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Proposed ‘millionaires tax’ could raise around $ 1.3 billion in 2023


Politics

But some millionaires could move, warns the study.

A voting board hung outside Boston City Hall during last year’s primary election. The “millionaire’s tax” will be on the ballot box in November. Craig F. Walker / Globe Staff

In November, Massachusetts voters will be asked if they support the so-called “millionaires’ tax,” a tax proposal that would institute a surtax on incomes over $1 million.

A new report from the Center for State Policy Analysis at Tufts University found that adopting the tax proposal would bring in around $ 1.3 billion in 2023. This money would be collected “in a very incremental way that could advance racial and economic equity,” the report said.

The tax proposal, also known as the “fair share amendment,” would institute a 4% surtax on income over $ 1 million – a change that would affect about 0.6% of households, the report estimated. The money collected would be used for education and transport expenses.

Rather than being a new law like most polling matters, the “millionaire tax” is a proposed constitutional amendment. If approved, it would add a paragraph to the state’s constitution that sets out three basic provisions – the surtax, where the money would go, and that the threshold will be adjusted for inflation, so that with over time, households will have to earn more than $ 1. millions a year to be affected.

While it affects only a small fraction of households, the 0.6% it affects holds 22% of all taxable income in the state.

A new MassINC poll found the majority of voters supported the tax proposal – with a total of 69% of respondents saying they supported it, with 44% saying they strongly supported it.

Supporters of the proposal say Massachusetts needs the money to invest in public schools and colleges and in a functioning transportation system. Raise Up Massachusetts, a coalition of labor, community organizations and religious groups that is a strong supporter of the proposal, highlights the effects of the COVID-19 pandemic on communities of color and says on its website that the proposal might help.

“Long before the pandemic, we needed new investments in our transportation and public education systems, and now those investments are needed more than ever to bring our economy to a fair recovery and tackle long-standing racial inequalities that prevent our state from its full potential. “, We read on the site.

Opponents of the bill say the proposal could hurt small business owners, lead to job loss and push high earners out of state. The Pioneer Institute, a conservative-leaning research organization, says on its website that the proposal “will have far wider implications than most people realize” because it also applies to certain corporations and partnerships, and therefore has the potential to harm small business owners.

As it stands, the state constitution requires that all income be taxed at a uniform rate. In 2018, a similar effort to raise taxes on about 20,000 of the state’s wealthiest residents was shot down after a legal challenge.

The Center for State Policy and Analysis report, written by Evan Horowitz, notes that if the tax had no effect on the behavior of high incomes, the tax would raise $ 2.1 billion from 26,200 taxpayers in 2023 .

However, the report also notes that there would likely be behavioral responses, including leaving Massachusetts and tax evasion. Based on other research, the report concludes that approximately 500 households could leave Massachusetts as a result of this tax change. Some high earners may also try to shelter their income to avoid tax, which the report says would reduce tax revenue by around 30%.

If voters decide to implement the tax change, the short-term impact is likely to be small, writes Horowitz. The long-term economic effects will depend on whether the state increases investment in transportation and education or uses revenue from the tax change to replace spending already planned.



Boston

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