BEYOND THE NUMBERS
Raise Taxes for Highest Income Earners to Boost Key Investments in Massachusetts
A coalition of Massachusetts groups has announced a campaign to raise income taxes on people with incomes over $1 million, with the additional revenue funding greater investments in the state’s education and transportation systems. That’s a good idea, for a number of reasons:
- The public investments will benefit the state’s economy. States with a more educated workforce are powerfully placed to compete in the national and global economy. The additional revenue will allow Massachusetts to strengthen the public investments that form a strong foundation for economic growth and widespread prosperity.
- Incomes at the top have soared, leaving a larger gap between the state’s wealthiest and its middle- and lower-income families. Massachusetts is one of the country’s most unequal states, and it’s grown much more unequal in recent decades. Only one other state — Connecticut — saw the income gap between the top and the bottom grow as rapidly as Massachusetts from the late 1970s to the mid-2000s, and there’s no reason to think things have improved much since then.
- The state’s current tax system is unfair. The top 1 percent of non-elderly taxpayers in Massachusetts pay much less in state and local taxes as a share of their income than middle- and low-income people. Raising income taxes for people with incomes over $1 million would help address this fundamental unfairness.
Opponents will undoubtedly haul out the usual argument that raising taxes for the highest income earners will cause them to flee the state, harming the state economy, but that claim doesn’t hold water. State after state has found that any revenue lost if some rich people move out is negligible compared with the revenue generated for schools and other services. After California raised income taxes for millionaires in 2005, for instance, the rate at which millionaires moved away actually fell.
The proposal faces a long process to enactment, including a public referendum. That process has begun, though, and it’s a step in the right direction toward a stronger future for Massachusetts.
Senior Vice President for State Fiscal Policy and Co-Leader of the State Fiscal Policy Division