Should Massachusetts introduce a new tax on high-income
households — and earmark the revenue for education, roads,
bridges, and public transit?
Voters will get to decide as part of a November ballot initiative
known as the millionaires tax, which would apply a 4 percent
surtax to annual income over $1 million.
Questions abound. Will this tax drive high-earning residents out of
state? Can it help address racial inequities? Might the money be
diverted for other uses?
In a previous report, we at the Center for State Policy Analysis
found that the tax would generate roughly $1.3 billion in revenue
in 2023 — and that aggressive tax avoidance would be a bigger
challenge than an exodus of high earners.
In this policy brief, we examine additional arguments for and
against the millionaires tax.
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Table of Contents
- Should Massachusetts introduce a new tax on high-income households and earmark the revenue for education roads bridges and public transit 1
- Voters will get to decide as part of a November ballot initiative known as the millionaires tax which would apply a 4 percent surtax to annual income over 1 million. 1
- Questions abound. Will this tax drive high-earning residents out of state Can it help address racial inequities Might the money be diverted for other uses 1
- In this policy brief we examine additional arguments for and against the millionaires tax. 1
- We find that 2
- With the right spending priorities million- aires tax revenue could directly address racial inequity. However the real-world impact will depend on the uncertain deci- sions of future lawmakers. 2
- Changing the Massachusetts Constitution as this ballot question does would introduce some unlikely but potentially 2
- The number of people paying this tax will grow over time but likely at a slow rate. 2
- In the sections that follow we look at these issues in greater detail summarizing relevant research where available. 2
- EARMARKS AND THE USE OF MILLIONAIRES TAX REVENUE 3
- ADDRESSING RACIAL AND ECONOMIC INEQUITIES 4
- THE PAYOFF OF EDUCATION AND TRANSPORTATION INVESTMENTS 4
- VOLATILITY OF MILLIONAIRES TAX REVENUE 5
- RISKS OF CHANGING THE CONSTITUTION 6
- SLOW GROWTH OF MILLIONAIRES TAX BASE 6
- CONCLUSION 7
