FAQs on the Fair Share Amendment
1. Some already call MA ‘Taxachusetts’ – why would we want to make ourselves even more of
an outlier? Overall, the level of taxation in Massachusetts is in the middle of the pack when
compared to the rest of the country. Total state and local taxes paid in Massachusetts as a share of
total State Personal Income was 10.1% in FY 2012 (the most recent year for which national data is
available). That places Massachusetts 22nd among the states and below the U.S. average of 10.3%.
Massachusetts Taxes Below the U.S. Average, 2012
State and Local Taxes as a Percent of State Personal Income, FY 2012
25%
20%
15%
U.S. = 10.3%
MA = 10.1%
10%
SD
NH
AL
OK
SC
ID
CO
W…
NC
UT
NE
MS
AR
MA
NV
N…
U…
DE
RI
NJ
IL
ME
HI
AK
0%
NY
5%
The Taxachusetts label is a legacy of the 1970s - and at that time the label had a basis in reality. In
1977, Massachusetts was a relatively high-tax state, ranking third in the nation when looking at
taxes as a share of total State Personal Income.
Since the late 1970s, tax policy in the Commonwealth has changed dramatically. The approval of
Proposition 2 1/2 in 1980 reduced property taxes, and then, in the late 1990s, the Commonwealth
reduced state taxes – primarily the income tax – significantly. As a result, between 1977 and 2012,
Massachusetts reduced taxes more than all but one other state. For more on details, see
MassBudget’s Where Does the Taxachusetts Label Come From?.
2. Don’t the rich already pay higher taxes? Why tax them more? In reality, upper-income
households in Massachusetts are currently paying the smallest share of their income in state and
local taxes as compared to the Commonwealth’s middle and lower income households (see chart
below). This is true for almost every state in the nation.
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Wealthiest Few Pay Smallest Share of Income in State and Local Taxes
State and local taxes as a share of income, by income group
12%
10.5%
10.3%
10%
9.9%
10.0%
9.2%
8.1%
8%
6.5%
6%
4%
2%
0%
Less than
$22,000
$22K - $44K
$44K - $70K
$70K - $118K $118K - $252K $252K - $860K
$860,000
or more
Source: Distributional analysis from Institute for Taxation and Economic Policy. All taxpayers, 2012 incomes, 2015 tax laws.
For more information, see MassBudget’s Examining Tax Fairness factsheet.
3. Won't the rich leave? Studies have shown that increasing tax rates on the wealthiest residents
leads to, at most, a very small percentage of those residents moving to another state. Overall, less
than 2% of all residents move from one state to another each year, with only a small fraction of this
total being high income residents. The research shows that the reasons people move are usually
cheaper housing, a new job, or better weather.
4. When they leave, won't that just end up costing the rest of us more? While a small percentage
of wealthy residents may move as a result of higher taxes, experience has shown that there will be
so few wealthy movers that the lost tax revenue from these few will pale in comparison to the
revenue generated by the overall tax increase. A detailed study using IRS data has shown that when
New Jersey raised taxes on very wealthy residents in 2004, the revenue lost from the 70 wealthy
tax filers who left the state (potentially to avoid higher taxes) totaled less than half of 1 percent of
the revenue gained by the overall tax increase.
5. Won't raising taxes on the wealthy kill jobs? Not at all. In fact, the investments in education
and infrastructure made possible by the additional revenue will create more skilled, better
educated workers and more desirable locations, all of which will help attract more businesses to
the state.
There is a well-documented link between education levels and wages, and the added revenue
going to public schools and higher education will pay off for the state in the long run. The majority
of students graduating from state schools will stay in the state once they enter the workforce, and
as a result of better education and training, they will have better jobs. This means they will earn
more, stay employed at higher rates, paying more income and sales taxes and be able to provide
greater opportunities for their children.
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The investments in transportation infrastructure will make the state more enticing for growing
businesses and highly skilled workers alike. Businesses are increasingly looking for dynamic
environments with a number of transportation options because they know that’s what skilled
employees are looking for. Creating reliable transportation options will only happen with the
dedication of additional revenue.
6. Didn’t we raise taxes already in the recent past? Why do we need more revenue? While the
sales tax and some excise taxes (i.e., cigarette taxes) have increased over the last few years other
important sources of revenue – like the personal income tax – have not.
