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A recent report from the Institute for Policy Studies (IPS) reveals that Massachusetts’ Fair Share Amendment, which introduced a four percent surtax on incomes exceeding $1 million, has not driven wealthy residents away, contrary to initial fears. From 2022 to 2024, the number of millionaires in the state grew by nearly 39 percent, increasing from approximately 440,000 to over 612,000. During the same period, their collective wealth surged from $1.6 trillion to $2.2 trillion, marking a 37.7 percent increase.
The Fair Share Amendment, approved by 51.9 percent of voters, was projected to generate around $1 billion annually for education and transportation. However, it produced approximately $2.2 billion in its first fiscal year, more than double the initial estimate. These funds have been allocated towards expanding child-care services for low-income families, enhancing universal Pre-K, increasing financial aid for public higher education, and improving public transit systems, including the Massachusetts Bay Transportation Authority (MBTA) and MassDOT rail projects.
The IPS report challenges the long-held belief that high-net-worth individuals will relocate in response to increased taxation. It notes that affluent people often have deep ties to their communities, which makes them less likely to migrate compared to the general population. This trend suggests that the notion of a mass exodus of millionaires may be more myth than reality.
Additionally, while the surtax applies to only 0.8 percent of Massachusetts tax filers, its impact is significant. The report highlights the existence of 2,642 ultra high-net-worth individuals in the state, each with assets exceeding $50 million, collectively holding over $500 billion. A proposed modest increase in taxation on this group could potentially generate an additional $11 billion in revenue.
Advocacy groups are now focusing on a “corporate fair share” policy, aiming to close tax loopholes exploited by major corporations. The IPS report emphasizes that progressive taxation, when implemented thoughtfully, can enhance economic and racial equity while generating substantial revenue for public investment.
The Massachusetts experience aligns with findings from Washington state, where a new tax on capital gains over $250,000 resulted in a 47 percent increase in millionaire households. As discussions about tax equity continue across the nation, Massachusetts serves as a case study demonstrating that a fair tax system can lead to thriving communities, improved public services, and a more equitable economic landscape.
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