Massachusetts’ Millionaires Tax

Editorial to the Lawrence Eagle Tribune

Over the past several years, there are two words that have, more than any other, sent Massachusetts lawmakers scurrying for cover: “tax increase.”

This state shed its infamous “Taxachusetts” moniker many years ago, when lawmakers rolled back a number of onerous taxes that had made the state a pariah for many companies and individuals. Every year for the past several years, top lawmakers such as House Speaker Bob DeLeo have expressed the sentiment that there is “no appetite” on Beacon Hill for tax hikes.

The tax rollbacks and the Legislature’s stand on taxes is a strategy that has made this state more competitive. Boston is one of the top 15 creators of new-economy jobs in the nation, according to Bloomberg.

A well-considered tax strategy can lead to job growth and economic expansion, and a habit of sticking to the strategy is something that long-term business investors seek.

But for some lawmakers, the old habits die hard. Take longtime state solon and current Senate President Stanley Rosenberg, for example.

The Amherst Democrat, speaking before a crowd of labor union representatives this week, trumpeted his support for a graduated income tax that would place a 4 percent surcharge on anyone who earns more than $1 million per year. You can sure more and more people will wind up paying the surcharge as legislators tinker with the tax code once the flat income tax is replaced by the grad tax.

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That money — perhaps $2 billion initially — would be used to create good-paying middle-class jobs and pay for better education, said Rosenberg. More money for road repairs and teachers, that’s the promise. Cue the thunderous applause.

Ah, yes, the rich. They don’t pay enough. Make them pay more. It plays well with many audiences, probably most audiences these days.

But this simplistic “solution” is a worn-out platitude to the working middle class. It feeds the worst impulses of politicians and the public, and in the end, it doesn’t accomplish what Rosenberg and other supporters claim.

If the surcharge were to pass, Massachusetts would regain its Taxachusetts reputation. It would have the third-highest graduated income tax rate in the nation, according to the State House News Service. Its impact on job growth is something that is harder to determine, but certainly it would give pause to start-up executives who want to locate in the Northeast. Consider, for example, that although Boston placed No. 15 in the nation for high-tech job creation in Bloomberg’s study, Manchester, New Hampshire, placed No. 6. Part of the reason for its high ranking is its tax policy. New Hampshire, which has no state income tax or sales tax, will no doubt use the millionaires’ tax to lure more businesses over the border.

The bigger problem for Bay Staters is the way that Rosenberg and other top lawmakers have punted down the road one of the worst fiscal problems in the state — the cost of universal health care, or MassHealth. A decade ago, when Massachusetts became the first state in the nation to pass universal health care, lawmakers failed to take action on a known ramification, controlling costs. Politically, it’s far easier to just pass the costs on to taxpayers, rather than face an office full of angry lobbyists.

As a result, the amount of money that taxpayers shell into the health care system is growing wildly. It now consumes half of all state spending, and most of the new tax revenue being generated annually is being fed into it, according to the Massachusetts Tax Foundation, a budget watchdog group. Little wonder why we have no money left over to put toward increased spending on schools and roads.

The problem with MassHealth will be punted even further down the road if Rosenberg gets his graduated income tax. With such a huge influx of money, there’s even less incentive to fix the spending problems.

The “tax the rich” mantra is the battle cry of politicians who lack the fortitude to take on the tough problems they had a hand in creating.

Please see the earlier post dated January 29, 2016 to view the list of representatives in favor of the bill (H3933). Representative Arciero is on the list. House Bill 3933 is a MA Constitutional Amendment that reads:

Amendment Article XLIV of the Massachusetts Constitution is hereby amended by adding the following paragraph at the end thereof:

To provide the resources for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation, all revenues received in accordance with this paragraph shall be expended, subject to appropriation, only for these purposes. In addition to the taxes on income otherwise authorized under this Article, there shall be an additional tax of 4 percent on that portion of annual taxable income in excess of $1,000,000 (one million dollars) reported on any return related to those taxes. To ensure that this additional tax continues to apply only to the commonwealth’s highest income residents, this $1,000,000 (one million dollar) income level shall be adjusted annually to reflect any increases in the cost of living by the same method used for federal income tax brackets. This paragraph shall apply to all tax years beginning on or after January 1, 2019.

