MA rolls out literal millionaires tax

If you live in Massachusetts and have managed to be successful enough to bring in seven figures this year, here’s an important tip for you. Get out. Grab your stuff and the kids, toss everything in the car and keep driving until you cross a state line.

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Legislators in the Bay State are preparing to roll out a millionaires tax (carrying the oh-so-socialist name of “the Fair Share Amendment”) that would pile on another 4% in taxes for any income over one million dollars. Even though the structure of it looks constitutionally dubious, supporters think they can get it pushed through this time. (Boston Globe)

A measure to revive a statewide tax on high earners received a glowing reception on Beacon Hill Thursday, suggesting an easy path ahead despite staunch opposition from business groups.

“We are in desperate need for revenue for our districts,” said Senator Michael D. Brady of Brockton, one of the proposal’s more than 100 sponsors and a member of the Joint Committee on Revenue, which convened a hearing on the proposal Thursday. “We’ve got to move as swiftly and as responsibly as we can on this.”

The hearing kicked off Round Two for progressive activists and legislators pushing to create a new income tax on the state’s highest earners.

You won’t need to flee the state immediately because this is a complicated scheme that will take time to implement. Under Massachusetts rules, they will first need to amend the state constitution. That requires two majority votes in the legislature in consecutive, two-year legislative sessions. If it meets that bar, it then goes to a public referendum at the next election. The soonest the tax could kick in would be 2023.

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The people pushing for this new tax are claiming that it could bring in an extra two billion dollars in revenue for the state. That’s a rather interesting figure to pluck out of the air because we’ve seen a similar claim before and it’s showing up in the current debate. The president of one business owners’ group summed it up nicely when he said, “Look, we’re trying to prevent Massachusetts from becoming Connecticut.”

What he’s talking about is the fact that Connecticut jacked up their income tax rates twice in the past decade, using the excuse of crying poverty just like Massachusetts is doing today. The result? They lost 12,254 tax filers in 2016 alone, the sixth highest such loss in the nation that year. And those choosing to leave skewed heavily toward higher earners. Rather than gaining two billion in state tax revenue, they were estimated to have lost $2.6 billion as people fled for states with lower tax burdens.

Massachusetts is in budget trouble because they spend beyond their means. And yet nobody is talking about cutting spending and tightening the state government’s belt. They’re going to try to tax their way out of the hole by imposing what amounts to a penalty for success. Those with higher incomes are already paying quite a bit since the state collects more than 5% on all income (their combined sales and income tax hits 12.6%, the second highest in the nation) and a whopping 12% on some capital gains. At some point, you just can’t milk the cow any harder or it’s going to leave the barn.

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