Proposed MA Millionaire’s Tax is a Tax on Your Retirement Fund

    Posted by MAIA on June 7, 2019

    MillionairesTaxImageSupporters of MA House Bill No. 86 and Senate Bill No. 12, the proposed Fair Share Amendment (a.k.a., millionaire’s tax), want to add a 4 percent surtax on income over $1 million. What they neglect to mention is what it will mean for non-millionaire small-business owners. Independent insurance agencies are often organized as pass-through entities for tax purposes (S-corps, LLCs, partnerships). They may not typically report $1 million in annual income, but many will reach that threshold during the one-time sale of their business. If that sale is your retirement fund and this proposal passes? You can kiss a hefty chunk of your nest egg goodbye. It’s time to contact your lawmakers and ask them to oppose this amendment.

    You may be thinking, “wasn’t the millionaire’s tax rejected?” Yes, but it’s back in a different form. Chris Carlozzi of the National Federation of Independent Businesses (NFIB), explains: “Last year, advocates attempted to pass a referendum ballot question calling for an identical proposal to enact the 4 percent surcharge and claimed the tax revenue would be used for education and transportation. NFIB, along with four other plaintiffs, argued the question was unconstitutional and petitioned the Massachusetts Supreme Judicial Court to remove it from the ballot.”

    The courts agreed and removed it from the ballot. However, Representative Jim O’Day and Senator Jason Lewis and filed bills seeking to enact the tax through the legislative constitutional amendment process to avoid the courts. House Bill No. 86 and Senate Bill No. 12 would provide new revenue sources at the expense of entrepreneurs like you. In addition, there is no guarantee that future legislatures will use the revenue from this tax for education or transportation.

    “Many people do not realize that the proposed Fair Share Tax, which would assess an additional 4% surtax on individual income over $1 million, would also apply to Subchapter S Corporations,” said MAIA President & CEO Nick Fyntrilakis. “A majority of our members are organized in this manner. If passed in its current form, H.86/S.16 would have a deeply negative impact on our independent insurance agencies and other small business across the Commonwealth.”

    We urge you to contact your lawmakers and ask them to oppose the Fair Share Amendment.

    Talking Points:

    • As a small business owner in your district, I urge you to oppose House Bill No. 86 and Senate Bill No. 16, the so-called millionaire’s tax.
    • Proponents of this tax deceitfully imply that only wealthy Massachusetts residents will be impacted. However, an income tax surcharge will harm small business owners like me, who file as a pass-through entity for tax purposes.
    • Small business owners spend a lifetime investing time and capital into our businesses, hoping to someday retire. We then rely on the sale of our business to act as a retirement fund. If these bills pass, it means significantly more of my money will end up in state coffers rather than my retirement nest egg.
    • Massachusetts should learn to reduce state spending and live within a budget, something small business owners know far too much about in recent years. We have faced costly new mandates like paid sick leave, paid family medical leave, the EMAC assessment, and a $15 minimum wage, all adding to the cost of doing business. More mandates meant less money to invest and grow our businesses and led to tighter budgets. The state, like a small business, must also learn to spend within its means!
    • The “millionaire’s tax” will essentially become a tax on small business retirement. After a career spent hiring Massachusetts residents, sponsoring sports teams, fundraising for schools, and investing in my community, my thanks would be a higher tax rate when I retire.
    • I strongly urge you to oppose House Bill No. 86 and Senate Bill No. 12 which will subject my business to higher tax rates under the so-called millionaire’s tax.

     Contact your local legislator HERE.

    Topics: Government Affairs

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