This amendment will be heard in Joint Session on May 18, 2016.

 

2015 per diems

And the winner is:

Beacon Hill Roll Call

By Bob Katzen

Updated:   02/22/2016 09:26:09 AM EST

THE HOUSE AND SENATE. There were no roll calls in the House or Senate last week. Beacon Hill Roll Call has obtained the 2015 official list from the state treasurer’s office of the “per diem” travel, meals and lodging reimbursements collected by the Legislature’s 157 state representatives from Jan. 1, 2015, through Dec. 31, 2015. The list reveals that representatives collected a total of $239,732. Combined with the $63,590 that the state’s 38 senators collected as reported in a recent Beacon Hill Roll Call, the grand total for both branches is $303,322.

Under state law, per diems are paid by the state to representatives “for each day of travel from his place of residence to the Statehouse and return therefrom, while in the performance of his official duties, upon certification to the state treasurer that he was present at the Statehouse.” These reimbursements are given to representatives above and beyond their regular salaries.

The amount of the per diem varies and is based on the city or town in which a representative resides and its distance from the Statehouse. The Legislature in 2000 approved a law doubling these per diems to the current amounts. The payments range from $10 per day for legislators who reside in the Greater Boston area to $90 per day for some Western Massachusetts lawmakers and $100 per day for those in Nantucket. Representatives who are from areas that are a long distance from Boston’s Statehouse most often collect the highest total of annual per diems.

Some supporters of the per diems say the system is fair and note the rising costs of travel, food and lodging.

They argue many legislators spend a lot of money on travel to the Statehouse and some spend the night in Boston following late sessions. Others say that some legislators accept the per diem but use all of the revenue they receive to support local nonprofit causes. They say that not taking the per diem would leave that money in the state’s General Fund to be spent on who knows what.Some opponents argue most private-sector and state workers are not paid additional money for commuting. They say the very idea of paying any per diem is outrageous when thousands of workers have lost their jobs and homes, and funding for important programs has been cut. Others say the per diem is especially inappropriate given the 3-cent-per-gallon hike in the state’s gas tax that the Legislature approved in July 2013.

The 2015 statistics indicate that nearly one-half (78) of the state’s 157 representatives have received reimbursements ranging from $18 to $8,730, while a little more than one-half (79) have so far chosen not to apply for any money. State law does not establish a deadline that representatives must meet in order to collect the per diems.

The representative who received the most per-diem money in 2015 is William “Smitty” Pignatelli (D-Lenox) who received $8,730.

LOCAL REPRESENTATIVES’ PER DIEMS FOR 2015

The dollar figure next to the representative’s name represents the total amount of per diem money the state paid him or her in 2015. The number in parentheses represents the number of days the representative certified he or she was at the Statehouse during that same period. Representatives who have not requested any per diems have “0 days” listed. That is not meant to imply that these representatives didn’t attend any sessions but rather that they chose not to request any per diems.

Rep. James Arciero, $4,940 (190 days); Rep. Cory Atkins, $0 (0 days); Rep. Jennifer Benson, $0 (0 days); Rep. Colleen Garry, $1,300 (50 days); Rep. Thomas Golden, $0 (0 days); Rep. Kenneth Gordon, $0 (0 days); Rep. Sheila Harrington, $0 (0 days); Rep. Marc Lombardo, $0 (0 days); Rep. James Lyons, $0 (0 days); Rep. James Miceli, $774 (43 days); Rep. Rady Mom, $0 (0 days); Rep. David Nangle $4,004 (154 days); Rep. Jennifer Benson $0 (0 days); Former Rep. Stephen DiNatale $1,404 (39 days); Rep. Kimberly Ferguson $3,744 (104 days); Rep. Sheila Harrington $0 (0 days); Rep. Harold Naughton $0 (0 days); Rep. Dennis Rosa $1,008 (28 days); Rep. Jonathan Zlotnik $0 (0 days).

