Progressive Coalition Mulling Tax Questions For Ballot

Tax Return form 1040 with USA America flag and dollar banknote, U.S. Individual Income.

Photo: Getty Images

BOSTON (State House News Service) - It's not just a minimum wage increase: the Raise Up Coalition is also eyeing a possible 2024 ballot question that would amend taxation laws affected by the income surtax voters approved last year.

The influential constellation of organized labor and community groups filed paperwork with state campaign finance regulators last week to convene a ballot question committee, describing its goal as "building shared prosperity in the Commonwealth through higher minimum wages and fair and adequate taxation."

SEIU State Council Executive Director Harris Gruman, who is listed as the committee's chair, told the News Service that organizers are eyeing potential avoidance of the state's new surtax on higher earners and other tax cuts currently up for debate on Beacon Hill that the coalition disagrees with.

The possible ballot question -- which would be subject to a review of its constitutionality and need tens of thousands of voter signatures to make the 2024 ballot -- would not feature any proposed tax increases, Gruman said.

"There were two goals in passing the Fair Share amendment. One was to make our tax system fairer. The other was to make new investments in programs that would help everybody in the economy," Gruman said. "We're worried that either the fairness won't be maintained, or the adequacy of the revenue might not be maintained."

After years of debate and one previous constitutional amendment campaign derailed by the courts, voters in November approved a Raise Up-backed measure imposing a 4 percent surtax on personal income above $1 million.

Gruman said state law now needs additional tweaks to reinforce the surtax. The coalition's first focus, he said, is to make sure higher-earning Bay Staters pay the full tax and that "there are not new avoidance strategies that undermine the ability of the amendment to raise the revenue it's supposed to raise."

The left-leaning Massachusetts Budget and Policy Center wrote last month that a married couple who together earn more than $1 million could file federal taxes jointly and then file separate tax returns in Massachusetts, effectively giving each spouse their own $1 million limit instead of a single cap applied to their combined income.

MassBudget analysts said "inconsistent" but currently legal filings could lead to between $200 million and $600 million in unrealized surtax revenue, a sizable chunk of the roughly $1 billion state budget-writers expect to be available in fiscal year 2024.

Raise Up is backing legislation filed by original surtax sponsors Democrat Rep. Jim O'Day of West Boylston and Democrat Sen. Jason Lewis of Winchester (H 2909 / S 1866), which would require all married couples in Massachusetts to file jointly at the state level whenever they file jointly at the federal level.

Gov. Maura Healey in her fiscal year 2024 budget proposed exempting surtax revenue from counting toward an annual state tax revenue cap, calculated under a law known as Chapter 62F. She also sought to shield surtax receipts from an existing requirement for capital gains hauls above a certain threshold to be placed into benefit accounts or savings.

Gruman said Raise Up members "were very pleased by that," but do not see those outside sections as addressing all of their concerns.

"That was only one of the possible ways in which we saw the Fair Share amendment vulnerable to not the use that voters intended," he said.

The other issue Gruman voiced Tuesday is the prospect of Healey and the Democrat-supermajority Legislature agreeing to tax reforms "that would basically return funds that were raised by [the] Fair Share [amendment] to the people who are paying them through a different means."

Healey is deploying her political capital to press for a nearly $1 billion per year tax package that would roll out a new $600-per-dependent tax credit for parents and caregivers, boost breaks for renters and seniors, slash the short-term capital gains tax rate from 12 percent to 5 percent, and triple the estate tax threshold to $3 million.

Since she rolled out her plan two weeks ago, the Raise Up Coalition has been critical of Healey's capital gains and estate tax proposals, arguing that they would "undermine" the goals of the new surtax.

Gruman said the allied labor and community groups believe Healey's estate tax plan will "pass the benefits up to the ultra-rich."

Healey has contended that tripling the estate tax threshold -- a bigger reform than her Republican predecessor, Gov. Charlie Baker, sought -- would affect not just higher earners but also many middle-income families who "have seen an appreciation of their property value."

The coalition threw its support behind a Sen. Julian Cyr bill (S 1784) that calls for preventing any estate tax from reducing a decedent's net estate "to an amount less than two million dollars."

Gruman said that measure "would protect modest estates of $2 million and under."

"It saves most of the money, but it gets the relief right where we want it," he said.

For now, Gruman said the coalition plans to focus on urging lawmakers to pursue changes in the O'Day-Lewis and Cyr bills. Asked if passage of both bills would remove the need for a ballot question, he replied, "I certainly think that's likely, yes."

The next few months appear key to the route activists take. Healey proposed some surtax application tweaks in outside sections to her budget, which lawmakers will finalize this summer, and filed her tax package as a separate bill accompanying the annual spending plan.

Legislative leaders have not offered much indication about their plans for tax relief this session after retreating from the topic last year when they suddenly learned state government needed to repay nearly $3 billion in excess revenues to taxpayers.

"We don't want to rush to a ballot situation. We do prefer to work it through in the Legislature," Gruman said.

Organizers in the past have launched ballot question campaigns to ramp up pressure on lawmakers to act or craft a compromise deal.

Campaigns must file specific initiative petitions with the attorney general's office by Aug. 2 for review. If the question is cleared as constitutionally sound, organizers need to collect tens of thousands of signatures from registered voters, and the Legislature will get a chance to act on the measure next year before it heads to the ballot.

Written By Chris Lisinski/SHNS

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