Massachusetts declares early victory in taxing the rich, saying $1.8 billion take from millionaires tax was double expectations
Taxing millionaires is a contentious issue—but Massachusetts is declaring early victory, with an announcement this week that the state’s tax on its highest earners has yielded $1.8 billion in additional income. With three more months left in the state’s fiscal year, the take is already $800 million more than what officials, including Gov. Maura Healey, planned to spend in additional revenue from the tax, according to the State House News Service.
The money from the so-called fair-share tax has been earmarked to boost transportation and education, including giving every public-school child in the state free lunch, Healey’s office told Fortune last fall, and while the fate of the surplus funds isn’t yet clear, it’s likely to be designated for capital projects related to education and infrastructure. “Those are two areas of immense need,” senate budget chief Michael Rodrigues said on the senate floor, according to the State House News Service.
The tax imposes an additional 4% charge on any income over $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 favored destinations for Massachusetts residents looking to escape the state’s tax regime, Bloomberg Tax noted. Now, progressive proponents are claiming victory in the wake of the Massachusetts haul.
“Opponents of the Fair Share Amendment claimed that multimillionaires would flee Massachusetts rather than pay the new tax, and they are being proven wrong every day,” Andrew Farnitano, a spokesperson for Raise Up Massachusetts, a group that pushed for the initiative, told the Boston Globe.
“With this money from the ultrarich, 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,” Farnitano continued.
The right-leaning Massachusetts Fiscal Alliance denounced the tax. “Whatever short-term financial benefit the state will receive from the income surtax will be outweighed by the long-term negative effect this tax is having on the state,” spokesperson Paul Craney told the State House News Service. “It’s chasing out high-income earners and making the decision very easy for taxpayers who are regularly impacted by this tax to domicile in more tax-friendly states.”
The Tufts University Center for State Policy Analysis, in January 2022, released a report that found the tax would apply to less than 1% 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.
The news of the first-year success of Massachusetts’s tax is giving fuel to progressives in other states. In neighboring New York, the group Invest in Our New York called for a similar tax, writing that the Massachusetts experience “underscores that taxes on the ultra-wealthy are not only politically feasible, they are a fiscal imperative.”
This story was originally featured on Fortune.com
