I wanted to share with you my remarks from the June 14, 2017 Constitutional Convention on the Fair Share Amendment. This measure now moves to the November 2018 ballot.
It is not every day that we debate an amendment to the state’s Constitution. It is a privilege to do so today and, for the second time, consider the Fair Share Amendment that we passed by a vote of 135-57 last spring.
After we vote for it again today, it will head to the ballot on Nov 6, 2018, 510 days from now, and the citizens of Massachusetts will have the opportunity to address two fundamental challenges – the need for new revenues for public education and the need for new funding for our transportation system – roads, bridges and public transit. Voters will be able to address those challenges in a way that makes our tax system fairer, more equitable and more sustainable.
We owe Raise Up Massachusetts, a coalition of scores of advocacy organizations, an abundance of gratitude for giving us the language of the amendment and the campaign to collect signatures on the initiative petition that brought us to this moment. This was no small accomplishment. Raise Up collected hundreds of thousands of signatures and, even more significantly, accomplished extraordinary feats of diplomacy to bring together disparate organizations, bridge many differences, and find not just common ground but the higher ground to finally address some of our most basic revenue needs and to the fundamental truth that we cannot continue to raise revenue using our current tax system – it is regressive and unsustainable;
What was the need they saw?
No fewer than five reports, commissions and committees in the past few years agreed that we need at least $1 billion per year going forward to repair and maintain the Commonwealth’s roads, bridges, and public transit.
Last year’s Foundation Review Commission and many non-partisan and bi-partisan studies found a comparable $1 billion annual deficit in our state and local education budget.
Education and transportation are unquestionably two of the Commonwealth’s most basic responsibilities, and we have been falling short of what it takes to meet the needs of our citizens and of a vibrant economy.
Even if we could agree on the need for new public investments – and there will be some today, as there always are, who don’t see that need – the combination of property taxes, sales taxes and a flat income tax that defines our current tax system means that the weight of taxes falls disproportionately on the poor and middle class in Massachusetts. Those with the least income pay just over 10% of their household income in state and local taxes. The vast majority of us who are the so-called middle class pay around 9%. So 99% of us pay in the range of 9-10% of household income in state and local taxes. The highest income earners, the 1% of residents of Massachusetts who earn more than $850,000 annually, pay less than 5%.
This is not fair, not sustainable, not us.
Don’t just take my word for it. This was the conclusion of the bipartisan Tax Fairness Commission in 2014. Members of that commission unanimously agreed that our overall tax system was unfair and that there was no way to raise revenue without making it more so. This led many of us to the inevitable conclusion that we needed a systemic fix, an amendment to the Constitution. And that conclusion led to the Fair Share Amendment.
So what is the Fair Share Amendment?
The amendment establishes a new 4% tax on income over $1 million. To be clear, this is a tax on personal income (not a wealth or corporate tax) and it doesn’t kick in until that personal income exceeds $1 million in any taxable year. 99.5% of Massachusetts taxpayers will see no new tax. For that ½ of 1% of us who make more than $1 million per year, there is no additional tax on the first $1 million of income and then the 4% additional tax on income over $1 million amounts to an additional tax of $40,000 per $1 million, around $30,000 per additional million after taking the federal offset into account. This proposed new levy will actually cost the wealthiest among us $30,000 per million, not a king’s ransom.
The million dollar threshold is indexed for inflation to ensure that the tax continues to apply only to those with the very highest incomes.
All funds raised from this new tax are dedicated to public education and transportation. This commitment to those key areas of our state’s economy and our sense of community will be embedded as a fundamental principle in our Constitution.
And we can do this by asking those with the highest incomes to begin to pay their fair share.
We will undoubtedly hear today, as we did when we debated this last year, and as we’ll undoubtedly hear again as we approach the 2018 vote on this, some arguments that are rooted in implicit faith in trickle-down economics and/or misinformation.
I appreciate that, philosophically, some see things differently than I do, but contrary to what some may want you to believe, there are important truths to remember.
- We are told that those with the greatest wealth and highest income will flee the state. However, there is no compelling evidence for this so-called “millionaire migration.” States like us have raised income taxes on those with the highest income, yet those states have not seen citizens of means leave. State taxes simply don’t loom that large as people, families and businesses chose where to locate. Yes a few will move themselves or their assets out of state, but only a few, and our projections of revenue impact – $1.8-2.2 billion – take this into account. While I hate to see them go and hope they see the benefits that the Commonwealth has to offer, even with the proposed new tax, our tax on those with the highest incomes will still have us in the middle of the pack among states, hardly the place to leave.
- Some of our opponents claim – and hope – that the proposed amendment is unconstitutional. However, there is – or should be – no doubt about the fact that the amendment is properly drawn. Indeed it has already been so ruled. We may need the Supreme Judicial Court to have the last word on this issue, but I have no doubt that the ruling will be in our favor.
- Last, contrary to our opponents’ fears, this amendment would not disadvantage us among our companion or competitor states. It better aligns us with comparable states that have strong economies and affords us the ability to raise critical revenue to support and grow Massachusetts’ strong economy. Our credit rating was just downgraded because we’ve not done what we need to do to convince the rating agency that we have the fundamentals right. The Fair Share Amendment will not only not hurt our economy; it will put it on stronger footing.
I certainly know that facts – and we will continue to focus on them in this debate as we did last year and as we will going forward – are often a weak antidote to myths and very different beliefs, to basic anti-tax sentiment, or to self interest.
In this regard, it continues to astound me – and disappoint me – that much of the opposition to the Fair Share Amendment comes from a few of the state’s business groups who, for years, have championed the need for greater investments in public education and transportation and yet say “no” to our one chance in a generation to actually pay for these investments without adding to the weight of our unfair tax system. The bottom line here is that a “no” vote translates into turning our back on need and on the opportunity to fix our broken tax system. The Fair Share Amendment is asking those with the highest income – not even the top 1%, just the top half of the top 1% – to pay a bit more, to share so that the companies they head will have the educated workforce and transportation infrastructure to allow them to grow and prosper, so that their employees can thrive as well, and so that the community and Commonwealth in which they live can be more sustainable and a bit fairer.
I ask you, my colleagues, to say yes to the revenues we need for our schools and our roads, bridges and transit systems; to say yes to fairer taxes; to vote yes for the Fair Share Amendment.