Harwich Cranberry farmer Leo Cakounes has become the face of opposition to Question 1, the ballot measure that would raise taxes on the state’s highest earners – up from 5 to 9 percent for any income exceeding a million dollars.
A TV spot shows the gray-bearded 66-year-old, in suspenders and dirty jeans, walking through a field with his wife, riding his tractor, looking worried as he stares from a barn. In the ad, Cakounes says he has been a cranberry grower for 25 years, and that COVID, supply issues, and inflation have made it “very tough.”
“Question 1 isn’t just a tax on annual salary,” he says. “So when farmers like me sell our family farms or homes, Question 1 would nearly double our taxes, punishing us for our years of hard work.”
In a mailer opposing the measure, Cakounes says the measure would be “taking away money we are depending on for our retirement.”
But Cakounes is going to do just fine in retirement, whether or not Question 1 passes. A search of Registry of Deeds records across the state reveals the Republican former local politician, sometime radio and podcast host, tour operator, and farmer is sitting on property worth millions, including rental properties in Harwich and Belchertown. He estimates his home and the land on which it sits are worth $3 million.
“I’m not struggling, and I never once said I didn’t own property that was worth millions,” Cakounes said in a phone call on Friday. “Every single one of those pieces of property my wife and I have bought and sold, we got through hard work and sweat. I am not a trust fund baby.”
His real estate records reflect that work, and considerable savvy: His properties have risen greatly in value over the years, and he holds almost all of them in trusts, “for liability reasons,” he said, adding that he always treats his tenants well, and charges them below-market rent because he knows working people need housing.
“I’m not a goddamned slumlord,” he said, then cautioned me. “Don’t blow that off.”
He is enterprising, too. In July, Cakounes offered the town $330,000 in cash for an old fire station and adjoining land in the hopes of building rental housing there. And for two decades, from 2001 to 2021, Cakounes farmed cranberries on 33.6 acres of public land, which he leased from the town of Harwich for a total of $63,859 over those 20 years, according to a copy of the lease. That averages out to $95 per acre, per year. He says he won’t be farming cranberries any more, because the industry has “gone down the tubes.” Cakounes, whose company leads cranberry bog tours, is now hoping to turn the land into an education center for Cape Tech students.
“I’m not a moron, and I don’t want to be perceived as one in your article,” Cakounes said. He said he understands the law, and having to pay taxes on capital gains. Even if Question 1 passes, he will be fine personally, he said.
“Yes, I may have to pay an extra $40,000 [in taxes],” he said. “Is that gonna kill me? No, that’s not gonna kill me. I’m more upset at the message this is sending to the rest of the country.”
Cakounes believes the damage from Question 1 lies elsewhere; he worries higher taxes will drive businesses from the Commonwealth, as they relocate to avoid the extra burden; that Beacon Hill cannot be trusted with the extra $2 billion annually advocates say the measure will raise; that the state, which is enjoying a huge surplus right now, does not actually need the money.
“Don’t portray me like I’m a friggin’ crybaby because I don’t want to spend 40 grand on a million dollars,” he said. “I couldn’t give a s**t about 40 grand, but this tax is not good for the Commonwealth.”
His concerns are debatable, but not unreasonable. Remote work makes leaving the state easier these days, so people are freer to relocate to lower-tax places. Many of the people who would be subject to the extra tax can also afford advisers to help them avoid it. And though the measure earmarks the extra taxes raised for transportation and public education, legislators will ultimately decide where that money goes.
“I don’t trust the politicians with the money,” he said.
Fair enough. But instead of making these arguments, opponents of Question 1 are hiding behind people like Cakounes. Of course, the phenomenally rich people funding the No campaign, including Suffolk Construction chief John Fish, Patriots owner Robert Kraft, New Balance chairman Jim Davis, and Paul Edgerley of Bain Capital, among others, would be fools to appear in their own ads. Obscenely wealthy magnates complaining about paying 9 percent tax on their earnings over a million dollars are hardly going to engender sympathy.
So the No campaign has been hammering away at the notion that ordinary people selling homes or businesses will get caught by the tax, imperiling their retirement.
But here’s how the tax would work: If you’re selling your residence, the “millionaire tax” would kick in only if your profit on the place exceeds $1 million. To calculate that profit, take the sale price and subtract whatever you paid for the house, whatever you spent renovating and improving it, some sales fees, and a further allowance of $500,000 if you’re married.
Let’s say you and your spouse buy a house for $500,000 and spend $200,000 to fix it up, and when you retire and downsize you sell it for $2 million. Your profit would be $2 million, minus the $500,000 you paid for the house, minus the $200,000 renovation, minus the $500,000 tax exclusion. So your profit is $800,000 – no millionaire’s tax would apply.
If your net profit were $1.2 million, you’d pay 5 percent on the first million, then 9 percent on the remaining 200,000 – an extra $8,000. In other words, you’d need to make a giant bucket of money off your house for the tax hike to kick in at all, and when it did, most people would see relatively small increases.
So yes, some one-time millionaires would be among the less than 1 percent of residents who would be subject to the surtax. But those people as a group would be paying far less than the extremely rich, because the extra 4 percent levy only kicks in after the first $1 million in gains.
As he himself acknowledges, Question 1 is certainly not going to break successful entrepreneurs like Cakounes, and it’s dishonest to suggest otherwise.
But clearly, the wealthy people trying to get you to say no to raising their taxes have decided they can’t win unless you believe it will.