Column: Making Our Tax System Fairer
The Fair Share Amendment would make our tax system fairer, strengthen the Massachusetts economy, and improve economic opportunity and quality of life for residents of the Commonwealth. Proposed by Raise Up Massachusetts, a broad coalition dedicated to helping working families, it would amend our state constitution to create a 4% surtax on personal annual income above one million dollars, and invest the new tax revenue that would be generated in education and transportation. The million dollar threshold would be adjusted upward each year to reflect the rate of inflation.
Poor and working families in Massachusetts are struggling to get by every day. For millions of people, the American Dream seems ever more elusive. From World War II through the late 1970s, average income for the top 1% of wage earners in Massachusetts grew at an annual rate of 0.9% while average income for the bottom 90% grew at an annual rate of 1.4%. In other words, prosperity in these years was broadly shared. Since 1979, however, average income for the top 1% has grown at an annual rate of 4.2% while average income for the bottom 90% has grown at an annual rate of just 0.4%. A disproportionate share of all new income and wealth over the past three decades has gone to those who are already very rich.
This is not because people are not working hard enough. In fact, they are working longer hours, sometimes multiple jobs. And, they are more productive. Since 1979, worker productivity has increased an astonishing 65%. But workers are not getting ahead and they’re not getting their fair share.
This is taking a terrible toll on our children. The child poverty rate in Massachusetts has been rising for years, with one in six children now growing up in poverty. And one in three children are living in a household with an annual income below 200% of the poverty level. In a state as wealthy as Massachusetts, this is shameful.
We know there are no simple explanations or easy solutions to address inequality and economic insecurity in the Commonwealth. However, one contributing factor is squarely within our control, and that is the state’s tax and fiscal policy.
Our current tax system in Massachusetts is regressive and unfair. People in the bottom 20% of the income scale pay an average of 10.5% of their annual income in state and local taxes, while people in the top 1% pay only 5% of their annual income in state and local taxes, after federal tax deductions.
This tax structure is unable to support the essential needs of our Commonwealth. In 2001, we invested 11% of the state’s economic output in our state budget. Today, that has fallen to 9.5%. Furthermore, of the growth in the state budget since 2001, much of the new revenue has been consumed by rapidly rising healthcare costs that are largely fixed rather than discretionary expenses. As a result, lawmakers have had to cut spending in many areas of the state budget. For example, according to the Mass Budget and Policy Center, after adjusting for inflation: local aid is down by 43%; early education and care is down by 22%; higher education is down by 20%; public health is down by 23%; environment and recreation is down by 30%; welfare is down by 32%; and mental health is down by 8%.
In other words, we are not able to invest enough resources in a wide range of public priorities, including education, transportation, housing, the environment, and many other critical public needs. As a result, our families suffer. Our communities suffer. And, our economic growth suffers.
The Fair Share Amendment is the best opportunity we have right now to make our tax system fairer, invest in education and transportation, strengthen our economy, and begin to rebuild the American Dream for all residents of the Commonwealth.