This November, Massachusetts voters will decide whether to raise
taxes on high-earning residents and funnel the money to
education, roads, bridges, and public transit.
It’s part of a ballot question known informally as the “Millionaires
Tax” or the “Fair Share Amendment,” which would alter the state
constitution to introduce a 4 percent surtax on annual income
over $1 million.
Though this tax would only apply to around 0.6 percent of
Massachusetts households in any given year, it could raise a
meaningful amount of money, as those few households account
for more than one-fifth of all taxable income in the state.
However, the millionaires tax also could have some serious side
effects if top earners opt to leave the state or shield their income
to avoid paying.
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Table of Contents
- This November Massachusetts voters will decide whether to raise taxes on high-earning residents and funnel the money to education roads bridges and public transit. 1
- However the millionaires tax also could have some serious side effects if top earners opt to leave the state or shield their income to avoid paying. 1
- Building on the latest economic research and examining how similar taxes have affected other states we find that 2
- Some high-income residents may relocate to other states but the number of movers is likely to be small. 2
- Tax avoidance could be widespread cutting substantially into the amount of revenue raised by the levy. 2
- Together cross-border moves and tax avoidance would reduce millionaires tax revenue by roughly 35 percent. Absent these responses the tax would be expect- ed to raise 2.1 billion in 2023. 2
- In the sections that follow we discuss each of these findings in greater depth while also providing fuller background on the ballot question and the make-up of the states highest earners. 2
- THE BASICS OF THE MILLIONAIRES TAX 3
- WHO WOULD PAY 3
- CHANGING FACE OF HIGH EARNERS 4
- ESTIMATING THE IMPACT 4
- MOVING OUT OF STATE 4
- TAX AVOIDANCE 5
- COMBINED BEHAVIORAL IMPACT 5
- EQUITY AND THE MASSACHUSETTS ECONOMY 5
- BOOSTING EQUITY 6
- NEXT STEPS 7
- METHODOLOGICAL NOTES 7
