Trying the millionaires tax in the court of public opinion
The fate of the millionaires tax is in the hands of the state’s highest court. But that isn’t stopping opponents from trying the case in the court of public opinion.
Two reports emerged this week claiming a new surcharge on high-income earners would drive many of them out of state, particularly with recent changes to federal tax law.
At issue: a proposal to raise the income tax by 4 percentage points, to 9.1 percent based on the current rate, for earnings over $1 million. The change — if it survives a legal challenge and gets approved by state voters — would be ensconced in the state Constitution.
For the right-leaning Pioneer Institute, this would be “an economic time bomb” considering the new $10,000 cap on deductions for state income and local property taxes. Pioneer says this new limit, along with the millionaires tax, would more than double the effective state income tax rate for most taxpayers earning $1 million or more.
A Mass. Taxpayers Foundation report, meanwhile, says the surtax would give Massachusetts one of the highest taxes on $1 million-plus earners in the country. The business-backed MTF, one of the plaintiffs suing to stop the surcharge, says the new tax would accelerate moves to lower-tax states such as New Hampshire and Florida, based on patterns observed in New Jersey and Connecticut.
But supporters of the Massachusetts surcharge, which could bring in $2 billion a year, say the concerns are overblown; they point to research that shows tax-related migrations are usually marginal in size.
These two new reports could become forgotten footnotes. But if the Supreme Judicial Court strikes down the ballot question, that would be a happy resolution for the groups that wrote them.