Amicus Brief Filed in Lawsuit Challenging Income Surtax Amendment

Earlier today, an Amicus Brief was filed with the Massachusetts Supreme Judicial Court (SJC) in support of the lawsuit challenging the validity of the legislature’s proposed Income Surtax Amendment. A more comprehensive accompanying study was also published. Authored by the Beacon Hill Institute (BHI) and sponsored by the Fiscal Alliance Foundation, the amicus focuses on the practical realities encountered when attempting to “earmark” funds from specific tax levies to specific spending. The proposed increase would bring the state’s income tax from 5% to 9%, representing an 80% increase, for earners over $1M. The surtax would include many small businesses and one-time transactions.

View the complete Amicus by Clicking Here

View the complete Study by Clicking Here

Today marks an important date for the lawsuit. The next notable date will be on May 4, when oral arguments are scheduled and we expect the SJC to make a decision in June. This court challenge hopes to ensure the state truthfully describe the ballot question to the voters. Our amicus shows that earmark spending does not guarantee additional spending for that earmark. The proponents of the ballot question want you to believe the tax increase will fund additional spending for “transportation” and “education” needs but as our amicus shows, the legislature has raided past ballot questions with similar earmark promises after the voters have voted on it.

In 1992, Massachusetts voters passed a referendum imposing an additional 25 cents in excise tax on cigarette sales, with the revenue earmarked for a special Health Protection Fund. The amicus found that less than 25% of the revenue from that tax was being used for the earmarked purpose, with tens of millions being diverted to the legislature’s alternative, unrelated spending priorities.

Due to our amicus, the court will now be better informed to know that the legislature has made earmark promises in the past through the ballot question process and it does not guarantee additional spending. We hope the public will consider this information when they go to vote.

“Earmarking revenues from state income taxes through a Constitutional amendment is not a reliable path to increased spending on education and transportation,” noted David G. Tuerck, President of the Beacon Hill Institute and one of the authors of the amicus brief. “The earmarking of revenues from an income tax risks a decision by the legislature to use the new revenues to replace money already allocated to the earmarked purposes, with no gain in spending for those purposes.” 

“To make a fully informed decision, voters should have accurate information on the consequences of their vote, including the downside,” Dr. Tuerck added

“Many people across the Commonwealth have been noting this all along. Earmarking new tax dollars for a specific purpose does not guarantee an increase in funding for those purposes. In fact, there is a lot of evidence that points to the opposite usually happening, and this brief does a good job laying out concrete examples of that to the court,” said Paul Diego Craney, a spokesman for the Fiscal Alliance Foundation.

The Fiscal Alliance Foundation will keep the public updated on this important legal challenge, stay tuned.