Despite some tax increases and an overall rise in the amount of revenue collected by the
Commonwealth, total tax revenue as a share of all personal income generated in the state has
declined over the past decade and a half. This decline means that revenue collections are not
keeping pace with the growth in our economy and the growth in related costs. These declines are
due in large part to substantial cuts made to the income tax from 1998-2002. These major tax cuts
(combined with other factors, such as the increase in online sales, on which sales taxes often go
unpaid) amounted to a loss of $3.5 billion in annual tax revenue for the Commonwealth in FY 2014.
In response to these budget shortfalls, state lawmakers have made deep cuts to program areas
across the budget. Deep cuts in funding for essential public investments can compromise the
state's long term growth potential and harm the current and future well-being of the people who
live and work here in Massachusetts.
For more on these state income tax cuts and their impact on funding for programs and services, see
Income Tax Cuts and the Budget Deficit in Massachusetts.
7. How have the recent automatic income tax rate cuts affected the amount of money the state
brings in? Just as state revenue collections began rebounding after the Great Recession, these
increases activated a series of “automatic triggers” whereby the income tax rate was reduced in
stages from 5.3% to 5.15% (as of January 1, 2015).
Together, the combined revenue loss from these automatic rate cuts will cost nearly $400 million
annually in FY 2016 and years beyond. Further automatic rate cuts are likely and could bring the
personal income tax rate to 5.0% by 2018, resulting in additional revenue losses. See Automatic
Income Tax Rate Cuts: Frequently Asked Questions, for more information.
8. Hasn’t our budget grown over the last decade and more?
While our state budget has grown in inflation adjusted terms over the last 15 years, the principal
driver of that growth has been increased healthcare costs. This challenge of rising healthcare costs
is not particular to Massachusetts, it is a nationwide trend. Still, as a result of tax cuts and these
and other rising costs, many areas outside of healthcare have seen sharp funding declines, as the
chart below shows.
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Select cuts across the state budget (FY01 - FY15)
Percentage cuts since 2001, adjusted for inflation (CPI)
-5%
-15%
-25%
-20%
-23%
-35%
-25%
-32%
-45%
-44%
-55%
Early
Education
Environment
& Recreation
Higher Ed.
Local Aid
Public Health
9. Won't the Fair Share Amendment lose? Similar proposals have lost before - what's different
this time around? There are two key differences with this constitutional amendment. First, is that
the revenue generated will be specifically targeted specifically to education and to transportation
infrastructure. This is crucial because voters are much more likely to support a tax increase if it’s
dedicated to specific programs, not just added to the state’s overall budget. Second, the tax
increase will affect only those households with taxable incomes above $1 million. Voters
understand that these highest income households – unlike most families - have seen incredible
income growth in recent years and that they therefore can afford to contribute more in taxes.
Education and infrastructure are also on the public’s mind. Families across the state are
increasingly aware of the escalating student debt crisis and the inequality in our public school
systems. As for transportation, the state is still recovering from the transit nightmare during early
2015, which highlighted the glaring holes in our entire transportation system – from the T to
highways and bridges.
With the amendment written specifically to address these issues, it will garner much more support
than attempts made in past years.
10. Won't the legislature just spend the new revenue on whatever it wants?
The constitutional amendment will be written to specifically dedicate the new revenue to
education and transportation infrastructure.
11. We should just eliminate waste, fraud, and abuse instead of giving the government more
money.
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We count on government to do many important things—things we can't do alone—like provide
good schools, protect our environment, promote public safety, and offer a safety net for those
facing misfortune. In fact, we frequently take these essential functions for granted. Furthermore,
we hope and expect that our investments in these shared priorities will be made as efficiently as
possible.
Occasional gross misuses of tax dollars often make the news—as they should. As it turns out,
however, these are infrequent events. Overall, we get good value from the tax dollars we spend on
the things we do together through government. For the many goods and services that our
government departments provide directly or purchase from the private sector, the evidence shows
that often, government entities provide these services at lower cost than private market actors
and/or purchase these services for less than market rates. For a more complete discussion of this
topic, please see the MassBudget’s paper Quality, Cost, and Purpose: Comparisons of Government
and Private Sector Payments for Similar Services.
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