News — A by the Center for State Policy Analysis (cSPA) at Tufts University's looks at the first ballot question facing Massachusetts voters this fall: the proposal to increase education, transit and transportation spending with a 4 percent surtax on earnings over $1 million.
A prior analysis from cSPA found that this millionaires tax would raise roughly $1.3 billion in 2023, after accounting for high earners who leave the state or otherwise reduce their tax liability.
Today’s report — the first in a series that will examine all four questions on the November 8 ballot — focuses on potential benefits, underappreciated risks, and common arguments on both sides of the issue. Key findings include:
- The millionaires tax would increase funding in a number of high-priority spending areas, potentially reducing economic and racial inequality and improving student outcomes.
- While money from the millionaires tax is explicitly earmarked for education, transit, and transportation, this pre-commitment will be difficult to fully maintain. Spending in these areas is likely to increase by 30 cents to 70 cents for every dollar raised by the tax, with the remainder diverted to other parts of the budget.
- Revenue from the millionaires tax would be highly volatile, rising rapidly in good economic times and falling sharply in downturns.
- Roughly 0.6 percent of households would pay this tax in 2023. That number will grow somewhat over time, but likely at a slow rate.
- Changing the Massachusetts Constitution — as this ballot question does — makes it harder to unwind or adjust the millionaires tax, should there be any unintended consequences.
“As we approach November, debates about the millionaires tax will be heated,” said Evan Horowitz, executive director of cSPA. " We hope that today’s report gives voters the information they need to cut through the noise and make sound decisions.”
cSPA provides expert, nonpartisan analysis of legislative proposals and ballot questions in Massachusetts. It is based at Tufts University and guided by a . cSPA is supported by Tisch College along with a diverse group of funding sources from across the political spectrum. These funders have no involvement in cSPA's research.
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