Proponents said Question 1 would institute a fairer tax system by adding 4 percentage points to the state’s 5 percent income tax rate for earnings over $1 million a year. The surtax would hit an estimated 20,000 or so taxpayers each year, starting with returns filed for 2023. It would initially bring in about $1.2 billion a year, or around 2 percent of the state’s current budget, according to the state Executive Office of Administration & Finance.
With many of the races for the state’s top elected offices determined early and decisively, the vote on the “millionaires tax,” formally Question 1 on the ballot , remained close as midnight approached. While the “Yes on 1″ side held a modest lead, it appeared that the final results would not be known until Wednesday.
After nearly a decade of political maneuvering, Massachusetts voters got the opportunity to decide on Tuesday whether to impose an income tax surcharge on the state’s wealthiest residents to help pay for education and transportation.
Opponents worried about the damage the tax on high earners would cause to the state’s economic competitiveness, both in perception and reality, and funded ads that tried to paint the tax as harmful to small-business owners and homeowners in particular.
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The union-backed Fair Share Massachusetts committee easily outraised the opposition committee, the business-backed Coalition to Stop the Tax Hike Amendment. Proponents gathered $27 million in donations this year, with the vast majority coming from the Massachusetts Teachers Association and the National Education Association. That’s nearly double the $14 million that the opposition raised in 2022, with donations in particular coming from individuals in the private equity and development sectors. Most of the money on both sides went to TV ads.
The spokesman for the campaign against Question 1, Dan Cence, said on Tuesday night his group’s internal polling leading up to Election Day indicated the vote would be a toss up.
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“We’ll most likely not know the final outcome until the sun comes up tomorrow,” Cence said.
“We feel very good about where we are,” countered Steve Crawford, a spokesman for the Yes side.
Allison Doherty, a teacher at Fenway High School in Roxbury, said Boston’s schools badly need more funding, citing as one example outdated ventilation systems that became a big problem during the COVID-19 pandemic.
“I’m a homeowner in the city of Boston,” Doherty said. “Being a single mom, I still live paycheck to paycheck. I’m not squirrelling away anything for my kids. … I don’t make a bad salary but I should be better off than where I am.”
Jeron Mariani, the campaign manager for Yes on 1, sits at the Yes on 1 and Yes on 4 event for the 2022 Midterm Elections at the Colonnade Hotel in Boston Tuesday night. Carlin Stiehl for The Boston Globe
The Fair Share side also had a more aggressive grass-roots campaign, building a coalition of progressive groups over the course of the past eight years that the ballot question has been in the works. The Massachusetts Affordable Housing Alliance has been calling its members for months, encouraging them to vote yes. Officials there said their members would benefit from the improvements to schools, roads, and bridges that the new taxes are intended to fund.
“We think this is a really fair way to raise the revenue,” said Hillary Pizer, associate executive director at MAHA.
Beth Huang, executive director of civic engagement nonprofit Massachusetts Voter Table, was among the many supporters making last-minute calls on Tuesday.
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“While I’ve heard and seen on the news that the election is a snooze fest, at the end of the day, I think many community leaders know this is the best chance we have in making a generational investment in our public education and public transportation system,” Huang said. “This has been a marathon. This has been a years-long fight.”
Huang is referring to the protracted efforts by the union-funded Raise Up Massachusetts coalition to get to this point. Because Question 1 would change the state’s constitution, it needed two supportive votes by the state Legislature.
It was originally intended to go on the ballot in 2018 but several business groups challenged the legality of the question, saying it was improperly bundling unrelated items — education spending, transportation spending, and a new tax rate for high earners. The Supreme Judicial Court agreed with the business groups that year, and sidelined the tax proposal.
It was later revived as a legislator-initiated constitutional amendment, enabling supporters to get around the relatedness question. But it still needed two more positive votes in the Legislature before it could go to the voters.
This was the sixth attempt to persuade voters to undo the state’s flat income tax rate. In all five previous times, first in 1962 and most recently in 1994, the efforts were resoundingly defeated.
Dan Cence, the spokesperson for the group spoke at the party for The Coalition to Stop the Tax Hike that was held at the Westin Hotel in Copley Square on Tuesday night. Jim Davis/Globe Staff
One big issue raised by the business groups this time around is whether the ballot question will result in a commensurate increase in state spending on education and transportation. There’s nothing to stop state legislators in the future from cutting spending in those areas, and then backfilling with revenue from the new surcharge.
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“The indication I’m getting from people is they’re nervous about where the money is going to get spent,” said RJ Valentine, a Braintree-based businessman who donated to the opposition. “They don’t believe it’s [all] going to education and transportation.”
Critics also warned that by writing the 4 percent surtax into the state constitution — a required step in Massachusetts for any move away from a flat income tax rate — means it would take another years-long process to undo it.
Perhaps the biggest concern among business leaders involves the possible long-term impact to the state’s economic competitiveness, particularly during a time when remote work is a widespread option for many people. The Washington-based Tax Foundation has said Massachusetts will likely drop from 34th in its ranking of tax-friendly states to 46th if Question 1 passes.
“We’ve already got significant headwinds,” said Greater Boston Chamber of Commerce CEO Jim Rooney, who has been speaking out against Question 1. “We’ve got the cost of housing. We have a dysfunctional transportation system. We battle the weather issue. This just adds another headwind.”
One fear, articulated by Rooney and other prominent business leaders, is that entrepreneurs and business leaders choose to expand in states without any income tax, such as New Hampshire or Florida.
Justin Hannan, a tax lawyer at Day Pitney, said there’s no way to accurately estimate how many people will leave if Question 1 passes. But it’s inevitable, he said, that some will go.
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“This tax isn’t going to be the one thing that causes a bunch of people to pick up and leave,” Hannan said. “But I do think this could be the final straw for a lot of folks who were already thinking about it.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.