Special Elections

Mailers target Hay as Democratic Party chair appeals for help

By Matt Murphy, State House News Service

Updated:   02/25/2016 01:58:28 PM EST
A mailer targeting state rep candidate Stephan Hay is being called misleading by state Democrats.

A mailer targeting state rep candidate Stephan Hay is being called misleading by state Democrats.

BOSTON — Massachusetts Democratic Party Chairman Thomas McGee has reached out to his legislative colleagues seeking manpower to help blunt an “all-out blitz” planned by a right-leaning independent group backing two Republicans running for House seats in special elections to be decided next Tuesday.

The Massachusetts Fiscal Alliance, a conservative non-profit that has spent heavily in election cycles to target Democratic candidates for state office, started blanketing the Fitchburg-Lunenburg area targeting Democrat Stephan Hay, a Fitchburg city councilor, over transparency, internet sales taxes and illegal immigration.

A letter sent to supporters on Tuesday from Jordanne Anderson, of the MassFiscal Alliance, said she needed to raise $23,000 in seven days to “execute MassFiscal’s mission” ahead of the March 1 special elections in Fitchburg and Peabody.

“The plan is an all-out blitz,” Anderson wrote.

MassFiscal officials could not immediately be reached for comment on how much they planned to spend on the two races.

With Gov. Charlie Baker planning to campaign over the weekend in both Fitchburg and Peabody on behalf of Dean Tran in Fitchburg and Stephanie Peach in Peabody, McGee emailed legislators Thursday asking them and their staffs to help staff a phonebank at Democratic headquarters in Boston.

“We can’t match the Republicans and their allies with outside spending, but, with your help, we can beat them with grassroots support,” McGee said in the message, obtained by the News Service.

McGee, a Democratic senator from Lynn, attached a copy of a MassFiscal mailer being distributed in Fitchburg and Lunenburg “repeating the same ridiculous accusations they charged many of you with last election.”

The mailer stated that Tran supports making legislative committee votes available to the public and giving preference to veterans over illegal immigrants in public housing, and opposes taxing sales on the internet. Under Hay’s name and photo, the card states “declined” next to all three issues, suggesting the Democrat did not respond to MassFiscal’s campaign questionnaire.

The issue of veteran preference in public housing is a particularly sensitive one given that many House Democrats faced similar charges from MassFiscal in 2014 that they supported illegal immigrants over veterans.

The charge is grounded in a vote taken during debate on a veterans’ benefit bill to uphold the ruling of the House chair that a Republican amendment to give preference to veterans in public housing over undocumented immigrants was not germane to the bill and therefore out of order.

Rep. James Arciero, a Westford Democrat who was targeted with the same accusation by MassFiscal in 2014, called the claims “bush league” at the time. “It’s a smear campaign. To suggest the Massachusetts Legislature somehow supports illegal immigrants over veterans is absurd,” he said then.

MassFiscal Eecutive Director Paul Craney defended the 2014 mailers at the time as a “black-and-white” representation of the lawmaker’s voting record.

McGee told lawmakers in his Thursday letter that they did not have to even come to downtown headquarters to participate in the phonebank, but could do it from their districts with a computer. He also said shifts would be available on election day to help get out the vote for the two Democrats running.

Hay and Tran are running for the seat vacated by Stephen DiNatale, a Democrat who left the Legislature after being elected mayor of Fitchburg. Democrats are also trying to reclaim a seat in Peabody that the party held until the death of Joyce Spiliotis in 2014. Republican Leah Cole won that seat in a special and resigned last year mid-term to focus on her nursing career.

Peach is running against Democrat Thomas Walsh, a Peabody city councilor and former state representative who is trying to return to the Legislature.

Arciero Votes for Millionaires Tax

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Committee approves millionaires tax

Would impose 4% surtax on income over $1m

STATE HOUSE NEWS SERVICE

THE LEGISLATURE’S COMMITTEE ON REVENUE on Thursday morning gave its stamp of approval to a proposed constitutional amendment that would establish a 4 percent surtax on income in excess of $1 million in a bid to raise $1.9 billion.

The proposal (H 3933) seeks to raise additional revenue for education and transportation initiatives by hiking the tax rate for earnings in excess of $1 million to about 9 percent.

