Residents of Massachusetts have voted to impose a surtax on residents of the state earning more than $1 million annually.
With the approval of Question 1, also dubbed the Fair Share Amendment, the state will begin levying a 4% surtax on the annual income of millionaires. The funds are intended to bolster the public education system and be used for the repair and upkeep of the state’s infrastructure. The vote was somewhat close, with about 52% voting in favor.
Massachusetts currently has a flat income tax, meaning that all residents pay 5% of their income to the government. Someone earning $80,000 per year pays 5% of that to the state, just as someone earning $8 million pays 5% of that in income taxes annually.
Question 1 would not apply to the first $1 million that a person owns, but would rather be assessed from what is earned in excess of that $1 million.
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Proponents of the ballot measure said that taxing the wealthy at a higher rate than the middle class is more equitable than the existing simple flat tax.
“This is certainly not meant to be a punishment of anyone, but really about how we all invest in our communities,” Liz Speakman, an organizer for the campaign in favor of the measure, told GBH News.
Opponents argued that some nonwealthy residents would be unfairly saddled with the increased tax because of one-time occurrences, such as selling a small business. Critics also warned that some taxpayers might end up moving to another state to avoid the new tax.
The measure was expected to haul in an estimated $1.2 billion per year in the near term, which equates to nearly 2.5% of the yearly state budget, according to the Bay State’s Executive Office of Administration and Finance. The agency said, though, that revenues could vary greatly and that taxpayers could relocate from the state.
Millions of dollars were spent in the lead-up to the election from those both supporting and opposing the surtax. A lot of the funds generated in support of Question 1 came from unions, including the Massachusetts Teachers Association and the National Education Association.
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Massachusetts, in years past, has had the reputation of a high-tax state, earning the nickname “Taxachusetts.” While that used to be accurate, since then, the average state and local tax burden have fallen to a more average level.
The current state and local tax burden is 11.5% of state net product, below that of states such as Virginia, Minnesota, and Utah, and well below that of New York, which has the highest tax burden in the nation at 15.9%, according to the Tax Foundation.
