Massachusetts' Supreme Judicial Court on Monday rejected a November ballot question that would have asked voters to raise the state income tax on the commonwealth's top earners and earmarked an estimated $2 billion per year for transportation and education.
The court, in a 74-page split decision on Anderson v. Healey, sided with business groups that argued that the "millionaire's tax" proposal was unconstitutional. The measure would have imposed a higher income tax rate for personal earnings above $1 million.
"We conclude that the initiative petition should not have been certified by [Attorney General Maura Healey] as 'in proper form for submission to the people," Associate Justice Frank Gaziano wrote in the majority ruling.
Gaziano his the measure would have disregarded voters who may have wanted to fund transportation or education, but not both.
"A voter who commuted to work on an unreliable subway line, but who did not have school-aged children and was unconcerned about public education, might want to prioritize spending for public transportation, without devoting additional resources to public education, but would be unable to vote for that single purpose," wrote Gaziano.
"A parent of young children, who lived in a rural part of the commonwealth and did not own a motor vehicle, would be unable to vote in favor of prioritizing funding for early childhood education without supporting spending for transportation."
State Department of Revenue officials have estimated that the millionaires tax would have generated between $1.6 billion and $2.2 billion in additional tax revenues in 2019.
"We are incredibly disappointed that a few wealthy corporate executives and their lobbyists brought this lawsuit that blocked the right of Massachusetts voters to amend our state’s constitution," said Raise Up Massachusetts, a primarily union-funded coalition of labor groups, community organizations and religious groups that ran point for the initiative.
"It is stunning that these business groups would overturn the will of the more than 157,000 voters who signed petitions to qualify the Fair Share Amendment for the ballot, and of two overwhelming majorities in consecutive constitutional conventions."
The Massachusetts High Technology Council led the opposition, arguing the tax will hurt the state economically and deter entrepreneurs. Other business groups opposed to the measure included the Associated Industries of Massachusetts and the Massachusetts Competitive Partnership.
Republican Gov. Charlie Baker, who is seeking re-election, had not taken a formal position on the proposal. His Democratic challengers, Bob Massie and Jay Gonzalez, strongly supported it.
S&P rates Massachusetts' general obligation bonds AA, while Moody’s Investors Service and Fitch Ratings rate them Aa1 and AA-plus, respectively. All three assign stable outlooks.
"Massachusetts municipalities are in the midst of an economic boom that is outpacing regional and national trends and generally support stable local revenue performance," S&P said in a report two weeks ago that portrayed the commonwealth favorably compared to neighboring Connecticut.
Massachusetts intends to come to market with a $225 million sale of Commonwealth Transportation Fund Series 2018A revenue bonds. The retail and institutional sales are scheduled for Tuesday and Wednesday, respectively.