Revenue Committee Chair Rep. Jay Kaufman on Thursday praised the Raise Up coalition, who spearheaded the effort for the constitutional amendment, in remarks following a favorable vote on the measure.

Without debate on the matter, the committee voted 12-4 to recommend that the bill ought to pass.Rep. Walter Timilty, a Milton Democrat, joined Republicans Sen. Ryan Fattman, Rep. Randy Hunt and Rep. Shawn Dooley in voting to recommend that the bill should not pass.

[Watch: Revenue Committee Vote]Supporters pressed lawmakers last week to advance the proposal, arguing that the “fair share amendment” would allow the state to put money into transportation projects and education without hitting the middle class with a tax hike.

Raise Up Massachusetts, the group behind the proposed amendment, has estimated the surtax would affect 14,000 individuals, generating between $1.3 billion and $1.4 billion in additional revenue, while the Department of Revenue estimated a higher yield of $1.6 billion to $2.2 billion with $1.9 billion as the median.

Opponents argued that the amendment would have serious consequences that are

Revenue Committee Chair Rep. Jay Kaufman on Thursday praised the Raise Up coalition, who spearheaded the effort for the constitutional amendment, in remarks following a favorable vote on the measure. [Photo: Antonio Caban/SHNS]

Revenue Committee Chair Rep. Jay Kaufman on Thursday praised the Raise Up coalition, who spearheaded the effort for the constitutional amendment, in remarks following a favorable vote on the measure. [Photo: Antonio Caban/SHNS]

not being considered by proponents, like the possible outward migration of Bay State millionaires and the impact on the state budget of the associated decline in capital gains taxes.“On principle, one thing I believe is that you don’t raise people up by tearing others down,” Fattman, who said he would be drafting the minority report, said after the committee vote. “An income tax the way it is is a fair tax and everyone pays the same thing, so in principle, when we talk about fairness, I think that’s fair.”

Fattman also said that if the amendment were to become law, it could dissuade corporations from choosing to base themselves in Massachusetts.“We just attracted GE to come here and I don’t think it makes sense to give anybody any questions about where we’re going as a state with the business climate. We want to make sure that we continue to attract people,” he said.

Rep. Jay Kaufman, co-chair of the Revenue Committee, praised the work of the Raise Up Massachusetts coalition in gathering the signatures necessary to get the proposal before the Legislature and said that he expects the question to go to voters on Nov. 6, 2018 — 1,013 days from now.

“This proposal come to us at the intersection of two huge challenges, the challenge first to find the financial wherewithal to meet the needs of Massachusetts families and have the education and transportation that are a vital part of a vibrant economy,” he said. “And second the challenge to address the gross wealth and income inequality in the state. We are number one in the nation in our inequality, not a distinction we want or need.”

If the proposal is advanced by House and Senate members meeting jointly in Constitutional Conventions this session and in the 2017-2018 session, the question could go to voters in November 2018.

The next meeting of the Constitutional Convention is Wednesday, Feb. 3, but it’s not clear that the proposal will surface for a vote then. Since it’s a citizen-sponsored amendment, the plan needs support from just 50 lawmakers in two consecutive legislative sessions in order to qualify for the 2018 ballot.

Fattman said he is interested to see the political dynamic of the convention, given that House Speaker Robert DeLeo on Wednesday pledged to keep new taxes and fees out of the fiscal 2017 budget.

“He said no new taxes, no new fees. When we go in on Feb. 3 I think that’s what a lot of members have to think about when they vote. This is a tax, this is a tax increase,” he said. “This is a tax increase vote on Feb. 3. I’m encouraged by the speaker’s position and I think he will be with me.”

Voting in favor of recommending that the proposal ought to pass were Kaufman, committee co-chair Sen. Michael Rodrigues, Rep. Timothy Toomey, Sen. James Timilty, Sen. Benjamin Downing, Rep. Denise Provost, Sen. Daniel Wolf, Rep. James Dwyer, Sen. Eric Lesser, Rep. Thomas Stanley, Rep. James Arciero and Rep. Alan Silvia.

 

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