The Fair Share Amendment

I voted in a Constitutional Convention to advance the Fair Share Amendment to the 2022 ballot. As a result, next November the citizens of Massachusetts will be given a chance to vote the amendment into law and thereby add it to our state constitution. The Fair Share Amendment will add an additional tax of four percentage points (4%) on the portion of a person’s annual income above $1 million. For example, if someone makes $1.1 million, the 4% tax increase would be applied only to the $100,000 they made over $1 million, so a total of $4,000. The new revenue would be spent on “quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation.”  While estimates vary, if the Fair Share Amendment becomes law it will raise somewhere between $1.5 to $2 billion in revenue each year, enough to make a real difference on critically important initiatives.
 
A Constitutional Amendment
The Massachusetts state constitution specifies that income for all taxpayers is taxed at one flat rate, currently 5%. So rather than having a progressive tax system under which higher annual incomes are taxed at higher rates — as is true at the federal level and in many other states — income in Massachusetts is taxed at the same rate for everyone. Therefore, to raise taxes on high earners, we must amend our constitution. To advance a constitutional amendment to the ballot, 50% or more of the Legislature must vote in favor of the amendment in two consecutive constitutional conventions. The vote I just took in June was the second affirmative vote by the constitutional convention and therefore the question will be put to voters next year.
 
The Needs            
While there is much to be proud of for residents of Massachusetts, the truth is that we have many pressing public policy challenges that result from inadequate public sector investment. We just haven’t kept up and the failure to address these challenges does not impact all citizens equally; it most specifically disadvantages those of modest means as they struggle to get a toehold in the middle class at a time of profound and increasing inequality. Moreover, failure to invest in the foundational pillars of our society is tremendously short-sighted. Let’s be clear: the public and private sector are inextricably linked. Research at our public institutions of higher learning, efficient well-functioning public transportation, high-quality public schools – all of these things have a direct impact on our ability to thrive and create the dynamism and innovation necessary for economic growth. 
 
Thoughtful stewardship of the state requires leaders to understand these challenges and address them so that our state can continue to thrive, attract investment, and allow all of our citizens equal opportunity and the chance to enjoy a good quality of life. 
 
Public Education
Last session we passed the Student Opportunity Act, which — when fully funded — will generate an annual $1.4 billion of new investment in our state’s public schools. This overhaul of the public school funding formula will ensure they are getting the necessary funding to provide quality education to all students in the Commonwealth, particularly in school districts with the highest concentration of low-income students. Additionally, there are growing calls to expand and establish high-quality pre-kindergarten programs across the state. And our state’s high-quality vocational high schools have long waiting lists. All of these policies and programs require new investment of the kind that the Fair Share Amendment will enable.
 
Public Higher Education
As the Chair of the Higher Education Committee, I have been spending a lot of time recently focusing on making high-quality public education accessible and affordable to everyone. As we all know, college costs are soaring, far outstripping the rate of inflation. Up until the late 1980s, you could work a low paid job and still afford to pay your way through UMass Amherst without any debt. Those days are gone. Now the average student at UMass Amherst is about $31,000 in debt at graduation, and a student at Bridgewater State is about $33,000 in debt at graduation. Keep in mind, these are averages and some students have far more debt. This is in large measure due to a drop in the percentage of the costs funded by the state and, a concomitant increase in funding required from the students. It is also important to remember that students who attend one of our 29 outstanding state colleges and universities remain living and working in the state at a much higher rate than those who attend Harvard, MIT, Tufts, BC, BU, Northeastern or any of the other great private institutions of higher learning for which this state is famous. These students from public colleges and universities are our future workforce and the debt they are incurring is crippling to many. A study by a UMass Amherst Ph.D. student found that the state forgoes about $2.5 billion in savings and economic growth due to the debt held by Massachusetts college graduates. Again, the Fair Share Amendment will go a long way toward addressing the college debt crisis.
 
Transportation
There are almost 500 bridges in Massachusetts that have been labeled as “structurally deficient.” These bridges will continue to deteriorate over time, becoming more expensive to fix and putting safety at risk. The “state of good repair” backlog for the MBTA is at least $10.1 billion. Keep in mind, that $10.1 billion figure is not to expand or take on the many new projects envisioned by transportation planners (like South Coast Rail or a North Station/South Station link), but only covers the cost to make sure the MBTA is at a basic acceptable level of safety, sustainability and reliability. There also is a need for regional transit authorities (RTAs) to expand and upgrade their systems. This is a huge sum — an $8 billion gap over the next 10 years, again just to bring our regional transportation systems into a state of good repair. In addition, there will be new transportation problems with the coming sea-level rise brought about by climate change that we will have to address. All of these needs will benefit from the passage of the Fair Share Amendment
  
Income Inequality and Federal Tax Policy
By now, the unhealthy concentration of wealth in our country is well documented, and here in Massachusetts we are one of the states with the biggest wealth gaps. There are many reasons for this trend, including globalization and technological advancement, the benefits of which have disproportionately accrued to those at the commanding heights of our economy. But as much as more than those developments, federal tax policy has been a major contributor to the wealth gap.

