BOSTON (SHNS) – The state’s high court on Monday struck a proposed $2 billion income surtax from November’s ballot, ruling the question improperly mixes two different spending priorities and a major change in tax policy.
The decision means voters will not decide one of the biggest state tax policy questions in decades – whether to stray from the uniform income tax rate and begin assessing a higher tax rate on people with the largest annual incomes.
Dubbed the millionaire’s tax or Fair Share Amendment by its supporters, the question sought to amend the state Constitution to impose a 4 percent surtax on annual household incomes over $1 million, with the associated revenue dedicated to education and transportation.
The Supreme Judicial Court’s ruling remands the case to county court, where a judgement will be entered declaring Attorney General Maura Healey’s certification of the petition “not in compliance” with the Constitution and the petion “not suitable to be placed on the ballot in the 2018 Statewide election.”
The court found that voters who favored a graduated income tax but not earmarking funds for a specific purpose and voters who wanted to designate funds for transportation and education but not to adopt a graduate tax structure would be in an “untenable position.”
“A voter who commuted to work on an unreliable subway line, but who did not have school-aged children and was unconcerned about public education, might want to prioritize spending for public transportation, without devoting additional resources to public education, but would be unable to vote for that single purpose,” the decision said. “A parent of young children, who lived in a rural part of the Commonwealth and did not own a motor vehicle, would be unable to vote in favor of prioritizing funding for early childhood education without supporting spending for transportation.”
The suit was filed by officials from three major business groups – the Massachusetts High Technology Council, Mass. Taxpayers Foundation and Associated Industries of Massachusetts.
The state Constitution allows initiative petitions to contain only subjects that are “related” or “mutually dependent,” and the lawsuit argued that the proposed surtax improperly bundled unrelated subjects of a graduated income tax and spending on education and transportation.
The proposed constitutional amendment specified that revenues collected from the surtax could only be spent to provide “quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation.”
A dissenting opinion written by Justice Kimberly Budd and joined by Chief Justice Ralph Gants said there was “no way to separate the question into subjects and still have the same question — the petition does not have the same meaning if its subjects are separated.”
Supporters of the tax, proposed by the Raise Up Massachusetts Coalition that is also behind ballot questions to raise the minimum wage and establish a paid leave insurance program, have said it would support critical investments in public education and transportation, without most taxpayers bearing the burden.
Opponents warned it could lead to an exodus of wealth from the state, along with tax revenues associated with higher income households.
A Suffolk University poll of 500 likely voters, conducted earlier this month, found more than 66 percent in favor of the surtax.
Gov. Charlie Baker, who appointed five of the high court’s seven judges, has consistently declined to stake out a position on the surtax, saying it was not guaranteed a spot on the ballot.
Healey certified the constitutional amendment as ballot-eligible in September 2015, and the Department of Revenue in 2015 concluded it would generate $1.9 billion a year.
The Democrat-controlled Legislature twice endorsed the question for the ballot despite Republican opposition, voting 134-55 to advance it in June 2017 and 135-57 in 2016.
The decision could have ramifications on other potential ballot questions.
The Retailers Association of Massachusetts, which is pursuing a question to lower the 6.25 percent sales tax to 5 percent and opposes two other initiatives that would institute a paid family and medical leave program and gradually raise the minimum wage to $15, has said any legislative deal to keep some combination of those three proposals off the ballot “is inextricably tied” to the court’s decision.
Ballot campaigns face a July 3 deadline to submit their final round of signatures.