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Misleading title - they’re not doing this by applying 4% tax to the income of mere millionaires, they’re doing it by applying 4% to the incomes of those with annual incomes one million and over.
That’s a much, much wealthier cohort than the title implies.
Remember that this is a marginal income tax rate, i.e. it does not apply to the first $1 million of taxable annual income, only to the amount in excess of that threshold.
Assumed that as a given, but the title is as misleading as all of the general chatter about taxes which neglect to mention marginal rates.
an additional 4% income tax on state residents’ incomes above $1 million
The standard state income tax rate in Massachusetts is 5%.
Does that mean the highest earners have a 9% income tax in that area? Either that’s very low, or this article isn’t very clear on actual tax rates.
MA (and much of the US) has a multi-level tax system where they all stack up.
Let’s tax someone in Boston, MA making $1.5m/yr
Local = 0% State = 9% (previously 5%) Federal = 37%
So on their final dollar of income they’ll be paying 46% income tax now. Note of course because of graduated income tax schemes, that 46% is not applied to the entire $1.5m but instead only to the amount that fits into the highest bracket.
That make sense. Thanks a lot.
So overall income tax in Boston, MA for the highest bracket is 46%. That’s comparable to many european countries. Although brackets are probably very different.
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The extra tax, known as the Fair Share Amendment, was approved by voters in November 2022.
Of that, $224 million will go to K-12 programs, including free lunch and implementing “clean energy” in schools, the governor’s office said.
“This FY24 budget shows that Massachusetts can address critical needs like housing, college affordability and hunger while also remaining fiscally responsible,” state Administration and Finance Secretary Matthew Gorzkowicz said.
“This spending plan is both affordable and necessary to meet the array of needs confronting our families, businesses and municipalities, and I am thankful to my partners in the Legislature for their collaboration to get this done.”
Additionally, $229 million will go to higher education, including making community college free for students 25 and older.
And $71 million will go toward increasing the number of child care slots for low-income families and “put the Commonwealth on a path to universal Pre-K,” the governor’s office said.
Saved 34% of original text.
It’ll be interesting to see if they stay in Massachusetts or leave for another state.
