$1.5 billion in estimated revenue: A look at the Massachusetts 'millionaire's tax' first year taxing the rich
$1.5 billion in estimated revenue: A look at the Massachusetts 'millionaire's tax' first year taxing the rich
Advocates promised the new tax would bring in over $1 billion a year in new revenue. And they quickly saw their predictions surpassed: the state Department of Revenue estimates it will generate over $1.5 billion this fiscal year.
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I love that the main criticism is that this will cause the ultra wealthy to leave the state. That just seems like a reason to implement this nationwide rather than at the state level.
What, the people who buy elections are fleeing? Sign me up for that.
I mean, an eroding tax base is a problem. I just think the solution is to drag them kicking and screaming to pay back into the system that enabled them to become so stinking rich rather than chasing them off/eating them. The Guillotine of the first French Republic sure did feel good until the reign of terror rolled in.
Murder is always fun until you’re the one getting murdered. Doesn’t apparently sour you on the idea of murder, though.
Eat the rich and become what you despise. No thanks. I’m happy to look for that third way
If you took my comment as an endorsement of how the First republic did things, it you read it wrong.
Wow, yeah, that was a bad read lol. It's generally received wisdom for global economics that tax disincentives push people to a point, but most of 'em will actually pay taxes if the alternative is hanging out in Bermuda forever. Nationwide rather than statewide is gonna be good enough for most
Tl;Dr basically agree
but most of 'em will actually pay taxes if the alternative is hanging out in Bermuda forever.
What if the alternative is their money hanging out in Bermuda forever while they enjoy a life of tax-reduced luxury in the countries they're dodging taxes from?
Then you have to continually fight a lot of battles about your money and it gets complicated but sure that's definitely a thing people also do and there are no magic bullets and all options for everything are a bit sucky - but having some of these mega-high-earners pay a bit more tax is still better than doing nothing because you're worried they'll take the money away, and the wider the policy of fair graduated tax is applied, the better it works
Oh, my point is more that "These cretins only pay taxes when there are teeth behind enforcement" rather than "We shouldn't tax them more because they might leave"
Make the IRS feared again
Then we are on the same side 👍
Time to put some sanctions on tax havens then
I didn’t take it that way— mine was a poorly worded agreement with you.
What's your third way? Does shore leather taste good?
Murder is always fun until you’re the one getting murdered.
You think...murder is always fun?
A dusting of sarcasm on that.
It's probably not...always...fun...
I remember seeing this argument about billionaires and corporations leaving the US if they are taxed fairly at a national level. If that were the case then 1. The US wouldn’t lose out on revenue it wasn’t losing out on already, and 2. The “free market” or the government would adapt to fill the abandoned niche.
And anyplace worth living already has a higher tax rate anyway.
Besides we would all be better off if people like that left. Human happiness levels off around 110k per year, on average in the US. If there really are people who would give up all the things that make normal people happy just to add a marginal amount to their net worth, do we really want them?
We have all unfortunately met someone like this. Someone who cuts the line at an all you can eat buffet. All the food you could possibly want and they are angry that someone else might possibly get slightly more of something. And that isn't fair. Someone who has a fake job with almost no work and tries to find ways out of that even token tasks.
Let them leave.
Source on the 110k number? Because I remember reading something about 75k not that long ago and inflation couldn’t have been that bad could it?
Massachusetts was already relatively high tax, high cost of living
Examples?
Western Europe
The average US rate is 25% while the average Western Europe rate is below 20%….
They even get more out of those taxes too.
You are looking at two different tax systems. The effective US tax rate (the rate you actually pay is much much less). Our household makes $300k per year, and we have a $650k net worth. Our income taxes every year? Less than 7% of that, which is absurdly low. The ultra wealthy are taxed even less than that. The US is propped up by taxes from the middle-class because the more you makes, the easier it becomes to optimize and lower your effective tax rate. We need to tax the rich more.
Ok, now what's the top tax bracket? We're talking about people making >$1M/yr.
10% $0 to $11,000.
12% $11,001 to $44,725.
22% $44,726 to $95,375.
24% $95,376 to $182,100.
32% $182,101 to $231,250.
35% $231,251 to $578,125.
37% $578,126 or more.
