State lawmakers are expected to vote Wednesday to place a constitutional amendment on the 2018 ballot that would raise taxes on the rich and direct the money to transportation and education.
Approval by the Legislature could potentially shift the fight over the so-called millionaires’ tax to the courts, where business groups are working on a legal challenge in hopes of derailing the measure before it could reach voters.
If those efforts fail, the amendment could then head to the ballot, where early polling suggests it enjoys overwhelming support.
Business groups have argued the tax will hurt the economy, while labor, religious, and community groups say it will raise much-needed revenue to fix crumbling roads and rails and improve schools.
The amendment would scrap the state’s flat income tax rate of 5.1 percent and create a two-tiered system. Starting in 2019, all earnings over $1 million would be taxed at a rate 4 percentage points higher.
State officials say about 19,600 people, or 0.5 percent of all filers in Massachusetts, would pay the higher tax, which would raise about $2 billion annually.
Supporters say the money is needed to make public higher education more affordable and ensure the state has a modern, reliable transportation network.
Business groups argue the money may not materialize because some wealthy residents will leave the state rather than pay the higher tax. They also point to language in the amendment that they say would allow lawmakers to spend the revenue on items other than transportation and education. Business groups have suggested that this language could be the focus of a legal challenge.
“This proposal, unfortunately, combines questionable benefits with an extraordinary level of risk,” the Massachusetts Taxpayers Foundation wrote in a withering analysis of the proposal released Monday.
But Representative Jay Kaufman, a Lexington Democrat who supports the amendment, said such warnings are not likely to affect the outcome of Wednesday’s special joint session of the Legislature, called a constitutional convention.
“We’ve heard these arguments before,” he said.
He pointed to studies that show that states that have raised taxes on top earners did not see an exodus of wealthy residents. And he dismissed concerns that the amendment’s language would allow the Legislature to spend the money on other things, saying the language is clear and the constitution is binding.
Wednesday’s vote represents one of the last steps in a lengthy process.
Backers of the tax amendment have already cleared one threshold by submitting more than 157,000 signatures from Massachusetts voters last year. The amendment also received 135 votes — far above the required 50 — at the last constitutional convention in May 2016.
On Wednesday, backers just need support from 50 lawmakers again to place the amendment on the 2018 ballot. Governor Charlie Baker does not have to sign the amendment as part of the process.
If ratified by voters, the amendment would mark the first change in the Massachusetts Constitution since the passage in 2000 of a constitutional amendment that banned voting by convicted felons in prison.