The Editorial Board
Oct 27, 2022
Taxing Massachusetts workers earning more than $1 million at a higher rate will affect very few and harm almost none of them. But it will benefit virtually everyone in the state.
That’s why we strongly endorse a “Yes” on Question 1 for the election that ends Nov. 8.
Massachusetts has a flat tax system and currently taxes all income levels at the same rate: 5%. The referendum would amend the state constitution to introduce an additional 4% surtax on anyone’s income above $1 million.
The United States has a progressive tax system, and Massachusetts would join 34 other states if Question 1 is adopted. Only six other states have a flat tax.
A study from Tufts University’s Center for State Policy Analysis said that the change would generate about $1.3 billion of revenue in 2023 and would apply to about 0.6% of households in the state. That’s less than 16,000 of the Bay State’s approximately 2.54 million households.
There are some “one-time millionaires” who will be affected, and the opposition — which includes Gillette Stadium owner Robert Kraft, who contributed $1 million to the cause — has tried to sway the public by generating sympathy for those individuals.
For instance, if you bought a home years ago for $300,000 and it sold today for $1.8 million after broker fees are paid, you still would not pay the surtax.
When it comes to home or property sales, the tax only applies to the capital gains, $1.5 million. And couples have a $500,000 exemption for property sales.
Even that scenario would be rare. In 2021, only 2 percent of Massachusetts home sales resulted in capital gains of more than $1 million, according to a state analysis.
The opposition has also overstated the impact on small business owners who sell and are counting on it for a retirement nest egg. If the owner has capital gains of $2 million, the tax bill will rise from $100,000 to $140,000.
Most of us would be happy with that remaining nest egg.
Another argument against Question 1 is that the state is sitting on a huge surplus and doesn’t need the money. But a good chunk of that money is expected to be returned to inflation-strapped taxpayers.
And if we know one thing about Massachusetts politics, it’s that the state won’t have plenty of money for too long.
Approving this referendum will lock in another revenue source while affecting very few wallets.
The people of Massachusetts do need help now, however, and that’s the biggest reason we urge your support.
Revenue from the surtax is earmarked for education and transportation, and while there is some question whether the Legislature can spend elsewhere, we doubt lawmakers will override the will of voters, at least initially.
The surtax targets Massachusetts two greatest needs: Improving our schools and our transportation infrastructure.
As the shocking drop in test scores indicates, students were seriously set back by the pandemic. Teachers need help getting kids back on track, and they need it quickly.
And anyone who drives our pothole-filled streets or is detoured by a bridge closing or depends on the MBTA to get to work understands the need to improve our transportation.
Better schools and better transportation help everyone. Question 1 provides an opportunity to improve the lives of all Bay Staters while only asking a little more from our most affluent residents.
We urge you to vote “Yes.”