New report finds proposed ‘millionaire’s tax’ could raise about $1.3 billion in 2023

But some millionaires might move, the study warns.

A vote sign hung outside Boston City Hall during last year's primary election. The "millionaire's tax" will be on the ballot in November. Craig F. Walker/Globe Staff

In November, Massachusetts voters will be asked if they support the so-called “millionaires tax,” a tax proposal that would institute a sur-tax on income over $1 million. 

A new report from The Center for State Policy Analysis at Tufts University found that the passing of the tax proposal would raise about $1.3 billion in 2023. That money would be raised in “a highly progressive way likely to advance racial and economic equity,” the report said. 

The tax proposal, also called the “Fair Share Amendment,” would institute a 4% sur-tax on income over $1 million — a change that would affect about 0.6% of households, the report estimates. The money collected would be earmarked for education and transportation spending. 


Rather than being a new law like most ballot questions, the “millionaires tax” is a proposed constitutional amendment. If approved, it would add a paragraph to the state constitution that lays out three core provisions — the sur-tax, where the money would go, and that the threshold will be adjusted for inflation so over time households will need to earn more than $1 million a year to be affected. 

While it affects only a small fraction of households, the 0.6% it affects holds 22% of all taxable income in the state. 

A new MassINC poll found that the majority of voters support the tax proposal — with a total of 69% of people polled saying they supported it, with 44% saying they strongly supported it. 

Supporters of the proposal say Massachusetts needs the money to invest in public schools and colleges and a functioning transportation system. Raise Up Massachusetts, a coalition of labor unions, community organizations and religious groups that is a strong proponent of the proposal, points to the effects of the COVID-19 pandemic on communities of color and says on its website that the proposal could help. 

“Long before the pandemic, we needed new investments in our transportation and public education systems, and now those investments are needed more than ever to lift our economy into an equitable recovery and tackle the longstanding racial inequities that hold our state back from its full potential,” reads the website. 


Opponents of the bill say the proposal could hurt small business owners, cause a loss of jobs, and push high-earners out of the state. The Pioneer Institute, a conservative-leaning research organization, says on its website that the proposal “will have much more far-reaching implications than most people realize” because it also applies to some corporations and partnerships, and thus has the potential to harm small business owners. 

As it stands now, the state’s constitution requires all income be taxed at a uniform rate. In 2018, a similar effort that aimed to raise taxes on around 20,000 of the state’s wealthiest residents was shot down after a legal challenge. 

The report from the Center for State Policy and Analysis, written by Evan Horowitz, notes that if the tax were to have no effect on high earners’ behaviors, the tax would raise $2.1 billion from 26,200 taxpayers in 2023. 

However, the report also notes that there would likely be behavioral responses including moving out of Massachusetts and tax avoidance. Based on other research, the report concludes that around 500 households may move out of Massachusetts as a result of this tax change. Some high-earners may also try to shelter their income to avoid the tax, which the report estimates would reduce revenue from the tax by about 30%. 


If voters decide to implement the tax change, the short-term impact will likely be small, writes Horowitz. The long-term economic effects will depend on whether the state increases investments in transportation and education or uses the revenue from the tax change to replace already planned spending.


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