What at first was plunder assumed the softer name of revenue. Thomas Paine, Rights of Man
In the Roman Republic, tax collection was done by private contractors called publicans. They bid on contracts to collect the taxes. The high bidder (i.e. the one who promised to collect the most taxes) was awarded the contract. If they collected anything above their bid, they got to keep it as profit. It was a system that was employed for centuries, but it was rife with corruption. Publicans often forced people to pay taxes above what they were legally required to pay. Under threat of violence, citizens paid the excess to the greedy publicans. It seems like many progressives in Massachusetts would gladly take the job of the Roman publican. They’ve come up with an ill-conceived scheme that exposes their greed.
Progressives in Massachusetts have proposed a 4% millionaires’ surtax that will appear as a ballot question in November. This is no ordinary ballot question though. It is a constitutional amendment. The Massachusetts State Constitution does not permit graduated income taxes, so supporters of the proposal had to craft an amendment.
In 2016, a billionaire hedge fund manager sent New Jersey’s budget into turmoil. How did one private citizen accomplish this? He moved to Florida. David Tepper was, until December of 2015, New Jersey’s wealthiest taxpayer. No one knows for sure whether Mr. Tepper was only seeking warmer weather, but we do know that New Jersey was soaking him for all it could get. Some estimates said that Mr. Tepper was paying as much as $300 million in income taxes to the State of New Jersey. The state has a graduated income tax that tops out at 8.97% for income over $500,000.
Massachusetts Proposition 80 has several serious flaws, beginning with the fact that many wealthy people already own homes in lower tax states and can often shift income from one state to another or, if necessary, shift their residency. The amendment requires that the taxes collected be spent on public education and transportation infrastructure. Apparently, the authors of this amendment have no idea how the Massachusetts Legislature works. Tax dollars are fungible. Funds currently spent on education and infrastructure can be moved to other budget items, resulting in no increase in education and infrastructure spending. The legislature can repurpose what they now spend on roads and education to other needs that they feel are more pressing like healthcare and courts. To believe that the Legislature will spend the new tax dollars as intended is naïve..
According to the Tax Foundation, the top 0.5% of taxpayers in Massachusetts accounted for 19% of income tax revenue in 2013. Just as with Mr. Tepper’s departure from New Jersey, the loss of just a few of these taxpayers will have a huge impact on state revenue. A report done for New Jersey found that the tax loss from losing a single $1 million taxpayer filing with single status is equal to 59 taxpayers earning $50,000.
Voters in Massachusetts have a long and proud history of rejecting tax increases via referendum. Six previous attempts for a graduated income tax have been defeated by the voters. We can’t depend on this history to defeat Proposition 80 though. So far, there is no organized committee against this question. Supporters have already raised almost $2,000,000. Three polls done by WBUR in 2017 found that Mass. voters support this tax by a 3 to 1 margin. There is a lot of work to do before November.
Last month, the Worcester Tea Party leafleted the Republican State Convention in Worcester to publicize Proposition 80. We need to keep spreading the word about this destructive amendment to the state constitution. We will be looking for you help as we continue to educate voters on this ill-conceived referendum question.