Report says millionaires tax would raise $1.3 billion

A new report released by an independent think tank found that passing the so-called “millionaires tax” would raise an estimated $1.3 billion annually beginning in 2023.

The number is lower than some previous estimates and assumes that around 500 high-income families would move out of state.

The report, written by Evan Horowitz of the Center for State Policy Analysis at Tufts University, said the new revenue would be raised in “a highly progressive way likely to advance racial and economic equity.”

It provides an independent look at a debate that has already produced volumes of competing research from players on both sides of the argument. It comes as advocates and lawmakers are expected to take the final steps necessary to put the question on the November 2022 ballot.

The tax proposal would amend the state constitution to institute a 4 percent surtax on income over $1 million, with the threshold increasing with inflation. The money would be earmarked for education and transportation spending. A new poll by the MassINC Polling Group, which shares a parent company with CommonWealth, found that 69 percent of voters support the proposal.

Proponents of the tax say Massachusetts needs more money to pay for crumbling roads and bridges and to invest in childcare and public education. They see the tax as a way to get wealthier taxpayers to pay their “fair share” in a state with a flat income tax rate.

The liberal-leaning Massachusetts Budget and Policy Center, which supports the tax, has said a top 9 percent tax rate would put Massachusetts in line with some other states. The conservative-leaning Pioneer Institute, which opposes the tax, warns that it would harm small business owners.

The Department of Revenue estimated that the tax would raise around $1.9 billion in 2019 – but that estimate, which was already being used during debate in 2017, is now years out of date. The conservative-leaning Beacon Hill Institute, in a 2021 study, pegged the amount that would be raised at $1.2 billion.

Horowitz’s new report finds that the surtax would apply to 0.6 percent of Massachusetts households annually, around 21,000 households. Very few of these households would be hit by the tax every year since many families that exceed incomes of $1 million do so only once, for reasons like selling a business or a long-term investment.

He writes that the surtax could raise $2.1 billion if it does not affect high earners’ behavior. But because a small number of millionaires would likely move (he suggests around 500 families) and far more would use legal tax avoidance schemes to get around paying the tax (things like shifting economic activity out of state), that would cut the revenue by 35 percent, to around $1.3 billion.

Horowitz discounts research suggesting that the tax would blunt economic activity in Massachusetts, arguing that the change is small enough that it is unlikely to drive large shifts in behavior, particularly since it would have only a limited impact on businesses. He is also skeptical of claims that the money would create a sea change in state spending on education and transportation, noting that because money is fungible and subject to legislative appropriation, the new revenue could simply displace money that is already being spent in these areas.

He did suggest that the change would have a positive impact on racial equity, since nearly 90 percent of $1 million earners in Massachusetts are white, while state services that benefit from the money would likely help lower income individuals and people of color, because of the progressive nature of state spending. 

SHIRA SCHOENBERG

 

FROM COMMONWEALTH

Baker commutes sentences: Gov. Charlie Baker commutes the life sentences of Thomas Koonce and William Allen, who were convicted of first-degree murder. “I believe both men, having taken responsibility for their actions and paid their debt to the Commonwealth by serving sentences longer than most individuals found guilty of similar actions, deserve the right to seek parole from prison,” Baker said. Read more.

Offshore wind legislation: A sweeping offshore wind bill is headed toward a vote in the House. The bill would give the Clean Energy Center authority to issue tax credits, grants, and other incentives to promote the advancement of offshore wind and other renewable technologies. The cost of the incentives would be paid for using new surcharges on electric and gas utility bills. Read more.

Fare survey: A new poll sponsored by the Barr Foundation finds overwhelming support for discounted fares for low-income riders on public transportation and strong but lesser support for eliminating fares entirely.

– The poll, conducted by the MassINC Polling Group, indicated 79 percent of registered voters support discounted fares for low-income riders. The margin of support (strongly support plus somewhat support) fell to 71 percent for eliminating fares on bus routes serving low-income riders, 61 percent on all bus routes, 58 percent on subways and trolleys, and 54 percent on commuter rail and ferries.

