Millionaires’ tax may generate $1.3B – at a ‘high’ cost

Opponents of a millionaires’ tax before voters this fall say the $1.3 billion in new annual income will cost Bay Staters 9,000 lost jobs and drive out up to 4,000 high-earning families at a time when Massachusetts is already “flush with cash.”

Massachusetts voters will decide on the measure, dubbed the “fair share amendment” by proponents, in the November election. It would add a 4% surcharge on incomes over $1 million.

This is the Legislature’s seventh attempt to pass a wealth tax, but a new poll released by the MassINC Polling Group Thursday showed this time it’s likely to stick, with 70% of registered voters in support of the question.

A new study from The Center For State Policy Analysis at Tufts University found it could generate $1.3 billion in new tax revenue annually.

That’s less than the $2 billion predicted by a state Department of Revenue in a report several years ago but still a “meaningful amount of money” for Massachusetts, while only hiking taxes on the Bay State’s top 0.6% of earners, the study states.

“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,” the Tufts University study points out, saying “the number of movers is likely to be small.”

The report concludes that 500 families could end up leaving the state and Massachusetts could lose roughly $100 million in tax revenue from relocation.

David Tuerck with the Beacon Hill Institute produced it’s own financial predictions for the socalled millionaires’ tax. While its prediction that it would raise about $1.2 billion in new annual revenue is close to the Tufts figure, Tuerck said “that’s the only similarity.”

Tuerck said the tax hike would “kill” 9,000 jobs in the first year and cause up to 4,000 high-earning Massachusetts families to relocate — a “much bigger” economic hit than the Tufts report predicts.

State Rep. Nicholas Boldyga, R-Southwick, said top earners in Massachusetts “are going to flee the state in droves” to avoid the tax, leaving the commonwealth “in a much worse position.”

State Rep. Marc Lombardo, R-Billerica, said “the reality is that Massachusetts is flush with cash,” arguing Massachusetts has no need to raise taxes on the wealthy with so much green flowing in already.

The state had over $5 billion in revenue above benchmark last fiscal year and is already billions above benchmark halfway through this fiscal year. Billions more still have flown into the state over the past two years in the form of federal coronavirus funds, more than $2 billion of which remain unspent.