The proponents behind a state surcharge on high-earners found themselves defending their decision on Tuesday to bundle the tax proposal with a promise to spend more on education and transportation.
The decision could become the undoing of the ballot question, judging from questions posed by members of the Supreme Judicial Court as they listened to oral arguments in a lawsuit challenging its legality.
The justices are considering a lawsuit filed by business groups to block the proposal, scheduled for the November ballot. It would raise taxes on residents earning more than $1 million. If voters approve, the state’s personal income tax, currently at 5.1 percent, would be increased by 4 percentage points for earnings above $1 million.
Backers of the ballot initiative, led by a union-funded group known as Raise Up Massachusetts, want to direct the additional money, as much as $2 billion a year, to transportation and education.
Kevin Martin, a lawyer for the business groups, argued the ballot question is problematic because it combines different issues that are not directly related to each other — a tax increase and two spending proposals — in a single question. The state Constitution requires that ballot questions be limited to related matters.
Martin also said the ballot question, a proposed amendment to the Constitution, would usurp the Legislature’s traditional role in appropriating state funds.
Several of the six justices hearing the case on Tuesday seemed interested in the “relatedness issue.” Lawyers for the proponents and for the state attorney general’s office, which certified the proposal, faced repeated questions about that aspect of the case.
The topics of transportation and education, the justices implied, might be too unrelated to be allowed in a single ballot question, particularly one that involves an income tax surcharge.
“Those seem to be three separate major policy decisions,” Justice Scott Kafker said. “Could they have added pension reform here, solar energy, anything you wanted? . . . There needs to be a coherent, unified policy that you’re voting on.”
Kate Cook, a lawyer for the proponents, responded by saying that transportation and education are related because “they are the keys to social mobility” and they are “chronically underfunded government services.”
The proponents want to amend the Constitution because it currently does not allow income to be taxed at different rates. Supporters call the proposal the Fair Share Amendment, but it’s more widely known as the “millionaires tax.”
The plaintiffs who oppose it include top executives at Associated Industries of Massachusetts, the National Federation of Independent Business, the Massachusetts Taxpayers Foundation, Massachusetts High Technology Council, and the Massachusetts Competitive Partnership.
Polls show strong voter support, so the business groups see a court challenge as their best opportunity to stop the measure. They worry it could hurt the state’s economic competitiveness.
Representatives of both sides expressed optimism after Tuesday’s hearing.
Chris Anderson, president of the high-tech council, said the justices’s questions indicated they were focused on the differing aspects of the ballot question. “I went into the hearing hopeful, and I think the hearing affirmed that,” he said.
But Raise Up Massachusetts spokesman Steve Crawford played down the line of questioning and noted that business leaders regularly cite education and transportation when they advocate on state policy matters.
“Clearly the lobbyists for the business community have repeatedly said over the years that education and transportation are essential to the success of our economy,” Crawford said. “They are the ones who have connected the two in the past.”
The Supreme Judicial Court typically rules within several months after hearing oral arguments. Observers of this case expect a ruling by early June.
Marc Perlin, a Suffolk University Law School professor, said the court would want to avoid the way ballot questions play out in California, where a proliferation of referendums has undermined the state Legislature’s ability to make budget and policy decisions.
Perlin said the strategy to combine transportation and education spending with the income tax surcharge could come back to haunt the proponents if the court rules they simply packed too much into one ballot question.
“I don’t know the politics behind why they tied it to transportation and education, other than the fact that might be why people would vote for it,” Perlin said. “That does seem to be combining two unrelated matters.”