On Beacon Hill, Tense Wait For SJC 'Millionaire Tax' Ruling

BOSTON (AP) — All eyes are on the Massachusetts Supreme Judicial Court as it determines the fate of a proposed constitutional amendment that would impose a 4 percent surtax on any portion of an individual's annual income that exceeds $1 million.

The justices are deciding whether the November ballot question sponsored by the Raise Up Massachusetts coalition meets constitutional criteria for a ballot initiative. Several business groups that sued to stop it from going before voters in November argue it does not.

The court must rule on the so-called millionaire tax on Monday if it holds to its guideline of issuing written decisions within 120 days of hearing oral arguments on a case. But that's only a guideline, and the justices could still hold off for days or even weeks.

Whatever the decision is and whenever it comes down, it's likely to have massive ramifications — and not just for the state's wealthiest citizens.

Here's a look at some of what could unfold following a ruling:

STRONG SUPPORT

If the court upholds the legality of the proposed ballot question, its prospects with voters appear solid.

Two recent polls, one conducted by the Suffolk University Political Research Center for The Boston Globe and the other by MassInc Polling Group for WBUR-FM, point to better than 2-1 support for the millionaire tax among likely voters.

If the question reaches the ballot and is approved, the surtax would take effect Jan. 1 and would bring in an estimated $2 billion in annual revenue for the state. The proposal earmarks that revenue for transportation and education, though the Legislature would retain final say over how the additional money is spent.

DOMINO EFFECT?

The long wait for the high court to rule on the millionaire tax has complicated secretive negotiations over three other November ballot proposals: a reduction in the state sales tax from the current 6.25 percent to 5 percent; mandated paid family and medical leave; and a $15 minimum wage.

Like the millionaire tax, recent polling suggests all three enjoy broad public support.

Efforts to craft compromise legislation — or what Republican Gov. Charlie Baker has termed a "grand bargain" — that would keep those three questions off the November ballot are likely to be influenced by the court's pending ruling.

A ruling that disqualifies the millionaire tax could strengthen the hand of business groups that oppose the paid leave and minimum wage questions, assuming retailers would be willing to give some ground on their support of the sales tax cut.

Raise Up Massachusetts, which is also the organizing force behind the paid leave and minimum wage initiatives, has indicated a willingness to accept as-yet unspecified revisions to paid leave, but has dug in its heels on minimum wage. The group says it would not be open to certain business-backed suggestions, including: a smaller hike in the sub-minimum wage for tipped workers such as restaurant servers; a lower minimum wage for teenagers; or an end to state-mandated time-and-a-half pay for workers on Sundays.

BAKER'S DILEMMA

The governor has so far declined to take a firm stand on the millionaire tax, citing the uncertainty presented by the court case and the ongoing negotiations over other ballot issues.

If the justices clear the way for the question to appear before voters, Baker will come under tremendous pressure to take a position one way or the other. Either choice could bring political peril as he seeks re-election.

Supporting the millionaire tax might be seen by Republicans and conservative-leaning independents as an abrogation of Baker's longstanding promise to fight against broad-based tax increases. But opposing the tax — in the face of the apparent strong public support for the measure — could energize Democrats in search of issues to run on as they wage an uphill fight to unseat the popular governor.

Voters have disagreed with Baker in the past without much impact on his personal popularity. In 2016, the electorate rejected a charter school expansion strongly supported by the governor, and approved of legalizing recreational marijuana despite his opposition.

If the high court rejects the millionaire tax, Baker could then face a quandary over the sales tax question if it reaches the ballot. While he has offered general support for reducing the sales tax, he has yet to endorse the specific ballot initiative that is estimated would cost the state $1 billion in annual tax revenue.

Without an offsetting increase in revenue that could come from the millionaire tax, Baker would have to decide whether he can go along with a measure that could potentially blow a $1 billion hole in the state's precariously balanced budget.

(© Copyright 2018 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)