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Massachusetts Income Surtax Opponents Challenge Revenue Estimates

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A day before Massachusetts lawmakers plan to vote on whether to put a constitutional amendment on the 2022 ballot to raise taxes on the wealthy, opponents are challenging the revenue assertions by Democratic leaders.

New research suggests the tax would cost jobs, and would produce significantly less new revenue than the $2 billion anticipated for education and transportation.

A study done by the Beacon Hill Institute estimates that if wealthy earners in Massachusetts were forced to pay a 4% surtax on all income over $1 million it would generate $1.23 billion in new taxes in 2023.

That estimate, which climbs to $1.5 billion by 2027, is substantially less than the roughly $1.9 billion projected by the Department of Revenue six years ago.

BHI President David Tuerck and Director of Research William Burke also said the so-called millionaires tax would cost the state 9,329 private sector jobs in the first year and reduce the number of working households by 4,388, mostly due to high earners leaving Massachusetts for lower-cost states.

"The reason it will raise less revenue than predicted is because the proponents don't bother to figure out what it will do to the state economy," Tuerck said on a conference call organized by the Massachusetts Fiscal Alliance Foundation.

Proponents for years have rejected arguments that the surtax on those earning over $1 million would prompt the wealthy to leave Massachusetts, and continue to make the case that despite the influx of tax dollars and federal COVID-19 relief funding the income surtax on the wealthy is needed to create a long-term funding source for education and transportation.

Senate President Karen Spilka and House Speaker Ron Mariano have teed up the proposal for a vote on Wednesday afternoon. It will need the support of at least 101 of the 200 House and Senate lawmakers on Beacon Hill to advance to next year's ballot.

When the proposal last went before the legislature for a vote in 2019, it passed with 147 legislators in support.

Paul Craney, the spokesman for the Fiscal Alliance Foundation, said it's important that legislators have information on the tax's impact before they vote Wednesday, and if it does pass he said he's "optimistic" voters will reject it.

"They usually make the right decision on this," Craney said.

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