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raise around $1.9 billion in 2019 – but that estimate, which was already being used during debate in 2017, is now years out of date.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. 




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.





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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

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