Image by Kent Buckley
December 8, 2015
BY JASON PRAMAS @JASONPRAMAS
Boston Business Journal’s Craig Douglas made an interesting criticism of Raise Up Massachusetts last week (“Excited about the proposed millionaires tax? Cut off your nose while you’re at it,” Dec. 4). For those who missed it, RUM is a progressive labor-community coalition that just collected over 155,000 signatures to field a constitutional amendment referendum in 2018 that will create an additional 4 percent income tax for residents who make more than $1 million a year.
RUM initially estimated that the new tax would generate $1.3 billion to $1.4 billion of new revenue a year if enacted in 2019. Then the state Department of Revenue recently did their own analysis, and projected that the additional revenue will be significantly higher—$1.6 billion to $2.2 billion a year.
This led BBJ’s Douglas to call foul on both the RUM numbers and the DoR numbers. The problem? BBJanalysis shows that projections by amendment advocates and the DoR aren’t taking into account that the number of Mass millionaires fell in 2013 and 2014—leading him to point out that the amount of tax money the amendment will raise could be far lower than expected.
Certainly food for thought. And if Douglas had stopped there he would probably have landed on solid ground. But then he overplayed his hand, arguing that if the amendment passes we can “expect more millionaires—and their earnings—to flee the state like a bunch of flying monkeys.”
That’s just a truism. The kind of spectre that anti-tax jihadis are fond of raising whenever there’s the slightest danger of tax equity in America. And Douglas offered no citation to back up the claim.
Turns out the Commonwealth’s very own UMass Amherst Political Economy Research Institute did a study called “Raising Revenue from High-Income Households: Should States Continue to Place the Lowest Tax Rates on Those with the Highest Incomes?” in 2012 that states “… the research reviewed in this study suggests that modest tax increases on affluent households are unlikely to make substantial changes in their work effort or entrepreneurship or make them any more likely to leave the state.”
Also, Douglas seems to have forgotten his own article from Oct. 22, “The BBJ Wealth Report: The towns and cities with the most millionaires,” in which he stated that the falling numbers of millionaires in the state were the result of rich people accelerating “income-related activities in 2011 and 2012 in anticipation of the pending rate hikes on high-income earners” and “deferred asset sales and related income-triggering events to avoid the higher rates, hoping instead for a more-favorable tax climate following the 2016 national elections.”
In other words, they played games to make sure that they could report as little income as possible after 2012. Nowhere did he say they left the state, however. Or even that they really lost money.
And that’s basically what I would expect rich people to do if the amendment passes. They’ll play games that allow them to report as little income as possible. Some will drop off the millionaire rolls for a time. But the state will gain a good chunk of desperately needed extra income we’re not getting from any of the various neoliberal shell games that legislators have been playing to avoid taxing the rich. The flying monkeys, meanwhile, will remain safely in their roosts.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.
Copyright 2015 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.