The tax cut and a related ballot question aimed at reining in state spending growth are being proposed by a business coalition known as the Massachusetts Opportunity Alliance.
The group was launched in 2024 by the Massachusetts High Technology Council and the Massachusetts Competitive Partnership — a group of prominent CEOs — along with the libertarian-leaning Pioneer Institute think tank. MOA’s backers were frustrated with the millionaires tax — which added 4 percentage points to the income tax rate for earnings over $1 million — along with other policies that could hurt the state’s economic competitiveness.
To many on Beacon Hill, this new income tax proposal is seen as a business-backed effort.
But behind the scenes in the business community, the ballot question has many fierce critics as well as supporters. That’s one reason why none of the Big Four business groups — the Mass. Taxpayers Foundation, Greater Boston Chamber, AIM, and the Mass. Business Roundtable — have taken a formal position yet.
Bob Rivers isn’t waiting. The executive chair at Eastern Bank sits on the boards at three of those organizations, and a top lieutenant chairs the the fourth (AIM). Rivers plans to testify at Monday’s hearing to decry the impact that the resulting loss of state programs could have on the communities his bank serves.
While developer group NAIOP Massachusetts is most focused this year on defeating the rent control ballot measure, its board members gave the income tax cut poor reviews at its January meeting, chief executive Tamara Small said. The general consensus, she said, is that this is a bad time for a significant cut in state revenues, particularly revenues that support public investments in infrastructure, housing, and key services important to businesses. If those get cut, she says, it would hurt the state’s economic stability and make it less competitive.
Even prominent MOA donor John Fish, owner of Suffolk Construction, isn’t thrilled with the ballot question: He says it could cause lasting structural damage to the state’s operating budget, hurting the next generation of Massachusetts residents.
Meanwhile, union-backed Raise Up Massachusetts, the coalition responsible for the millionaires tax, is ramping up its opposition. Activists with Raise Up are trying to peel off members from Mass. High Tech and the Competitive Partnership by urging, if not shaming, them to quit over the ballot question.
In the fall, they rang up universities that belonged to Mass. High Tech. Several dropped out.
Now, Raise Up is targeting financial service companies. The activists held a protest outside the Fidelity Investments branch at Post Office Square on March 20, and on Monday — the day of the hearing — plan a parade of sorts through the Financial District to visit Fidelity, Bank of America, Franklin Templeton, Empower, Deloitte, and McKinsey & Co. Liberty Mutual might have been on this tour, too — but its HQ is 1 mile away in the Back Bay.
MOA, in contrast, argues that the income tax cut is a necessary step to address the state’s high costs of living and doing business. Their stated hope: to stem an apparent exodus of people and jobs.
Want evidence? The proponents can rattle off the talking points. The ongoing migration to lower-cost states such as New Hampshire and Florida. A state budget that has grown by roughly a third in just five years. Flat job growth since the start of the COVID-19 pandemic. The recent uptick in plant closures and layoffs — from Cape Cod Potato Chips to Zipcar to Takeda Pharmaceuticals.
That’s why small-business champions Jon Hurst, of the Retailers Association of Massachusetts, and Chris Carlozzi, of NFIB, lean toward supporting the tax cut. The ballot question, from their perspective, would particularly help self-proprietors who pay their business taxes via their personal income filings.
Hurst knows the issue is causing some hard feelings among his colleagues in the business community. But he says he’s got to give credit to Chris Anderson, of Mass. High Tech, Jim Stergios at Pioneer, and Jay Ash at MACP for stirring an important debate. Governor Maura Healey and the Legislature made a big deal out of a $1 billion tax package they passed three years ago, he said, but many mom-and-pop shops haven’t seen much of that relief. It simply didn’t go far enough.
Beacon Hill is already fighting back. A supplemental budget passed this month by the House of Representatives had a highly unusual measure tucked inside: It would block pro-business tax cuts in the federal One Big Beautiful Bill from taking effect at the state level if the income tax cut is approved.
That was just the first salvo. House Speaker Ron Mariano and Ways and Means chair Aaron Michlewitz made it clear that they wouldn’t balance the budget solely through spending cuts. Translation: Corporate taxes may go up if income taxes go down.
No one in the business community wants that to happen.
Lawmakers essentially have until the beginning of July to cut some sort of a deal that could prevent the income tax question from hitting the ballot. The estate tax, still among the most onerous in the country, is an obvious target. But Raise Up sees another estate tax trim as a benefit for the wealthy, and might be reluctant to go along. Raise Up also has a court challenge percolating before the Supreme Judicial Court.
Both seem like long-shot options right now. As the ballot question makes its way toward the November ballot, more business groups will feel pressure to come off the sidelines, and possibly end up siding with their old rivals to defeat it.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
