If the constitutional amendment proposing to add a 4 percent surtax on taxpayers who earn more than $1 million per year gets enough votes at the next Massachusetts constitutional convention, voters will weigh in on the measure in 2018.
Constitutional amendments require approval from at least 50 legislators from the House and Senate in consecutive sessions. The first session vote was in May 2016, when the measure received 135 votes. It’s expected to come up for a vote again later this year.
Under the proposal, an individual’s first $1 million in taxable income would be taxed at the flat rate—currently 5.1 percent, but scheduled to decrease to 5 percent pending certain economic triggers. Any income over $1 million would be taxed at both the flat rate and the 4 percent surtax, so 9.1 or 9 percent.
Ultimately, the measure amounts to a nearly $2 billion tax hike. Proponents say the revenue would be invested in public education and transportation, but critics have pointed out that the state constitution bans amendments that allocate funds, so there is no guarantee the money would be spent on those areas.
The proposed amendment is especially concerning for small business owners who pay taxes as pass-through entities. As pass-through businesses, a company’s business income—not the owner’s individual salary—is taxed at the individual rate. So small business owners would see their business income, which pays employee salaries and benefits and for other business expenses, take a much bigger hit.
