What California and Massachusetts Ballot “Millionaire Tax” Plans Mean for Taxpayers
How States Plan to Spend Millionaire Tax Proceeds
While the proposed taxes sound similar, there are differences in how each state plans to use the revenue.
In Massachusetts, if voters pass the measure, the tax is expected to generate about $1.3 billion in revenue in 2023, according to Tufts University. analysis. The state seeks to use the proceeds to fund public education, roads, bridges, and public transportation.
tax in california projected would generate between $3.5 billion and $5 billion a year if passed, and the state plans to use the proceeds to pay for zero-emissions vehicle programs and wildfire response and prevention.
Whether voters support an income tax hike or not, income plans often affect election day results, experts say.
“We’ve seen voters reject an income tax increase for the high earners, even if it’s for a relatively small number of people,” said Jared Walchak, vice president of government projects at the Tax Foundation. “And we’ve seen them adopt income tax changes that will affect many.”
We have seen voters reject an income tax increase for high earners, even if it was for a relatively small number of people.
Jared Walchak
Vice President for Government Projects at the Tax Fund
In general, there is one clear trend with state tax ballots: voters are concerned about plans to receive money, he said.
Because the funds are intended to subsidize zero-emission vehicles, Proposition 30 is opposed by Gov. Gavin Newsom, who believes the measure would negatively impact the state’s economy without the benefits “mostly going to Californians,” Walczak said.
Massachusetts promotes progressive taxes.
Another factor that could influence voters is the current income tax structure in each state, experts say.
“Massachusetts has been talking about a progressive tax rate for a long time,” said Richard Auxier, senior fellow at the Urban-Brookings Tax Policy Center, noting the current situation. flat income tax is 5% regardless of income.
“Part of that is because they want to be able to shift some of the state’s overall tax burden up the ladder,” he said.
In contrast, California has a differentiated state income tax system with a top rate of 13.3% for individuals earning more than $1 million a year.
“California already has very high limit values [tax] Stakes, – said Walchak. “Even if voters generally favor progressive taxes and support higher rates for the high paid, they may feel that this is enough.”
Walczak said he doesn’t think the proposed taxes on millionaires are part of a broader trend at the state level. Since 2021, about 21 states have reduced personal income taxes, with only one state, New York and the District of Columbia, raising fees.
“You can’t figure out what voters want based on ballot access alone,” he added.
Federal Plans to Raise Taxes on the Richest Americans Failed
In spite of growing interest in taxing the super-rich, federal proposals failed to gain support.
Following the publication of dueling wealth tax proposals during the 2020 presidential primaries, Senators Elizabeth Warren, Massachusetts, and Bernie Sanders, Island, along with other Democrats, proposed the Ultra Millionaires Tax Act, a 2% annual wealth tax over $50 million and 3% on wealth over $1 billion.
And Senate Finance Committee Chairman Ron Wyden, D-Oregon, proposed a plan in October 2021 to tax Americans with net worth over $1 billion or adjusted gross income in excess of $100 million for three consecutive years.
In March, President Joe Biden unveiled a wealth tax proposal as part of his 2023 budget, calling for a 20 percent levy on households worth more than $100 million.
While many Americans approve higher taxes among the super-rich, these plans did not receive widespread support.
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