– The poll did not ask how to pay for the fare discounts or replace the revenue lost by eliminating fares. Support sometimes weakens when confronted with the cost of discounted or eliminated fares. Read more.

RTA status report: A new report says ridership at the state’s 15 regional transit authorities is on average down 52 percent from pre-pandemic levels. Read more.

 

FROM AROUND THE WEB

 

BEACON HILL

Some residents have been frustrated with problems trying to use the state’s vaccine digital credential website. (MassLive)

MUNICIPAL MATTERS  

City officials cleared the Mass. and Cass area of the encampment of tents where homeless people had been living for months. (Boston Globe)  

More than 120 cities and towns file a federal lawsuit against consulting company McKinsey & Company for its role in fueling the opioid crisis, following a settlement Attorney General Maura Healey reached with the company over the same issue. (Salem News)

A Braintree school committee member did not wear a mask at a recent school committee meeting to protest the “inconsistency” of municipal mask policies. (Patriot Ledger)

Anti-vaccine protesters are taking their case to Boston Mayor Michelle Wu’s home, demonstrating in front of the Roslindale two-family home where she lives with her husband and two young sons. (GBH)

The Catholic bishop of Fall River censures a Hyannis priest for preaching against the COVID-19 vaccine. (Cape Cod Times)

Lynn is looking to hire translators to improve access to health and other city services. (Daily Item)

HEALTH/HEALTH CARE

There are now more than 3,000 Massachusetts residents hospitalized with COVID – more than at any time last year. (MassLive)

Some analysts think Medicare’s preliminary decision to cover the cost of Aduhelm only for patients in clinical trials could spell the demise of Biogen’s Alzheimer’s drug, which had initially been touted as a blockbuster new treatment for the fatal disease. (Boston Globe

Worcester is looking into a free COVID testing site, the Center for COVID Control, that is under investigation in other US locations. (MassLive

WASHINGTON/NATIONAL/INTERNATIONAL

House Republican leader Kevin McCarthy is rebuffing an attempt by the committee investigating the January 6 attack on the Capitol to interview him about conversations he had that day with then-President Donald Trump. (New York Times

BUSINESS/ECONOMY

Automation is here to stay across a range of industries, from manufacturing to accounting. That could speed up production but at the cost of hundreds of thousands of jobs. (Telegram & Gazette)

Wynn Resorts is putting on hold plans for a huge entertainment venue across the street from its Everett casino. (Boston Herald)  

EDUCATION

More than 1 million fewer students are attending college now compared to prior to the pandemic. It’s the lowest enrollment level in 50 years. (NPR)

Two students at Worcester Polytechnic University die over winter break, making six student deaths in six months. (MassLIve)

Carlos Santiago, the state’s commissioner of higher education, is planning to step down in June. (Associated Press)

Boston schools Superintendent Brenda Cassellius says the district is doing everything it can to avoid a return to remote learning. (Boston Globe

ENERGY/ENVIRONMENT

Winters are getting warmer in New England, creating lots of cascading impacts for crops, flooding, winter sports, and the environment overall. (Worcester Magazine)

CRIMINAL JUSTICE/COURTS

The father of Harmony Montgomery, a missing 4-year-old girl, was given custody of her despite a lengthy record of violent crime. (Boston Globe

A federal appeals court issues a ruling that deals a major blow to a gang member database used by the Boston Police Department. (Associated Press)

MEDIA

Dan Kennedy criticizes Boston Mayor Michelle Wu’s guidelines for press coverage at Mass. and Cass. (Media Nation)

The New Bedford Standard-Times announces that it will cease Saturday newspaper delivery, instead providing readers with a full digital edition. The Cape Cod Times, part of the same chain, does the same

Evan Smith says 2022 will be his last year as CEO of the Texas Tribune. (Texas Tribune