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Massachusetts ballot questions 2022: Question 1 on ‘millionaires tax’

Voters will decide on four ballot questions in the 2022 Massachusetts elections on Nov. 8. Here is what you need to know about Question 1, also known as the “millionaires tax.”

What is this ballot question about?

Question 1 asks whether Massachusetts should amend its flat 5 percent state income tax to add a surcharge on the highest earners, with the proceeds designated for education and transportation.

The proposed amendment to the state’s constitution would add an additional 4 percent tax on every dollar of taxable income earned over $1 million. That threshold would be adjusted annually by the same method used for federal income tax brackets, to reflect increases in the cost of living, according to the secretary of state’s website.

The change would mean that people who earn more than $1 million in a year would pay the current 5 percent tax on the first $1 million, and then 9 percent on all income above that. It would apply to tax years beginning Jan. 1, 2023.

Salaries, some retirement fund withdrawals, and gains on property sales are all treated as income now and would remain so if Question 1 passes. In 2019, only about 21,000 Massachusetts taxpayers, or less than 1 percent of all households, had incomes higher than $1 million, according to a report from Tufts University’s Center for State Policy Analysis.

The state says the change “may increase annual state revenues by $1.2 billion in the near term, which is approximately 2.4 percent of the current annual state budget.” It also warns, however, that “annual revenue generated by the surtax will vary significantly and unpredictably from year to year.” It would be up to lawmakers to decide how to spend the money, though the constitutional amendment designates the revenue for public education; public colleges and universities; and for the repair and maintenance of roads, bridges, and public transportation.

A yes vote would approve the tax surcharge, so that all taxable income beyond $1 million would be taxed at a rate of 9 percent.

A no vote would leave the constitution as is, continuing to tax income over $1 million at the same rate of 5 percent.

Who is backing each side?

Among the proponents of a yes vote are teachers unions and other labor groups. Meanwhile, opposition to this measure has attracted funding from prominent names in Massachusetts business circles, including Robert Kraft’s Rand-Whitney Containerboard, John Fish’s Suffolk Construction, and New Balance chairman Jim Davis.

What do those in favor say?

Supporters of this ballot measure say only the very rich would pay more in taxes. The Fair Share for Massachusetts campaign says current tax rules allow very wealthy earners to pay a smaller portion of their income in taxes (when including income, property, and sales taxes) than people who earn much less.

They say “almost no one who sells a house will be affected in any way,” and that people can take advantage of tax deductions to bring their taxable income down further.

As part of the arguments submitted to the state in favor of the amendment, Cynthia Roy of Fair Share Massachusetts writes that the additional money is constitutionally guaranteed to go toward transportation and public education, which she says would mean better schools and roads among other opportunities.

“Question 1 means creating opportunity for everyone,” Roy writes.

What do those opposed say?

Opponents say the tax surcharge would hurt “one-time millionaires” — people who experience a financial windfall after selling their home or business. These are funds that they may be relying on for retirement.

“Record inflation, supply chain difficulties, and continuing COVID-19 issues make now the worst possible time for massive tax increases — especially when Massachusetts already has a giant budget surplus!” writes Paul D’Amore for the Coalition To Stop The Tax Hike Amendment in an argument submitted to the state.

The opponents of Question 1 also argue the amendment would give legislators a blank check, with no guarantees that the money would go toward education and transportation since the revenue is “subject to appropriation by the state Legislature,” according to the ballot language.

They also argue that the amendment would push job-creating entrepreneurs and businesses to relocate to other states.

Further reading

Answers to your questions about the ‘millionaires tax’

There are rich people, and then there are the ‘one-time millionaires’

Voters have repeatedly said no to raising taxes on the highest earners. This time might be different.

Early voting in Massachusetts: What you need to know

Sahar Fatima can be reached at sahar.fatima@globe.com Follow her @sahar_fatima.