Business Groups Sue Attorney General Maura Healey and Secretary of State William Galvin to Boot the Grad Tax Question from the 2018 Massachusetts Ballot

Business Groups Sue Attorney General Maura Healey and Secretary of State William Galvin to Boot the Grad Tax Question from the 2018 Massachusetts Ballot

From the January 1, 2018 printed edition of The Boston Broadside

by Ted Tripp

Sr. Political Reporter

Christopher Anderson, president of the Massachusetts High Technology Council, Christopher Carlozzi, the Massachusetts director of the National Federation of Independent Business, Richard Lord, president and CEO of the Associated Industries of Massachusetts, Eileen McAnneny, president of the Massachusetts Taxpayers Association and Daniel O’Connell, president and CEO of the Massachusetts Competitive Partnership, have filed suit against AG Maura Healey and Secretary of State William Galvin, contending that the graduated income tax ballot question which they have approved is, in fact, unconstitutional and should not appear on the November ballot. Anderson and the others are saying that the two officers of the commonwealth “erred” in approving the language of the ballot question, and are asking the Massachusetts Supreme Judicial Court to rule it invalid.

The High Tech Council’s 58-page brief (http://tinyurl.com/y7c4uefl) was filed on December 11th and the case is scheduled before the SJC on February 5th with oral arguments. A ruling will have to come by late spring or early summer as the ballots have to be printed for the fall election around this time.

The business groups’ lawyers argue that the ballot question does not conform to Article 48 of the Massachusetts Constitution (http://tinyurl.com/ybl2hbx9), which specifically addresses what is allowed under initiative petitions. They say the question “violates” Article 48 for three reasons, any of which should disqualify it.

First, the ballot question “groups” together two unrelated issues. It raises the state income tax while at the same time directing all proceeds to public education and public transportation. Article 48 specifically prevents grouping.

Second, the ballot question earmarks the funds “only” for public education and public transportation. Article 48 explicitly bans “specific appropriations” by initiative petition. This prohibition precludes amending the Constitution to set aside tax revenues for particular purposes.

Third, the lawyers argue Article 48 does not authorize initiative petitions to impose taxes or set tax rates in the Constitution.

For each of these three arguments against the legality of the grad tax petition, the challengers present detailed reasoning and case law backing up their positions. It is worth reading the main sections of the brief.

The SJC has a history of very liberal rulings on a number of issues, particularly from a social perspective. It will be interesting to see how the seven justices view this case.

Five of the seven justices were appointed by Governor Charlie Baker, the other two by Governor Deval Patrick.

If the grad tax question remains on the November ballot and is passed, it would impose a 4% state income surtax on all those making more than $1 million per year. Such a so-called “millionaires tax” has not worked well elsewhere where it has been tried and has brought in far less revenue than predicted.

A recent policy brief by the respected Pioneer Institute reports that if the grad tax ballot question passes, Massachusetts’ top capital gains tax rate would go from 30th highest in the nation to fourth highest and the state’s highest combined state and federal rate would move from 25th to second.

Since Massachusetts must compete with other states for business, does it sound like this move would make businesses or entrepreneurs more likely – or less likely – to locate in the Bay State?    ♦