Teachers Unions Spent $22 Million Backing Massachusetts 'Millionaire's Tax'
The constitutional amendment is an attempt to undermine the state's flat income tax system.
Teachers unions in Massachusetts have spent big bucks trying to convince voters to approve a massive tax hike.
Voters in the Bay State will decide on Tuesday whether to impose a new 4 percent "fair share" tax on income in excess of $1 million—on top of the 5 percent flat income tax that all Massachusetts residents pay. The new "millionaire's tax" constitutional amendment has some deep-pocketed supporters in the state, with teachers unions having ponied up $22 million to back the initiative, according to the Boston Globe, which surveyed state campaign finance reports.
That accounts for nearly 85 percent of the $26 million spent trying to convince voters to support the tax hike, the Globe reports, and it dwarfs the $13 million that's been spent by a variety of individuals and groups opposing the tax increase. The teachers unions are literally outspending the millionaires.
The unions' efforts are also somewhat misleading, as Reason contributor and Education Next managing editor Ira Stoll notes. One mailer, for example, incorrectly says that residents forced to pay the new tax will have already gotten $1 million for "free"—which of course ignores both the fact that the income was earned somehow and already subject to a 5 percent tax.
It's not much of a surprise that teachers unions are pushing this tax hike. This year's ballot question is the culmination of a campaign that the Massachusetts Teachers Association (MTA) launched back in 2015. Go to the MTA's website and you'll be greeted not by information about how to educate students better or protect teachers' rights as workers, but by an argument for higher taxes.
"The MTA has coughed up $13.3 million for the so-called Fair Share Amendment, while its national counterpart, NEA, has doled out $7.2 million," the Globe reports. "Which begs the question: What do the teachers want?"
Maybe a better question would be: Is there anyone else who actually wants this tax hike to pass?
Sure, a tax on millionaires would mean more money for the state to dole out to schools and to everything else the Massachusetts government funds. A study from Tufts University says the new tax would apply to about 0.6 percent of the state's residents and would generate about $1.3 billion in additional revenue next year.
That's a lot of money, of course, but really not all that much in the context of the state's $52 billion annual budget.
On the other hand, as Tuft's report notes, the downsides could be significant. "Some high-income residents may relocate to other states," it warns, adding that "tax avoidance could be widespread."
A separate report from the Beacon Hill Institute, a free market nonprofit, estimates that the new tax would generate $1.23 billion in new taxes in 2023 while costing the state more than 9,000 jobs and reducing the state's overall gross output and real disposable income—a reflection of wealthy residents shifting assets and investments elsewhere.
So why are the teachers unions so heavily invested in backing a policy that could cost thousands of jobs and won't generate more than a modest amount of new tax revenue? Perhaps because they have bigger plans down the road.
Massachusetts is one of just a handful of states with a flat income tax—a policy that has a number of benefits, including making it easier for taxpayers to know exactly what they owe the government. Disrupting that system with a new tax on millionaires creates a mechanism for future tax increases on other groups, argues Chris LaBella, a state policy associate for Americans for Tax Reform, which opposes the tax increase.
After all, a "fair share" is in the eye of the beholder—and, for now, it's up to the vast majority of voters who won't have to pay it.