And here I won’t mince words:tax policy toward the very wealthy, developed with help from a small army of lobbyists and lawyers, has been tantamount to a looting of the federal treasury over the last 4 decades. When Ronald Reagan took office in 1981, the top marginal tax rate on the wealthy was 70%.  In a tax law passed in 1981, the rate was cut to 50%, a staggering 20 point drop. Not done, the Tax Reform Act of 1986 in Reagan’s second term cut the top rate from 50% to 35%, another 15 points shaved off of the rate paid by America’s wealthiest (Clinton raised that rate slightly). But wait – there’s more.

Those rates are on what economists and tax lawyers call “ordinary income”, that is wage income — the kind reported on your paycheck. But we know that wealthier taxpayers get a lot of their income from other sources, not from ordinary income, but from capital gains and dividends that come from selling stock and other financial transactions. Building on the trend started by Reagan in the 1980s, George W. Bush and a Republican Congress cut taxes substantially on those other forms of income in two tax laws passed in 2001 and 2003 (all while America was trying to fight two land wars half a world away in Afghanistan and Iraq).  These were huge tax giveaways to the wealthy, and according to most economists were unjustified from a broader policy perspective. While proponents of these ideas assert they lead to greater investment and capital formation, the claim is dubious at best. When asked about this topic, even the billionaire investor Warren Buffet said that tax policy did not dictate how he would assess companies as potential investments.   

It didn’t end there. In 2017, Trump and his enablers in a Republican-controlled Congress enacted The Tax Cuts and Jobs Act, which saw 83% of the benefits go directly to the top 1% of earners.  As a result of this bill, in Massachusetts, the top 1% of tax filers got a federal tax cut worth more than $60,000 a year. Additionally, the CARES Act — passed as a coronavirus relief bill – also included $135 billion in tax breaks for wealthy business owners. High-income earners in our country have continued to get tax breaks from our government, while the rest of us have fallen further behind. 

There are other tax policies that benefit the wealthiest too intricate to cover here, such as the so-called “carried interest rule”.  In addition, the Internal Revenue Service staff has been reduced and it lacks the ability to audit many of the complicated corporate structures employed by the well-off.  All of these tax policies are one of the major reasons that income and wealth inequality has reached levels not seen since the Gilded Age. That is not hyperbole – it is fact. The data on national income demonstrates it clearly.

While we often hold up our state, and rightfully so, for having some of the best schools and health care in the country, Massachusetts also has the sixth-highest rate of income inequality in our nation. Our state tax system is deeply regressive; taxpayers with lower incomes pay a much greater percentage of their income in taxes than high-income people. While we cannot change federal tax policy, each of you will have the power with your vote next year to change state tax policy – to make it fairer while creating an amazing opportunity for our state to meet the challenges of the 21st century. 

Raising our top marginal tax rate to 9% Massachusetts will be in line with many similar states. Such as, New Jersey (8.97%), Vermont (8.95%), New York (9.65%), Minnesota (9.85%), Oregon (9.9%), Hawaii (11%), California (13.3%), and New York City’s tax rate for annual income over $1 million is 13.53%.

We Need to Pass the Fair Share Amendment
Every day as your legislator, I am confronted by a wide array of important goals all of which are well-documented and brought forward by advocates and experts. And while the Legislature really has accomplished a great deal in recent years, some of these important goals remain out of reach without adequate financing. The need is real.

And just as the need is real, the “ask” is reasonable. Frankly, given the course of tax policy at the federal level over the last 40 years with its enormous benefits flowing to those at the top, this is a reasonable request at the state level of those who have benefited so greatly from our system and way of life. While most do not begrudge wealthy people their resources, we do rightly and reasonably expect them to contribute their fair share to make sure everyone gets the same shot at the American Dream that they enjoyed. 

The roads and bridges we all drive on and our public schools will all see improvements if this amendment passes. To truly be a Commonwealth, Massachusetts must care about our “common wealth” – that is the well-being and success of everyone in our community. It is beyond time for us to fix our tax code and make these needed investments for our future. It will take all of us to get this passed on the ballot next November. If you are interested in joining me in this fight, please email me and also visit https://www.raiseupma.org/.

Tagged with: , ,
Posted in Op Eds

Leave a Reply

Your email address will not be published.

*

Subscribe to my monthly email newsletter

* indicates required
Contact Dave

Please never hesitate to contact me for any reason.

Phone: 617-722-2637
Email: dave.rogers@mahouse.gov
Mail: State House Room 544, Boston, MA 02133