Over two years ago, when I lived in Massachusetts, I proposed a 10% income tax on every dollar over $780,000 (at the time, Massachusetts had a flat tax of 5.25%):
With those assumptions, I find that overall income tax revenues would increase about fourteen percent. In 2011, Massachusetts raised $11.576 billion from the income tax, so we’re looking at somewhere in the neighborhood of an additional $1.5 billion (and this doesn’t include people over 65). Even if that’s an overestimate, I still think we could generate $1 billion annually. That’s not nothing. From the perspective of the one percenters, the average one percenter would pay an additional $40,000 per year out of an average income of $2.16 million (the increase would be from $93,224 to $144,580). Obviously, not all one percent households would be hit equally, but that’s always the case whenever changes are made to the tax code, but this is still manageable–they’ll get by somehow.
Oddly enough, no one has proposed something like this. Go figure.
So we read this with great interest (boldface mine):
A coalition of Massachusetts groups has announced a campaign to raise income taxes on people with incomes over $1 million, with the additional revenue funding greater investments in the state’s education and transportation systems. That’s a good idea, for a number of reasons:
- The public investments will benefit the state’s economy. States with a more educated workforce are powerfully placed to compete in the national and global economy. The additional revenue will allow Massachusetts to strengthen the public investments that form a strong foundation for economic growth and widespread prosperity.
- Incomes at the top have soared, leaving a larger gap between the state’s wealthiest and its middle- and lower-income families. Massachusetts is one of the country’s most unequal states, and it’s grown much more unequal in recent decades. Only one other state — Connecticut — saw the income gap between the top and the bottom grow as rapidly as Massachusetts from the late 1970s to the mid-2000s, and there’s no reason to think things have improved much since then.
- The state’s current tax system is unfair. The top 1 percent of non-elderly taxpayers in Massachusetts pay much less in state and local taxes as a share of their income than middle- and low-income people. Raising income taxes for people with incomes over $1 million would help address this fundamental unfairness.
Visionary, we are. Actually, I’m surprised it took this long. I haven’t seen any official polling data, but the Boston Globe’s internet poll (which is probably worthless) is running 4:1 in favor of the tax.