![]() The wide margin between the two estimates highlights a tension between two schools of thought pertaining to the behavior of high-income earners. That’s a 40 percent difference between estimates. By the end, the cited figure was $1.2 billion. At the beginning, the assertion was that new surtax revenue would amount to $2 billion. Effects of New Tax Depend on How Millionaires RespondĬonflicting views about the tax’s effect on behavior led to widely differing surtax revenue estimates during the campaign. If they decide to move or withhold investment to avoid the surtax, that could significantly contract Massachusetts’ economy. Although Massachusetts has borne the unflattering moniker “Taxachusetts” in the past and had begun shedding that reputation, the retirement of the flat rate system after 105 years marks a seismic shift back to uncompetitiveness.Īs taxpayers and policymakers begin to navigate this new reality, they should pay attention to how high-income earners respond. Effective January 1, 2023, the Bay State will begin taxing all individual income above $1 million at a 9 percent rate. On Election Day, a narrow majority of voters approved Massachusetts Question 1, also known as the Fair Share Amendment, which will transition the Commonwealth from a flat rate individual income tax to a graduated rate system.
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