Potential “wealth tax” might elevate much more than the brand new revenue surtax
APRIL 28, 2025…..Surtax supporters launched knowledge Monday that they stated pokes holes within the argument that the state’s new tax on excessive earners is inflicting higher-income residents to maneuver out of Massachusetts.
The report from a pair of progressive analysis teams discovered that the variety of people in Massachusetts with at the least $50 million in complete wealth grew from 1,954 in 2022 — the 12 months voters adopted the 4% surtax on family revenue above $1 million — to 2,642 in 2024, a 35.2% enhance.
The Institute for Policy Studies and State Revenue Alliance report analyzed knowledge from Wealth-X, a proprietary database of hundreds of thousands of data on the world’s wealthiest people, based on Increase Up Massachusetts.
The brand new revenue surtax, which provides to the prevailing 5% revenue tax fee, generated $2.46 billion in its first full 12 months, and Beacon Hill Democrats are spending that cash on investments in schooling and transportation.
The report measures gathered wealth quite than annual revenue, however surtax supporters say they’re sure that some share of the “ultra-wealthy” captured within the report are paying the revenue surtax.
“That is additional proof that multi-millionaires usually are not fleeing the state in response to the brand new tax – they’re staying right here, paying extra in taxes, and having fun with the stronger transportation and public schooling programs that Honest Share {dollars} are funding,” stated Shanique Rodriguez, government director of the Massachusetts Voter Desk and a member of the Increase Up Massachusetts Steering Committee.
There’s bipartisan settlement in Massachusetts that prime prices of dwelling right here, together with housing and power costs, are inflicting some residents to choose up and transfer to lower-cost states. Whereas addressing the underlying causes of that outmigration and the state’s “affordability disaster” has develop into an ongoing public coverage problem, the report appears solely on the variety of higher-wealth households to attract conclusions about tax impacts.
Increase Up says the two,642 ultra-wealthy people delineated within the report signify 0.04% of the Massachusetts inhabitants, and collectively maintain $500.4 billion in complete wealth.
The report additionally modeled a hypothetical “wealth tax” on this group with at the least $50 million in complete wealth. The researchers concluded that Massachusetts has the potential to boost $3.7 billion with a 1% tax, $7.4 billion with a 2% tax and $11 billion with a 3% tax.
Increase Up spokesman Andrew Farnitano stated the group will not be pursing a wealth tax “for the time being” and as an alternative stays centered on its push for the Legislature to approve a new “corporate fair share” policy focusing on international companies that advocates say evade hundreds of thousands of {dollars} in state taxes.
The variety of Massachusetts taxpayers with annual revenue above $1 million was about 27,000 in 2022, the final 12 months when knowledge is obtainable from the IRS, based on Increase Up.
The report discovered that the variety of “millionaires by internet value” in Massachusetts, a class that features the worth of houses, retirement and different belongings, rose by 38.6% between 2022 and 2024, from 441,610 people to 612,109. Their collective wealth elevated from $1.6 trillion to $2.2 trillion, or 37.3%.
“Analysis has demonstrated that million-dollar earners and excessive internet value people are inclined to exhibit decrease charges of migration in comparison with most people,” stated lead report writer Omar Ocampo, researcher on the Institute for Coverage Research. “This isn’t a shock. Their household, enterprise and social community deeply root them to amenity wealthy locales the place they take pleasure in a top quality of life. A modest enhance on their incomes doesn’t compel the overwhelming majority of millionaires to flee to different states.”
President Donald Trump stirred debate over tax coverage not too long ago when he weighed in on higher taxes on these incomes greater than $1 million per 12 months, together with impacts on different taxpayers and election outcomes.
In a latest Boston Globe “inbox” merchandise, Jonathan Cohn, coverage director of Progressive Mass, stated surtax-funded investments in schooling and transportation will spark housing manufacturing and that insurance policies like free faculty meals, bus rides and group school “are making the state extra inexpensive for middle-class households.”
“Massachusetts is experiencing outmigration, nevertheless it’s not multimillionaires who’re fleeing barely greater taxes. It’s younger employees fleeing our excessive price of dwelling,” Cohn wrote. “As a millennial, I’ve develop into accustomed to seeing pals transfer out of Boston, then out of the state completely, because of excessive price of dwelling. If you wish to purchase a house for an honest worth or discover inexpensive baby care, good luck. We’re shedding individuals as a result of affording the top quality of life we tout is getting father and farther out of attain.”
