Tax testimony

Professor of Economics John Miller testified January 19 in support of a constitutional amendment aimed at creating a more equitable income tax system for Massachusetts residents.

Miller and fellow economist Arthur MacEwan, co-authors of the book Economic Collapse, Economic Change: Getting to the Roots of the Crisis, were asked to testify at the Joint Committee on Revenue hearing by the lobbyist group MassBudget. Both have served the group as economic consultants in the past.

The two also helped gather economists throughout the state to sign a statement supporting the amendment. In total, 71 experts have signed, including Miller and Wheaton economics professors Phoebe Chan, Russell Williams and Brenda Wyss.

Some have dubbed the proposal, which would increase the income tax rate for residents who earn more than $1 million annually, the “millionaire tax.” Miller refers to it instead as a “fair-share tax.”

“The richest 1 percent of Massachusetts families—those with incomes above $860,000—paid out 4.9 percent of their incomes in state and local taxes in 2015 after deducting from federal taxes,” Miller said. “In contrast, families in the middle, with incomes between $44,000 and $70,000, paid 9.3 percent of their income, while the poorest families, with income less than $22,000, paid 10.4 percent of their income in state and local taxes in 2015.”

Experts estimate the new tax, which would add a 4 percent tax on incomes over $1 million, would raise about $1.5 billion a year in revenues for the state—money that, according to the amendment, would be earmarked for public education and transportation. Miller said that estimate accounts for the possibility of “tax flight”— residents and businesses leaving the state in search of lower taxes—and that without that movement, the revenues would be even higher.

The Joint Committee on Revenue has until April 27 to decide whether to support the measure, though an earlier decision is anticipated, according to an article published by the NewBostonPost. The amendment needs approval from both the Massachusetts House and Senate to appear on the ballot in 2018. If voted in by the citizenry, the new tax would take effect in 2019.

Opponents of the tax worry about the aforementioned tax flight, pointing to General Electric’s recent announcement of plans to move from Connecticut to Massachusetts to escape the former state’s tax system, among other examples.

They also question whether a constitutional amendment can include earmarking of funds and whether the new tax revenues wouldn’t just end up in the state’s general fund.

Miller said he feels confident the money could be earmarked for education and transportation but said ultimately the amendment’s efficacy does rely on politicians.

“Many of them talked at the hearing about how concerned they were about the increasing inequality in the state,” Miller said, referencing a recent report that lists Boston as the No. 1 city in the United States for income inequality. “That makes this a far different atmosphere than the last time a graduated income tax got voted down.”

According to the NewBostonPost, Massachusetts voters have defeated surtax proposals five times since 1962, most recently in 1994.

But Miller said he thinks citizens and legislators alike seem ready for the change now. At the January 19 hearing, spectators and those testifying filled all the seats and were standing two rows deep throughout much of the 2 1/2-hour presentation.

“There were a lot of really moving testimonies—people who rely on public transportation, public school principals, college administrators and staff,” Miller said.

The committee members themselves delivered passionate testimony in favor of the amendment, he noted.

“I walked away feeling optimistic about our chances,” Miller said.

As for any future involvement in the process, Miller said he’d like to be part of the campaign if the amendment makes it on the ballot.

“I think this amendment would be fantastic for Massachusetts. Massachusetts is a rich state, but it’s a really unequal state, and these investments are really needed. This is the best and fairest way to collect the monies.”