Massachusetts Income Tax Increase Not on November Ballot

October 1, 2018

Massachusetts’s November election ballot will not include a proposal to increase income taxes for education and roads, after the state’s highest court ruled that the measure violated anti-logrolling provisions in the state constitution. It would have raised an additional $1.9 billion in revenue each year.

The proposal, which had been placed on the ballot after supporters gathered 157,000 signatures, would have imposed an additional 4 percent surtax on income over $1 million, on top of the existing 5.1 percent income tax:

Single Filer (double for joint filers) Income Tax Rate under Current Law Income Tax Rate under Proposed Proposition 207
>$0 5.1% 5.1%
>$1 million 5.1% 9.1%

It’s worth noting that individual income taxes apply not only to individuals but also to small businesses set up as sole proprietorships, partnerships, or other noncorporate forms.

The Massachusetts constitution currently requires the income tax be levied at a single rate, but this proposed “Fair Share Amendment” would have removed that restriction. The proposal’s downfall was a different constitutional provision, which forbids initiatives from including multiple unrelated or independent provisions. Because the initiative set a tax rate, earmarked funds for transportation, and earmarked funds for education, and because each of those policies could exist independently, the proposal violated the state constitution. Tax Foundation and the Pioneer Institute had filed a brief in the case making this argument.

Shortly after the case was decided, Governor Charlie Baker (R) and legislative leaders struck a “grand bargain” that increases the minimum wage to $15 per hour by 2023, establishes an annual sales tax holiday each August, and establishes a paid sick and family leave program (starting 2021) to be funded by a 0.63 percent payroll tax that begins July 1, 2019. The “grand bargain” headed off ballot initiatives on all three items.

The case was Anderson v. Healey, SJC-12422 (Mass. Jun. 18, 2018).

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