Massachusetts Income Tax Increase Not on November Ballot

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 surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. on income over $1 million, on top of the existing 5.1 percent income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. :

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 holidayA sales tax holiday is a period of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hurricane preparedness supplies, and more. each August, and establishes a paid sick and family leave program (starting 2021) to be funded by a 0.63 percent payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. 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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