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fair share amendment
Massachusetts Proves It Is Possible to Make the Wealthy Pay Their Fair Share
With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected.
May 26, 2024
This spring has been an exceedingly good one for Flightline Aviation Limited, a London-based enterprise that specializes in helping the world’s deepest pockets find the private jet of their dreams.
“We have closed six sales in the past five weeks,” Flightline’s Anna Campbell gushed at London’s most celebrated luxury trade fair earlier this month. “Everyone seems to want to get a plane for summer.”
Polly Toynbee, a veteran British political columnist, happened to be at that same trade fair. She watched one gentleman talking with a salesman about a showcased private plane and then approached that potential buyer with a question. With so many families struggling to put food on the table, Toynbee asked, shouldn’t the U.K.’s richest be paying “a bit more” in taxes?
“Why would I?” the private-jet aficionado replied.
“Look,” he added, waving at the aircraft on sale all around him, “take any more in tax and the wealthy would be off—away out of here in one of these!”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes.
Off to a place, that gentleman of means was implying, smart enough not to inconvenience its richest residents with any sort of robust tax on income or wealth.
The rich who call the U.K. home have, at the moment, little reason to start looking for one of those tax-getaway locales. Britain’s Labour Party, the likely winner in the nation’s next parliamentary elections, is showing no interest whatsoever in subjecting the U.K.’s richest to any significant tax hike.
“We have no plans for a wealth tax,” Rachel Reeves, the Labour Party’s likely choice for finance minister, announced last summer—and no plans either to put in place a mansion tax or a higher levy on either capital gains or top tax-bracket income.
“I don’t see the way to prosperity as being through taxation,” Reeves went on. “I want to grow the economy.”
The British economy is already growing quite nicely—for the U.K.’s wealthiest. Since 1989, the University of Greenwich economist Ben Tipper points out, the nation’s 200 richest residents have seen their wealth—after taking inflation into account—grow on average by 15% per year.
Throughout human history, adds the U.K. High Pay Center’s Luke Hildyard, living standards for average households have only improved when societies have in place mechanisms “to ensure that wealth doesn’t overwhelmingly flow to the people with all the economic and political power.”
Given that reality, Hildyard posits in his just-published Enough: Why it’s Time to Abolish the Super Rich, modern societies need to both tax the top 1% “more effectively” and get those wealthy to pay more “to the workers at the companies they run and invest in.”
How best to accomplish all that? Progressives in the United States—the only U.K. peer nation with less of a tax burden on its richest—have plenty of ideas on that score. This past week we learned that one of those ideas is generating some encouraging results.
The back story: In 2022, after seven years of dedicated volunteer labor, the Raise Up Massachusetts coalition of over 150 community organizations, faith-based groups, and labor unions had worked onto the November statewide ballot a constitutional amendment to add what amounted to a special tax on millionaires to the state constitution.
This “Fair Share Amendment” called for adding a 4% state tax on annual income over $1 million to the state’s existing 5% flat-rate income tax. That $1 million threshold, the amendment also spelled out, would adjust annually to reflect cost-of-living increases.
The proceeds from this special new levy on wealthy taxpayers would all go for public education and maintaining and improving the state’s public transit, roads, and bridges.
Voters turned out to like that notion. The Fair Share Amendment passed comfortably, with over 52% of the vote, and went into effect last year.
“The message sailed past billionaire money to victory,” as Jacobin contributing editor Paul Prescod has noted, “because it was clear, compelling, and broad-based: Make the rich pay so we have more revenue to improve the lives of working people.”
How much of a difference has the new Massachusetts levy on millionaires so far made? The Boston Globe earlier this week headlined the surprising answer: “‘Millionaires tax’ has already generated $1.8 billion this year for Massachusetts, blowing past projections.”
Way past projections. With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected the tax would raise in their budget for the entire fiscal year.
“Opponents of the Fair Share Amendment,” exulted Raise Up Massachusetts spokesperson Andrew Farnitano, “claimed that multi-millionaires would flee Massachusetts rather than pay the new tax, and they are being proven wrong every day.”
That doesn’t surprise Omar Ocampo, a Massachusetts-based analyst with the Institute for Policy Studies. Research from other states, he notes, demonstrates that instances of “millionaires fleeing increased taxes” turn out to be “extremely rare.”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes, a rate less than the 8.9% of their incomes that taxpayers in the state’s bottom 99% were paying.
The new Fair Share Amendment, estimates the Institute on Taxation and Economic Policy’s Marco Guzman, will raise the combined Massachusetts state and local tax rate on the state’s richest, but only to 8.7%.
In other words, advocates for tax justice in Massachusetts—like advocates for greater equality across the United States and all around the world—still have plenty of victories that need winning. But let’s make sure that we celebrate each victory along the way!
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New Massachusetts 'Tax the Rich' Law Raises $1.5 Billion for Free School Lunch and More
"Taxing the rich, it's good," said one progressive advocate in the state.
Jan 02, 2024
A new "millionaire's tax" in Massachusetts was expected to generate $1 billion in revenue last year to help pay for public education, infrastructure, and early childcare programs, but projections were a bit off, according to a fresh state analysis.
The state Department of Revenue estimated late last week that the Fair Share Amendment, which requires people with incomes over $1 million, to pay a 4% annual surtax, will add $1.5 billion to state coffers this fiscal year, which ends in June—surpassing expectations.
Universal free school meals, much-needed improvements to an aging public transportation system, and tuition-free education for community college students are just some of the programs Massachusetts' wealthiest residents have helped pay for after voters approved the law in 2022 amid growing calls across the United States to tax the richest households and corporations.
The amendment was narrowly passed via a statewide ballot initiative in 2022 despite claims by opponents that it would force wealthy residents and businesses to leave the state.
The state analysis of the law shows that requiring wealthy households to pay more in taxes to contribute to the greater good has overall benefits for the state, said observers including Jonathan Cohn, political director for Progressive Massachusetts.
"The Fair Share Amendment has had a great first year. Looking forward to many more!" said the organization.
According to Fair Share, which advocated for the passage of the referendum in 2022, $150 million of the new revenue has been allocated to expanding green infrastructure and other construction projects in schools, while it cost the state's richest taxpayers just $69 million to fund free school meals for every child in Massachusetts, "saving families hundreds of dollars."
More than $205 million is being spent to upgrade, repair, and maintain the Massachusetts Bay Transportation Authority system, and $150 million is going toward bridge and road repairs. Expanded access to high-quality childcare and pre-kindergarten is being paid for with just $70.5 million, and $50 million is going toward tuition-free community college.
The investments are "only possible because the voters passed this constitutional amendment and we created this new tax," Andrew Farnitano, spokesperson for the Raise Up MA Coalition, told WBUR.
"The money is going where it was promised," he added. "Those are fundamental investments in our economy that are needed to make sure it works for everyone."
Farnitano toldMassLive that revenues from the Fair Share Amendment are expected to increase as much as $2 billion by the time the 2025 budget goes into effect.
“Over the past few months, we've seen the impact, and that will only grow," he said.
An overall decline in other state revenue shows that the public spending would be impossible without the Fair Share Amendment, Farnitano told WBUR.
A Politico/Morning Consult poll found in September 2021 that 74% of Americans agreed with the statement, "The wealthiest Americans should pay higher taxes," and a Gallup survey found in August 2022, three months before the Massachusetts law was passed, that 52% of respondents believed the U.S. government should "redistribute wealth by heavy taxes on the rich," while 47% disagreed.
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