A new analysis finds that Massachusetts’ recently adopted millionaire tax makes the state and local tax system much more equitable.
Adopted through passage of the Fair Share Amendment, the surtax on incomes over $1 million helps pay for public education and transportation.
Carl Davis – research director with the Institute on Taxation and Economic Policy – said while the state’s highest earners still pay a smaller share of their income than the bottom 95% of households, it’s a move in the right direction.
“With that amendment taking effect,” said Davis, “it’s now among the more progressive jurisdictions in the country.”
Davis said people making less than $27,000 a year pay more than 8% of their income in state and local taxes, while those earning more than $1 million pay less than 9%.
Critics of the Fair Share Amendment call it a form of wealth redistribution that punishes the wealthy.
Polls nationwide show Americans believe those who make more, should pay more.
That includes support for the Billionaire Minimum Income Tax, which would require the wealthiest households to pay a minimum of 20% tax on their income.
Reports show many currently pay zero income tax.
Davis said states’ regressive tax systems are resulting in greater inequality and financial hardship for those who can least afford it.
“It can make it more difficult to put food on the table, to keep the lights on,” said Davis, “all these basic expenses. It really can create financial stress in the household.”
Davis said Massachusetts is a relatively low-tax state with the middle 60% of households paying a lower average share of their income in taxes than the middle class in 32 other states.
He said the state’s recently approved Child and Family Tax Credit and expanded Earned Income Tax Credit also help improve overall tax fairness.
