the amendment could go before voters in 2018.

“The Fair Share Amendment would provide essential revenue to make much-needed investments across all levels of public education and enhance our transportation infrastructure,” testified Barbara Madeloni, president of the Massachusetts Teachers Association, at a three-hour hearing of the Joint Committee on Revenue.

“In recent years, we’ve seen the divide between rich and poor grow to historic levels,” Madeloni said. “... We think it is fair to ask those who have reaped the biggest rewards from our economy to pay a fair share toward reversing barriers to success for Massachusetts families.”

Other supporters testifying included transportation advocates, teachers, parents, senior citizen advocates, clergy and experts on economics and budget policy.

Opposition was voiced primarily by representatives of business and tax watchdog groups.

Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, argued that an income tax increase imposed on a relatively small segment — the new tax would affect fewer than 20,000 taxpayers — would increase the “volatility” of the state’s revenue stream and have negative consequences as millionaires and businesses opted to exit Massachusetts.

“I think the best way to help folks is to provide employment opportunities and create jobs,” McAnneny said under questioning from Revenue Committee members.

John Regan, executive vice president of Associated Industries of Massachusetts, noted that higher earners pay more in absolute tax dollars than lower earners, and called the new tax unfair.

“It seems like a massive increase, and seems anything but equitable to me,” he said.

Rep. Jay Kaufman of Lexington, one of the Committee co-chairs, took issue with Regan’s line of reasoning.

“When I see the wealthiest among us paying under 5 percent of household income in state and local taxes, the poorest paying 10 percent and the vast majority of us paying around 9 percent, that seems fundamentally unfair to me,” Kaufman said.

Arnold Hiatt, former president of Stride Rite footwear, spoke in favor of the amendment.

“Based on my experience, the only way to be competitive with other states is to invest in an educated workforce,” said Hiatt.

Representatives of the Massachusetts Budget and Policy Center noted that the state’s highest income households now pay a lower share of household income in taxes than other Massachusetts households, as Kaufman pointed out. MassBudget’s recent report also finds that transportation infrastructure investments create a competitive advantage over other states and regions.

Academic support

A group of 71 economists from dozens of colleges and universities across Massachusetts submitted a written statement supporting the amendment. They reiterate that the proposed increase applies only to the portion of annual income above $1 million, call it “fair,” and assert that the new tax would yield economic gains, not reduce growth.