If you make $579k, you don’t pay 37% of that. You pay the above rate for each range of dollars you earn. So everyone pays 10% on the first $11k they earn.
There’s also deductions including the standard deduction of $13,850 (so subtract that from what you earned)
Some good information: https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
Yes, I understand how marginal rates work.
The one we're talking about is the state income tax:
5% - $0 to $1,000,000
9% - $1,000,000+
They aren’t paying the highest marginal tax rates, that’s what the loopholes are for. Trusts are well known for this exact scenario.
Nice cop out.
Eh… be proud of the lower taxes and quality of life if you want I guess.
Neither of those numbers seems accurate. It's not the "average" rate payer who is supposedly being chased off.
California. Highest taxes in the US, yet we generate 14.2% of the country's GDP despite being 11.7% of the population. We have an economy the size Germany (who has the world's 4th largest economy) with 46.4% the population.
People talk shit about the state, how awful it is, etc, and while we do have many problems we're doing pretty damn well all things considered. If we get housing and healthcare fixed (both active efforts by our government) we'll be in an amazing position as a state.
California is weird like that. I've seen plenty of sentiments about California surviving standalone as its own nation.
Without doing any research, most of us assume the revenue and economy is based on key industries like tech, agriculture?
Would the states survive if it didn't have his current water supply for agriculture?
With the Exodus of some tech companies, what is that trend look like overall? If it continues, will the state still be in the same good shape?
I'm assuming the great weather has something to do with it?
There are already places (in the U.S. and other countries entirely) with far, far lower taxes than MA. Why haven't rich people moved already?
Yea except I'm sure our federal government would just blow it on more missles and bullets. At least here it's doing good things like feeding kids.
Fun fact! Where do you think those missiles are designed? It's not all universities in Boston.
It did happen to New Jersey, Norway and France. Rich people leave when you tax them. I'm not arguing against the law, but to prevent "flight of the rich", the law has to be applied universally. Or if that can't happen, do what Norway did, tax wealth flight.
I’ve read studies that indicate the tax flight from NJ wasn’t as bad as people made it out to be as net tax revenue still increased and that some of the migration can be attributed to factors other than the tax increase. Still, I agree a blanket tax on the rich is ideal.
It's how you tax. Some Norwegians left because not the income but the fortune was taxed. And by fortune also the value of stocks and such. The issue for some was they needed to sell off stocks to pay the tax. Also Norway established a new tax that tax the fortune if you leave. I am ALL for taxing the wealthy, but if the money has already been taxed....
It's already been taxed, yes, but it's also passively generating income by investing it. You tax that income with a capital gains tax.
You can further impose a let's say 1-2% tax on wealth above let's say 5 million, so you only have to pay 1% on 2M if you are worth 7M.
That should be easily covered by your investing gains if you play at that level. So, in essence, no harm done to personal wealth. You just get richer less fast while urgent social and infrastructure projects receive better funding.
I mean, if the point is to stop people from stockpiling wealth and increasing wealth disparity, then it sounds pretty effective.
Even if it's not implemented nation wide, there's the implication that the state is losing something by these people leaving. I suspect they're contributing little by being there though.
I mean, if they leave, that tax revenue drops, meaning the goodies you gained may have to be dropped. The concern is whether it is sustainable long term
What tax revenue drops? Before the change they weren't paying the additional tax, and now they aren't paying it if they leave, so nothing is lost on that account. The state loses whatever taxes they were paying originally; given that they're annoyed enough to leave over an increase that suggests that they were already finding ways to minimize their tax payments. Thus, by them leaving, the state is likely losing a small amount of revenue. Given that each person has a cost to the state, the net effect will be even smaller.
Surely there's a point at which taxes drive away enough people that it doesn't work, but it's clearly not the case for this particular implementation.
I don't know what the tax bracket earning for this scenario is. I wonder what the difference is between the extra money a person earning a million dollars a year would be under this new tax guideline, versus the amount they were paying before. Now what's the difference if they leave in state revenue?
What are you trying to show?
You didn't have to make $1,000,000 per year to buy a $600,000 house.
That the median house price in MA is 38% higher than the median US house price, suggesting that the wealthy aren’t fucking off.
Even that fear is not really supported by data, according to Cristobal Young’s The Myth of Millionaire Tax Flight.