Report Finds 'Millionaire Tax' In Massachusetts Would Raise $1.3 Billion; Some High Earners May Leave State
BOSTON (CBS) -- A proposed "millionaire tax" on the ballot in Massachusetts would raise $1.3 billion for the state if approved by voters in November, a new report finds.
The study from The Center For State Policy Analysis at Tufts University took a closer look at what the 4% surcharge on incomes over $1 million would mean for Massachusetts.
"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," the report states. "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."
Researchers believe the number of high earners who would leave Massachusetts over the new tax "is likely to be small," but they are concerned that "tax avoidance could be widespread." Millionaire business owners might restructure their finances to avoid the tax in a way that would move economic activity out of the state, the report suggests.
Overall, the out-of-state moves and tax avoidance could reduce revenues from the proposed tax by $670 million in 2023, down from an expected $2.1 billion without any behavior change. However, the report concluded that "any short-term impact on the Massachusetts economy is likely to be negligible," and that the revenue would help extend racial and economic equality.
A recent MassINC poll found that 70% of registered voters back the tax, which would be dedicated to education and transportation.
Click here to read the full report from Tufts.
