Reed: Fight for tax relief is far from over

When the Massachusetts Supreme Judicial Court (SJC) denied voters the ability to support a popular tax cut this November, it was more than a temporary loss for residents of one of America’s most overtaxed states. Barely a generation removed from its “Taxachusetts” moniker, the Commonwealth’s competitiveness suffered a setback with long-lasting implications.

That is why even if this battle is over, the broader fight must go on.

Recent polling from the Mass Opportunity Alliance (MOA), a nonprofit advocating for state competitiveness, found that 82% of voters supported lowering the state income tax rate from 5% to 4%. Even a poll from the Boston Globe/Suffolk University released days before the SJC decision showed 66% supporting the tax cut.

Terrified by the threat to the status quo, entrenched special interests spearheaded a legal challenge not based on the merits of the tax cut or fiscal policy whatsoever. The issue was a technicality in summary of the question written by the Attorney General. As a retired SJC justice explained, “neither logic nor law” supported removing the tax cut from the ballot.

The Court’s ruling does not change the underlying issue. The same Suffolk survey showed a majority (54%) of respondents had considered leaving the state in the last year. Nearly six in ten cited taxes and high cost of living.

This trend is well underway. Following the Commonwealth’s last tax hike in 2022, roughly 30,000 more people exited Massachusetts than arrived the following year — one of the country’s highest population exoduses. The outflow took $4.2 billion dollars’ worth of taxable income with them.

It’s no mystery as to why we’re losing residents. Survey research from MOA showed high taxes were a key driver. Not coincidentally, the top two states welcoming Massachusetts expatriates, Florida and New Hampshire, both have no income tax.

By contrast, Massachusetts has the second highest effective tax rate in the country. The Commonwealth is ranked in the bottom 10 for competitiveness.

The impact of this tax burden extends far and wide.  Businesses are choosing to leave or relocate elsewhere. Iconic brands like Cape Cod Potato Chips have had enough, announcing the closing of their Hyannis facility earlier this year. Even international soccer players are not safe, learning that 90 minutes of participation in this year’s World Cup can subject them to crushing Beacon Hill tax policies.

Massachusetts is not alone in the blue state exodus. Frustrated by high taxes, endless regulation and overall unaffordability, families and businesses are fleeing California, Illinois and New York for friendlier terrain.

What are the consequences of fewer residents? For starters, less people to tax. Smaller tax bases means less resources for schools, roads and public safety – investments that tax hike advocates typically claim to care about.

Smaller populations also mean less national influence. In 2010, the congressional delegation shrank from 10 to 9 members, and only narrowly avoided losing another member in 2020. It’s anyone’s guess what the end of this decade will bring, but current trends are not encouraging.

So what’s next?

Fortunately, a second common sense tax proposal remains on track for the ballot this fall. By reforming the state tax revenue limit, the initiative would put the brakes on spendthrift politicians and return money to the taxpayers who earned it.

To be clear, the court’s ruling does not excuse the role of the legislators. Their constituents were denied the right to make their voices heard. As their elected representatives, members of the Massachusetts legislature should be fighting for families struggling with high taxes and some of the highest costs in the nation.

“Affordability” cannot just be a political buzz word; it must be a governing principle.

Two hundred fifty years ago, Massachusetts started a revolution against an oppressive government that led to the founding of our nation. That spirit lives on today, and so does the need for change. That starts by continuing the fight for common sense tax relief by every available avenue to keep the Commonwealth competitive for the next 250 years and beyond.

Colin Reed is a senior advisor to the Mass Opportunity Alliance