A measure was recently voted through in Massachusetts that is ultimately a measure that raises taxes on the States’ millionaires. There was an intense duel between the state’s unions and wealthy individuals, but the measure to raise the taxes on the ultra-wealthy in Massachusetts has been approved.
The state of California on the other hand rejected a very similar proposition to the one in Massachusetts. The California proposition was also slightly different, as it targeted the states’ most wealthy to pay more tax for climate initiatives throughout the entire state of California.
Fair Share Amendment in Massachusetts
The Millionaires’ tax in Massachusetts is also known as “The Fair Share Amendment in Massachusetts”. This measure would ultimately amend the constitution of the state to allow a 4% surtax on people with annual incomes over $1 million. It also lifts the current flat rate by roughly 5%.
According to the Associated Press, roughly 52% of Massachusetts voters were in support of the millionaires’ tax.
Where Will the Money Go?
The new and approved proposal is expected to generate an additional $2 billion in tax revenue for Massachusetts. The money is supposedly going to be used for a plethora of things such as education, infrastructure, and public transportation.
The advocates for the measure taken by the state are in support because they believe that this addresses the problem of tax inequality. It does this by forcing the top 1% to “Pay their share”.
Opponents of the New Tax
The people of Massachusetts that oppose this proposition say it has the potential to do some damage to the middle-class business owners of the state. They argue that middle-class businesses and homeowners have the potential to net $1 million in a one-time sale, and then be taxed as a top 1% in Massachusetts.
Some prominent names that were in disagreement with the proposition were New England Patriots owner Robert Kraft, as well as Jim Davis, who is the chairman of New Balance Athletics, which is a Boston-based company.
California Situation
Although the proposition in California resulted in a divergence, Governor Gavin Newsome was able to assist in striking down Proposition 30. The most recent proposition, however, turned out to be divisive within the state government of California. The measure, which was backed by large California-based companies such as Lyft proposed a 1.75% on any income above $2 million.
The money would have been used for the funding of electric vehicles, the building of EV charging stations, and the hiring of firefighters to combat wildfires within the state.
Wrap-Up
As the Midterm elections are over, it is important to keep an eye out for any changes in taxation throughout any state, as the recently elected officials will be looking to increase tax revenue for their state in many different ways. With recent propositions like the ones seen in Massachusetts and California, stay in touch with your Accountant and Advisor to ensure that you are aware of any upcoming changes that could potentially happen in your state.