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It was a thin margin, of victory, but the so-called “millionaires tax” is now the law of the land in Massachusetts. And business groups are now warning that the state needs to act to retain its economic competitiveness.
The AP called the race around 1:30 p.m. Wednesday with 52 percent of voters in favor of Question 1 and 48 percent against. The initiative passed comfortably in the metro Boston area and Pioneer Valley, with liberal strongholds of Somerville and Northampton coming in at 79 percent and 82 percent in favor, respectively. The question also did well in Western Massachusetts, with vote shares as high as 75 percent in favor in Williamstown and 76 percent in Great Barrington.
The surtax will raise an estimated $1.3 billion a year intended for transportation and public education, but opponents warned that the ballot question’s language and political realities meant the money may well not translate into an equivalent increase in transportation or education spending.
The Coalition to Stop the Tax Hike Amendment spokesperson Dan Cence said the opposition campaign was “disappointed” by the initiative’s passage, calling it a “setback for the Massachusetts economy.”
“There is no guarantee that this ill-conceived amendment will increase spending for either education nor transportation,” he said. “It will, however, severely impact retirees, homeowners, and hardworking residents across the state. This amendment will hurt small businesses as they struggle with inflation, supply chain issues, and work to rebuild from the negative impacts of the pandemic.”
The Massachusetts High Technology Council, which invested in the No on 1 campaign and has led anti-surtax efforts for years, said voters were “caught in a tax trap and misled into voting for a permanent new tax.”
Associated Industries of Massachusetts also released a statement that Question 1 would have a “negative impact” on “small businesses and the economy as a whole.”
“The proposal will have an immediate effect on businesses organized as pass-through entities,” AIM said. “These companies – many of them small, family businesses that invest profits back into their businesses to grow and expand – will be punished for their success with higher taxes. This will prevent businesses from being able to buy machinery and equipment and provide competitive pay increases for employees at a time of heightened economic uncertainty.”
Tuesday’s vote sets up a debate on Beacon Hill over how the money gets spent, with the ballot question language leaving significant leeway for legislators to steer the yearly billions into everything from local pet projects to major investments in repairs to the MBTA, vocational education or expanding transit outside of Greater Boston.
“Through the passage of the Fair Share Amendment we will see a greater, more stable investment in transportation and public education. The Alliance for Business Leadership, the only business group to support Question 1, knows this was a good business decision that was made in good conscience by the voters across the Commonwealth,” ABL President Jen Benson said in a statement.
Greater Boston Chamber of Commerce President and CEO Jim Rooney, whose organization opposed the tax, called on Massachusetts leaders to make sure the money raised by the tax was spent in strategic ways that compensated from the competitiveness hit his and other business groups say the tax hike will cause.
“With the outcome of the Question 1 initiative now decided, it is time to move forward together to strengthen the Commonwealth’s competitiveness and make sure any additional resources generated are effectively deployed to improve our transportation and education systems,” Rooney said in a statement. “Indeed, we are disappointed with the results and have concerns that this will negatively impact the Commonwealth’s economic competitiveness and ability to attract and retain workers and businesses. With voters almost evenly divided on the issue, it is important that our policymakers immediately move forward with strategies that cultivate a friendly business environment to avoid the loss of jobs to other states actively competing for our employers and talented workforce. We look forward to partnering to create a more vibrant, job creating and inclusive economy of all businesses and all people in the Commonwealth.”
