A controversial wealth tax is finally headed to the 2022 ballot, but politicians are predicting a “heated” campaign season before voters decide if Massachusetts millionaires should pay more in taxes.
“Our wealthiest residents can afford to pay a bit more in taxes to help fund investments that expand opportunity and make our Commonwealth more just and equitable for all,” state Sen. Jason Lewis, D-Winchester, said in the chamber just before lawmakers overwhelmingly approved the so-called millionaires’ tax,
State lawmakers in a joint session took a final procedural step, voting 159-41 to clear the way for the proposal to be placed on the ballot after years of prior attempts have been stymied by political and court battles
State Rep. Jim O’Day, D-Worcester, said after Wednesday’s vote that he anticipates the opposition to “look for every potential way known to mankind of shooting this down” in a tough 17-month lead up to the November statewide election next year.
The Raise Up Massachusetts Coalition, which has championed the proposal, “applauded” lawmakers for approving the proposal that would raise the tax rate on income over $1 million from 5% to 9%.
The added cash is earmarked for transportation infrastructure and public schools, but opponents caution it could drive jobs out of the state.
Critics have in recent days cast doubt on revenue estimates and warned of economic consequences.
A Beacon Hill Institute Study released this week challenged a six-year-old state Department of Revenue estimate that a millionaires’ tax would raise $1.9 billion annually in new tax revenue.
The 17-page report states the proposal would actually generate $1.23 billion in new taxes in 2023 and eventually about $1.5 billion in 2027.
The discrepancies are attributed to what Sen. Bruce Tarr described as “out-migration” which opponents of the wealth tax have warned could cost the state cost as many as 9,329 jobs and spur thousands of high earners flee the state for greener tax pastures and high-paying jobs disappear.
Holding up a package with the words “Tax Alchemy Box” written across it, Tarr — a Republican who voted against the proposal — warned of the law’s unintended consequences that also include potential hits to retirees and others who cash out on big investments.
“When you empty the contents of the box, make sure it makes sense, it’s accurate and that it will have no unintended consequences,” the Senate minority leader from Gloucester said.
But in a virtual rally hosted by Raise Up immediately after the vote, Phineas Baxandall of the left-leaning Mass Budget and Policy Center said major studies show only “isolated incidents” of people leaving the state to avoid wealth taxes.