“Million tax” opponents launch campaign, citing potential impact on small business owners

A coalition against the push for a “million-dollar tax” launched its campaign on Monday, saying it would hurt small business owners.

Massachusetts voters will decide in November whether to impose a tax hike on high-income people through a constitutional change. The Coalition to Stop the Tax Rise, made up of more than 80 small businesses and commercial organizations, says that if voters approve the proposal, it would have a negative impact on the Massachusetts economy.

“While the proponents have a good intention of trying to tax the richest of us, this is not the case,” said coalition spokesman Dan Cence. “It raises taxes on tens of thousands of small business owners at the worst possible time in the economy.”

The proposed Fair Share Amendment would impose an additional 4% tax on Massachusetts employees who earn more than $ 1 million in excess of that amount. Massachusetts is one of the few states with a flat tax system that taxes all levels of income in the same amount: 5%. The promoters say the new tax will bring in the necessary funds to support community education and transportation projects.

As the state emerges from the pandemic, it is not time to raise taxes, according to Cence. “Massachusetts has a huge budget surplus now, more than $ 10 trillion,” he said. “No more tax revenue is needed.”

The Coalition believes that the wealthiest households can move out of the state or impose tax evasion, and the real burden of the proposal would be on small business owners, farmers and the middle class.

Researchers Tufts University Center for State Policy Analysis he looked at tax records from January 1999 to 2007 and found that roughly half of the households that would be subject to the higher tax rate had temporary profits, such as selling a business or a long-term investment.

Proponents of her case have been working to make the actual transcript of this statement available online. In a statement in response to the Coalition’s presentation, Steve Crawford, a spokesman for Raise Up Massachusetts, said opponents are moving away from the potential benefits of the tax hike.

“The super-rich got rich in the pandemic, and a small number of them will say nothing to pay their fair share to build a better future for Massachusetts families,” he said in a statement. “Today’s press release also distorts the ability of small businesses to reinvest in their own business. Income that is sold and reinvested in the company can be deducted from business owner taxes.”

Toby Burr, owner of Marion’s Burr Brothers Boats, is opposed to the tax hike because he worries it could have a negative impact on businesses like his, which are formed as an S corporation, also known as a “gateway” company. These companies provide their income as personal income and then return it to their business, which would be an individual who would tax an additional 4%.

“That means there’s less money for the business,” he said. “It means less money to reinvest in the business, buy machinery and equipment, give bonuses to employees, and all the things that can move a business forward and survive and change over time.”

Burr said some businesses could leave Massachusetts or establish themselves in a neighboring state like New Hampshire to avoid tax while they have access to Boston markets. But a business like his, a boat, is physically connected to the community.

Tufts ’study found that the tax“ is likely to advance race and economic equity ”with its income, but it is likely to have behavioral impacts for higher incomes.

“Some high-income residents may relocate to other states, but the number of movers is likely to be small,” the study authors wrote. “Tax avoidance could be widespread, with rates significantly reducing the amount of revenue collected.”

He also said that the measure would generate about $ 1.3 billion in 2023 and would apply to about 0.6% of the state’s households.

Another problem in the game for opponents is how the funds can be spent. “It really gives Beacon Hill a white check without liability,” Cence said, as the funds will still have to be taken over by Parliament.

In April, the Beacon Hill Institute argued to the Supreme Court in an amicus summary that the question should be removed from the vote because the proposed text was “too ambiguous” and did not properly specify the funds for education and how they would be used. transport, saying it is “misleading” for voters.

This fight for a “million dollar tax” is not new. The proposal has been around Beacon Hill for years, and a similar measure was blocked by state courts in 2018 for procedural reasons.

Opponents say inflation is hitting businesses harder than ever and that a constitutional change would be difficult to adjust to the economic cycle, even if the $ 1 billion cut adjusts every year as the cost of living changes. Burr is worried that small businesses like his will be broken as inflation rises in price.

“A million dollars isn’t what it used to be, you know?” he said.

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