BOSTON (SHNS) – A day after the Legislature advanced a Constitutional amendment imposing a four percent surtax on incomes above $1 million, Gov. Charlie Baker said the state should not raise taxes following a devastating pandemic, and pointed to billions in federal aid dollars that elected officials still need to allocate.
The House and Senate voted 159-41 Wednesday afternoon to advance the amendment that advocates say could raise $2 billion per year for education and transportation and opponents view as a risky move that could scare high-earning individuals and their capital out of Massachusetts and lead to a graduated income tax structure.
Voters are now set during the November 2022 election to decide whether or not to approve the measure. The Republican governor has long said he is against raising taxes, and asked Thursday whether or not tax policy should be written into the state’s Constitution, he returned to that view.
“I said before that I don’t think we should be raising taxes,” Baker said at a press conference in Roxbury. “We have, between state and local government, we have $10 billion already in federal funds that we need to find a way to put to work. And I really think our focus ought to be on that.”
Baker’s opposition to new taxes, and the potential veto tax hikes might encounter, has diminished tax-raising possibilities for the Democrat-controlled Legislature, but the governor has seen situations where he has favored tax increases, including on opioid manufacturers and to help fund climate change adaptation efforts. Baker also agreed to a payroll tax for paid family and medical leave, and special assessments on hospitals.
The governor also put the tax measure in the context of the pandemic and its impacts.
“So first of all, we’re coming out of a pandemic,” he said. “We have hundreds of thousands of people who are looking for work. And we actually don’t know exactly what the impact of the pandemic is going to be on how people think about where and how they work and the nature of how organizations are going to set up and manage their organizations in the future.”
The state is currently deciding how nearly $5.28 billion in federal aid should be dispensed to communities, a question that has put the Legislature and the governor at odds in recent weeks.
The state’s tax hauls have also far exceeded benchmarks, with revenue officials reporting twice as much revenue during May than originally expected.
Sen. Jason Lewis, another supporter of the tax proposal, said polling has shown high public support for the amendment, adding the amendment “would make our tax system more equitable and it would raise substantial new revenue to support public investments.”
“The reason why the fair share amendment is so popular is that most people recognize that our wealthiest residents can afford to pay a bit more in taxes to help fund investments that expand opportunity and make our commonwealth more just and more equitable for everyone,” the Winchester Democrat said.
Senate Minority Leader Bruce Tarr said between 1993 and 2018, Massachusetts experienced a net outflow of $20.7 billion in taxable income. He said if the state raised taxes on individuals earning over $1 million that outflow could increase.
“If that’s what’s happening now, imagine what happens when we change the dynamic where those earning above $1 million dollars have their taxes increased again,” Tarr said Wednesday afternoon.