Mass. raised taxes on people who make more than $1 million a year by 4% in 2022. The new taxes started to be collected in 2023. The tax has brought in more money than politicians thought it would, and it pays for free lunches for kids in the state.
The people who lived in Massachusetts used to pay a 5% annual income tax. People who make more than $1 million a year now have to pay an extra 4% on the part of their income that is over $1 million because of the Fair Share Amendment.
Because the tax brought in more money, the state can now afford to offer free school lunches, free community college for people aged 25 and up, and more money to help state schools. The tax also pays for transportation projects like building new bike lanes and fixing up roads and bridges.
Food poverty in the state should go down a lot because of the free school lunches. The Greater Boston Food Bank did a study in 2022 and found that 33% of Massachusetts families did not have enough food. As of today, Massachusetts is the eighth state in the country to give all kids free lunch at school.
Democratic Representative Jim McGovern said in a statement, “Free meals for all kids in all schools will change lives, full stop.” “No child in Massachusetts will ever have to wonder how to get through the school day on an empty stomach.”
The tax hike has brought in $1.8 billion for the state, which is $800 million more than what Governor Maura Healey and the lawmakers had planned to spend in 2024.
A spokesman for the Raise Up Massachusetts group that pushed for the surtax told WGBH, “This is exciting because it’s the first concrete numbers we have seen showing that ‘Fair Share’ revenue is coming in far above the initial projections.” It looks like the Commonwealth has already earned almost $2 billion that year, and there are still a few months left. In other words, even more money will be available for Massachusetts to spend on its important transportation and public school needs.
Many people in Massachusetts are happy with the wealth tax’s short-term success, but some think the honeymoon phase might not last long. High-income people from Massachusetts don’t have to stay in Massachusetts. They can move to places like New Hampshire, Florida, or Texas, where they won’t have to pay a state income tax.
Wealth taxes are also linked to less economic activity, which can make wages lower for people with smaller incomes.
Paul Craney, a spokesman for the Massachusetts Fiscal Alliance, told WGBH, “The long-term bad effect this tax is having on the state will outweigh any short-term financial benefit the state will receive from the income surtax.” “It drives away people with high incomes and makes it easy for taxpayers who are always affected by this tax to move to states with lower taxes.”
People say that states are where democracy is tested, and the Massachusetts project seems to be going as planned so far. We don’t yet know if the tax increase will cause the state to lose money in the long run because wealthy people who bring in a lot of money decide to move somewhere cheaper.
