Pioneer: Tax revenue generated by ballot initiative and tax increase could be used for other purposes | Massachusetts
(The Center Square) — A new study claims that any funds raised through a ballot initiative and an income tax hike in Massachusetts would not be spent as designed.
Pioneer Institute published the study, “Why would the Legislature likely use the proposed tax change as a blank check?” Thursday morning and said the Legislative Assembly would likely spend all of the money taken from those taxes on general fund items instead of transportation and education. The study indicates that any cuts in these areas could be replaced by a surcharge.
“If the initiative passes, lawmakers could circumvent its stated intent while remaining in compliance with it,” said study author Greg Sullivan. “They can simply cut education and transportation expenses from other sources of revenue and replace them with a surcharge.”
The ballot initiative would allow voters to decide the fate of the millionaire tax, which would impose a 4% tax on individuals and businesses earning more than $1 million a year. The tax would be placed in addition to the 5% state income tax.
The Center for State Policy, which assessed the millionaire tax proposall, said the state would raise $1.3 billion from the tax in 2023 and more than 70% of businesses would fall under the tax. The Ministry of Primary and Secondary Education has an annual budget of $5 billion.
Under the ballot initiative, any proposed surtax would fall on retirees and intermediary businesses who report income on personal income tax returns, the study found, including those who decide to sell an asset, a home or a business.
Pioneer reports that in January, 55 taxpayers came together to file a lawsuit, Christopher R. Anderson et al against Maura Healey, who is the state’s attorney general. The lawsuit asks the Massachusetts Supreme Judicial Court to rule the ballot question as “unfair, misleading, and inaccurate because it fails to inform voters that lawmakers can simply use surtax revenue” in a way that “would supersede reductions in income from other sources”. ”
According to Pioneer, the court ruled in 2018 that a proposed amendment nearly identical in nature to the one that will appear on ballots in November was ruled unconstitutional for violating the state Constitution’s prohibition on matters of citizen-initiated votes that combine unrelated topics.
Pioneer reports that a ban would not apply to the current ballot question because it originated in the Legislative Assembly.
The study references oral arguments in the 2018 case where the attorney for the attorney general‘s office said “the Legislative Assembly would retain ultimate discretion over spending choices” because “the proposed amendment does not not require otherwise” and that “the Legislative Assembly could choose to reduce funding”. in certain budgetary areas “and replace it with the new revenue from the surcharge”.
According to the study, lawmakers are “likely to use surtax revenue” that would fill the gaps in education and transportation cuts that “come from the legislature itself.” The study showed that in 2019, at the constitutional convention, the wording of the proposed amendment would have “ensured that the revenue generated by the proposal would be in addition to, and not a substitute for, revenue already spent in these areas” .
Pioneer reports that the amendment was defeated 33 to 6 in the Senate and 123 to 34 in the House.
In the absence of a commitment from the legislature to decide revenues for education and transportation, Pioneer reports, this confirms the chances of “diversion of funds for other purposes with tax revenues from tax amendment. The study points to the 1998 Tobacco Regulations when the state diverted funds for other purposes.
“The plaintiffs in Anderson v. Healey have good reason to demand a more specific description of the progressive income tax change,” Pioneer Institute executive director Jim Stergios said in the statement. “The Attorney General and the Secretary of State have a duty to provide voters in Massachusetts with a clear and honest summary of what they will be voting on when they go to the polls in November.”