Taxing millionaires is a controversial issue, but Massachusetts declares an early victory, announcing this week that the state’s tax on top earners has generated $1.8 billion in additional revenue. With three months left in the state’s fiscal year, revenues are already $800 million more than officials, including Gov. Maura Healey, planned to spend in additional state revenue. tax. according to the State House press service.
Money from the so-called fair share tax was intended to boost transportation and education, including giving every child in the state’s public schools free mealHealey’s office said Fortune last fall, and although the fate of the excess funds is not yet clear, it is likely that they are intended for capital projects related to education and infrastructure. “These are two areas of tremendous need,” Senate budget chief Michael Rodrigues said on the Senate floor, according to State House News Service.
The tax imposes an additional 4% tax on any income above $1 million a year and was approved by voters in 2022, but immediately drew criticism from opponents who warned it would drive out high earners. Florida and New Hampshire, two states that don’t tax income, have long been popular destinations for Massachusetts residents looking to escape the state tax regime, according to Bloomberg Tax. note. Today, progressive advocates are claiming victory in the wake of the Massachusetts case.
“Opponents of the Fair Share Amendment claimed that multimillionaires would flee Massachusetts rather than pay the new tax, and they are wrong every day,” said Andrew Farnitano, a spokesman for Raise Up Massachusetts, a group that supported the initiative. . said THE Boston Globe.
“With this money from the ultra-rich, we can do even more to improve our public schools and colleges, invest in roads, bridges and public transit, and start building an economy that works for everyone,” he said. continued Farnitano.
The right-wing Massachusetts Fiscal Alliance denounced the tax. “Whatever short-term financial benefit the state receives from the income surtax will be outweighed by the long-term negative effect this tax will have on the state,” said spokesman Paul Craney at State House News Service. “This drives out high-income earners and makes it very easy for taxpayers who are regularly impacted by this tax to move to more tax-friendly states.”
The Center for State Policy Analysis at Tufts University released January 2022 a report which found that the tax would apply to fewer than 1 percent of Massachusetts households in any given year and that while some high-income residents might move to other states, the number of movers would likely be small.
News of Massachusetts’ first-year tax success fuels progressives in other states. In neighboring New York state, the group Invest in Our New York has called for a similar tax, in writing that the Massachusetts experience “underscores that taxes on the ultra-rich are not only politically feasible, but a fiscal imperative.”
This story was originally featured on Fortune.com
