Wicked Local | William J. Dowd
Apr 20, 2022
Cambridge City Council members do not always agree on the means to address community problems and issues, but they recently unified to publicly endorse a statewide referendum on the November ballot.
Why are Cambridge councilors backing the 'Fair Share' amendment?
Cambridge City Council members do not always agree on the means to address community problems and issues, but they recently unified to publicly endorse a statewide referendum on the November ballot.
That question? Should Massachusetts assess a 4% surcharge tax on residents who annually earn over $1 million?
The group behind the initiative - Raise Up Massachusetts - has dubbed their proposed referendum "The Fair Share Amendment" because it would amend the commonwealth's constitution and mandate funds go to public education and transportation infrastructure.
“The Fair Share Amendment has immense potential to address chronic underinvestment in our public education and transit systems," said Cambridge Councilor Quinton Zondervan. "We need this funding to invest in our students and shift more people towards free, reliable, and accessible public transit.”
Major transit, education investments needed
The 4% would be assessed in addition to the annual 5% tax rate that taxpayers pay on earned and passive income. Raise Up Massachusetts projects the new tax would go into effect in 2023 and raise an estimated $2.1 billion.
"That revenue will be constitutionally required to be spent on transportation and public education," Rachel Plummer, director of Programs and Public Policy for the Cambridge Economic Opportunity Committee, told councilors in a correspondence supporting the City Council resolution, "specifically 'quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation.'"
Plummer added Cambridge could stand to benefit from the extra revenue in those areas — especially in a post-COVID era.
"Now more than ever, we need investments in our public schools to help students recover from the effects of the pandemic and to ensure that all students have access to complete and well-rounded education," Plummer said.
Tufts University's Center for State Policy Analysis reports the surcharge tax would apply to roughly 21,000 taxpayers. Raise Up's annual revenue projections to hold up if millionaires remain in Massachusetts.
"[The 4% tax] could raise a meaningful amount of money, as those few households account for more than one-fifth of all taxable income in the state," reads the state analysis. "However, the millionaires' tax also could have some serious side effects if top earners opt to leave the state or shield their income to avoid paying."
Current income tax not getting the job done
Still, Cambridge resident Will MacArthur offered testimony, arguing the income tax does not get the job done.
"Fundamentally, prosperity in Massachusetts relies on our education and transportation systems — the high-income households who will be taxed under Fair Share owe a substantial measure of their success to past state investments in education and transportation," wrote MacArthur. "These households currently pay lower effective state tax rates than most Massachusetts residents, and passing Fair Share creates a mechanism for them to pay for the systems responsible for their prosperity."
The Massachusetts Bay Transportation Authority carries a backlog of $13 billion for capital projects and notes it will be operating in the red come July 2023.
"For years, Massachusetts has divested in infrastructure and education," wrote Cambridge resident Lee Farris on behalf of the Cambridge Residents Alliance. "State income tax, state sales tax and local property are all regressive forms of taxation that disproportionately fall on the poor, the elderly and communities of color."
He added, "It's called the millionaires' tax because it will only fall on the very, very rich - people with incomes over $19,000 per week."
Massachusetts has weighed in on 11 tax-related ballot questions between 1962 and 2020, and all but two failed:
In 1998, Massachusetts voters reduced the annual state tax rate on interest and dividend income from 12% to 5.95%
In 2000, Massachusetts voters reduced the annual state income tax rate from 5.9% to the present-day 5%