The Millionaires Tax Initiative in Massachusetts

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Tax Policy

Tax policy often involves questions of fairness. Who should be taxed and how much? In this article, Professor of Law Lawrence Friedman and Eric A. Lustig of New England Law | Boston discuss the Massachusetts “Fair Share Amendment” voter initiative.

Lawrence Friedman Eric Lustig

By Lawrence Friedman and Eric A. Lustig

Lawrence Friedman is a Professor of Law at New England Law | Boston where he teaches Constitutional Law, Information Privacy Law, National Security Law, and State Constitutional Law. Eric A. Lustig is a Professor of Law and Director of the Center for Business Law at New England Law | Boston. His courses include Personal Income Tax and Nonprofit Organizations.

The Massachusetts Constitution requires the same class of property to be taxed uniformly, including income. But a proposed ballot initiative would amend the Constitution to create a tax on millionaires. Supporters argue that it is time the very wealthy pay more in income tax in order to fund needed statewide investments in public education and transportation infrastructure. There is a question, however, whether citizens will even have the opportunity to vote on the so-called “Fair Share Amendment.” A recent court challenge alleges the proposal fails to conform to the constitutional requirements of the initiative process.

Uniformity of Income Taxation in Massachusetts

As the proponents of the Fair Share Amendment maintain, the wealthiest one percent of Massachusetts taxpayers pay a relatively low amount of income tax as compared to the majority of Massachusetts citizens. This disparity is based on total state and local taxes paid as a percentage of income. See Institute on Taxation & Economics Policy, Why Pays? A Distributional Analysis of the Tax Systems on all 50 States (Massachusetts) (5th ed. January 2015) ( The disparate income tax burden is in part a consequence of a provision of the Massachusetts Constitution, Article of Amendment 44, which authorizes the legislature to impose an income tax, but at the same time requires that the tax “be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property.” The lower total rate for high income taxpayers results from the relatively regressive effect of sales and property taxes.

The Supreme Judicial Court has consistently held that the constitutional requirement of uniformity forbids “the taxation of income from the same class of property at graduated rates, i.e., with the rate of taxation varying with the total amount of income (as, for example, is done by the Federal government).” Opinion of the Justices, 383 Mass. 940, 942 (1981). In 1986, for example, the court concluded that the legislature could not circumvent the uniformity requirement by enacting a series of personal exemptions “intended to apportion tax relief among the taxpayers based upon their relative ability to pay.” Mass. Taxpayers Found., Inc. v. Sec'y of Admin., 398 Mass. 40, 48 (1986).

Since the adoption of Article 44, moreover, every effort to amend the Massachusetts Constitution to permit the imposition of a graduated income tax has failed. The current initiative differs from past efforts to create a graduated income tax by proposing both to amend the constitution to allow the Commonwealth to levy the tax on millionaires, and to set the tax rate.

If ratified by Massachusetts voters in November 2018 through the initiative process, the “Fair Share Amendment” would create an exception to the uniformity requirement in respect to one class of taxpayers. The amendment would impose an additional four percent tax on households with income exceeding $1 million. The new tax would be adjusted annually to reflect cost of living increases. Accordingly, for a taxpayer with an income of, say, $1.5 million, the entire amount would be taxed at the uniform rate that applies to the income of all taxpayers (set by the legislature and, at this writing, 5.1 percent) and an additional four percent on the income over $1 million. Thus, the taxpayer's total tax would be $96,500 (base of $51,000 plus additional tax of $45,500). The total burden of the base income tax and the additional tax would be 6.43%.

Proponents and opponents of the proposed amendment naturally differ on whether it represents good tax policy. The proponents largely base their argument on the need for the targeted revenues and the unfairness of the current overall tax burden. Massachusetts is not alone in terms of the overall regressive nature of the total tax burden. See Who Pays? ( Indeed, a number of other states have raised their income tax rates into the range of eight or nine percent for high income taxpayers. Moreover, there is some disagreement as to whether the new tax will drive some millionaires from the Commonwealth, as well as whether the tax would deter others from moving into the Commonwealth.

The State Constitutional Challenge to the Fair Share Amendment

As reported in Bloomberg BNA's Daily Tax Report, a taxpayer advocacy group and a coalition of business leaders have challenged the constitutionality of the initiative in a lawsuit filed with a single justice of the Massachusetts Supreme Judicial Court.

The basis for the challenge has to do with the limits the Massachusetts Constitution imposes on the substance of initiative measures. According to their complaint, the opponents of the Fair Share Amendment have presented three arguments. First, they contend the constitution prohibits initiative petitions that address multiple subjects, unless those subjects are “related or mutually dependent.” Mass. Const. Art. Amend. 48, Pt. II, §3. Second, they argue the proposal unconstitutionally directs how revenue from the proposed tax must be spent, in violation of Article 48's prohibition of “specific appropriation[s] of money” from the Commonwealth's treasury. Id., Pt. II, §2. Finally, opponents maintain that Article 48 does not by its terms even contemplate that the initiative process may be used to raise revenue.

These are credible arguments. The Fair Share Amendment arguably mixes multiple subjects—namely, taxation, education spending and transportation spending. At the same time, it seems to require the legislature spend the revenue received from the tax in particular ways, notwithstanding that the proposal states that the spending on education and transportation infrastructure is “subject to” appropriation by the legislature. Finally, a tax imposed through the initiative process runs counter to the textual implication that the authority to generate revenue lies exclusively in the legislature. Article of Amendment 48 expressly states that the legislature “shall raise by taxation or otherwise and shall appropriate such money as may be necessary to carry” a voter-initiated law or amendment “into effect,” suggesting that the voters cannot, through the initiative process, directly impose taxes.


It remains to be seen what the single justice does with these arguments, which are likely to end up before the Supreme Judicial Court sooner rather than later. On the one hand, the current system of income taxation – which is enshrined in the constitution itself – appears to be unfair to a majority of taxpayers. On the other hand, the effort to correct that unfairness may reach beyond the limits on lawmaking through direct democracy that the constitution itself prescribes.

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