The Massachusetts Legislature approved yesterday the "Millionaire Tax" constitutional amendment for the ballot in 2018. Likely to be Question 1, below are a couple of slides (the text and a chart of what actually could happen):
If you read the text carefully, the proposal is worse than thought. The second to last sentence says that the surtax bracket is to "be adjusted annually." This will destroy the Commonwealth.
There were 15,422 real millionaire taxpayers in Massachusetts in 2014. If this tax passes, most of them at the lower end ($1.1, 1.2, etc.) will pack-up and move to more tax-friendly states, like:
- New Hampshire (No ordinary income or sales tax, 5% on interest and dividends)
- Rhode Island (Highest rate 5.99%)
- Pennsylvania (3.99% flat tax)
- Michigan (4.25& flat tax)
- Illinois (3.75% state flat tax)
- Indiana (3.23& flat tax)
- Utah (5% flat tax)
- Colorado (4.63% flat tax)
- Tennessee (Same as New Hampshire)
- Florida (No income tax)
- Texas (No state income tax)
- Nevada (No income tax)
- Wyoming (No income tax)
- South Dakota (No income tax)
- Washington state (No income tax)
- Alaska (No income tax)
- (Source: Tax Foundation)
The list goes on and on, but the individual rate in Mass. is currently 5.1%, with the exception of some capital gains 12%. The corporate rate is 8%. If this ballot initiative passes, the rates will jack-up 4% to 9.1% for individuals, 12% for business (if applied), and 16% of those certain capital gains (if applied).
Say for example, according to the chart, all the actual millionaires and their businesses leave Massachusetts (which will be no surprise). The surtax bracket will be required to be adjusted to make sure the top 15,000 tax filers pay the extra 4%, so potentially $100,000 earners could be classified as "millionaires" for purposes of this amendment!
This amendment must be defeated. If it does indeed pass (which unfortunately is very likely), it's permanent. This is a Constitutional Amendment to the state constitution and not a regular ballot question for a law, which will very hard to undo.