Voters in Massachusetts this November will not have a chance to decide if the state should adopt a so-called “millionaires tax.”
In a victory for the state’s business community and a blow to progressive activists and labor unions, the Massachusetts Supreme Judicial Court on Monday ruled a question to set a higher income tax rate on earnings over $1 million and earmark the additional revenue for education and transportation cannot appear on the ballot.
The court, in a split decision, said Massachusetts Attorney General Maura Healey, a Democrat, was wrong to certify the initiative to appear on the November ballot. The majority of the justices said the initiative ran afoul of the state constitutional requirement that ballot questions be about subjects that are related or mutually dependent.
David Nagle, a tax attorney with the Boston law firm Sullivan and Worcester, said the court found the question unfair to voters who might support raising taxes on the rich, but not earmarking the additional revenue for specific purposes.
"One of the interesting things about the opinion is that it is written in a way that would make it difficult for proponents to tie a specific use of funds to a comparable kind of tax," said Nagle. " The opinion does suggest a tax provision, like the one proposed here, will also stand on its own and not be related to any public good that might be funded."
Advocates for the question said it would raise as much as $2 billion a year for transportation and education, two areas of the state budget, they argue, that are chronically underfunded.
The business groups that sued to block the question from the ballot said the 4 percent surtax on personal income over $1 million would hurt the state’s economy and might prompt rich entrepreneurs to move away.
One of the plaintiffs in the suit, Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, is very pleased with the court’s decision.
"There were enormous fiscal, legal, and economic implications of this ballot initiative, so I am very glad the court found in our favor," said McAnneny.
The Raise Up Massachusetts coalition of left-leaning activists and labor unions started the process three years ago to put what it called the “Fair Share Amendment” on the 2018 ballot.
" We are incredibly disappointed that a small number of wealthy corporate executives and their lobbyists blocked the right of Massachusetts voters to make these important changes to our state's constitution," said Andrew Farnitano a spokesman for the coalition.
Massachusetts Democratic candidates for governor Jay Gonzalez and Bob Massie both strongly supported the “millionaires tax.” Republican Governor Charlie Baker had not taken an official position on it.
Raise Up Massachusetts is sponsoring two other questions on this year’s ballot – one to raise the minimum wage to $15 and another to require paid family and medical leave.
A ballot question backed by the Retailers Association of Massachusetts would cut the state’s sales tax to 5 percent.
House Speaker Robert DeLeo, in a statement Monday, said he would continue to work toward a so-called “grand bargain” that would substitute a legislative compromise for the three ballot questions. Time is running short. July 3rd is the deadline to have final signatures submitted for state ballot questions
In a separate ruling Monday, the state’s highest court cleared the way for a question on the November ballot from the Massachusetts Nurses Association on hospital staffing levels.