From Massachusetts, some tax-the-rich inspiration

The super rich, worldwide, are regularly cowing their critics. Bay Staters have pounded back.

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SOURCEInequality.org

This spring has been an exceedingly good one for Flightline Aviation Limited, a London-based enterprise that specializes in helping the world’s deepest pockets find the private jet of their dreams.

“We have closed six sales in the past five weeks,” Flightline’s Anna Campbell gushed at London’s most celebrated luxury trade fair earlier this month. “Everyone seems to want to get a plane for summer.”

Polly Toynbee, a veteran British political columnist, happened to be at that same trade fair. She watched one gentleman talking with a salesman about a showcased private plane and then approached that potential buyer with a question. With so many families struggling to put food on the table, Toynbee asked, shouldn’t the UK’s richest be paying “a bit more” in taxes?

“Why would I?” the private-jet aficionado replied.

“Look,” he added, waving at the aircraft on sale all around him, “take any more in tax and the wealthy would be off — away out of here in one of these!”

Off to a place, that gentleman of means was implying, smart enough not to inconvenience its richest residents with any sort of robust tax on income or wealth.

The rich who call the UK home have, at the moment, little reason to start looking for one of those tax-getaway locales. Britain’s Labour Party, the likely winner in the nation’s next parliamentary elections, is showing no interest whatsoever in subjecting the UK’s richest to any significant tax hike.

“We have no plans for a wealth tax,” Rachel Reeves, the Labour Party’s likely choice for finance minister, announced last summer — and no plans either to put in place a mansion tax or a higher levy on either capital gains or top tax-bracket income.

“I don’t see the way to prosperity as being through taxation,” Reeves went on. “I want to grow the economy.”

The British economy is already growing quite nicely — for the UK’s wealthiest. Since 1989, the University of Greenwich economist Ben Tipper points out, the nation’s 200 richest residents have seen their wealth — after taking inflation into account — grow on average by 15 percent per year.THE TOUGHEST JOB……today’s richest ever get to face?

Throughout human history, adds the UK High Pay Centre’s Luke Hildyard, living standards for average households have only improved when societies have in place mechanisms “to ensure that wealth doesn’t overwhelmingly flow to the people with all the economic and political power.”

Given that reality, Hildyard posits in his just-published Enough: Why it’s Time to Abolish the Super Rich, modern societies need to both tax the top 1 percent “more effectively” and get those wealthy to pay more “to the workers at the companies they run and invest in.”

How best to accomplish all that? Progressives in the United States — the only UK peer nation with less of a tax burden on its richest — have plenty of ideas on that score. This past week we learned that one of those ideas is generating some encouraging results.

The back story: In 2022, after seven years of dedicated volunteer labor, the Raise Up Massachusetts coalition of over 150 community organizations, faith-based groups, and labor unions had worked onto the November statewide ballot a constitutional amendment to add what amounted to a special tax on millionaires to the state constitution.

This “Fair Share Amendment” called for adding a 4 percent state tax on annual income over $1 million to the state’s existing 5 percent flat-rate income tax. That $1 million threshold, the amendment also spelled out, would adjust annually to reflect cost-of-living increases.

The proceeds from this special new levy on wealthy taxpayers would all go for public education and maintaining and improving the state’s public transit, roads, and bridges.

Voters turned out to like that notion. The Fair Share Amendment passed comfortably, with over 52 percent of the vote, and went into effect last year.

“The message sailed past billionaire money to victory,” as Jacobin contributing editor Paul Prescod has noted, “because it was clear, compelling, and broad-based: make the rich pay so we have more revenue to improve the lives of working people.”

How much of a difference has the new Massachusetts levy on millionaires so far made? The Boston Globe earlier this week headlined the surprising answer: “‘Millionaires tax’ has already generated $1.8 billion this year for Massachusetts, blowing past projections.”

Way past projections. With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected the tax would raise in their budget for the entire fiscal year.

“Opponents of the Fair Share Amendment,” exulted Raise Up Massachusetts spokesperson Andrew Farnitano, “claimed that multi-millionaires would flee Massachusetts rather than pay the new tax, and they are being proven wrong every day.”

That doesn’t surprise Omar Ocampo, a Massachusetts-based analyst with the Institute for Policy Studies. Research from other states, he notes, demonstrates that instances of “millionaires fleeing increased taxes” turn out to be “extremely rare.”

Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8 percent of that income in state and local taxes, a rate less than the 8.9 percent of their incomes that taxpayers in the state’s bottom 99 percent were paying.

The new Fair Share Amendment, estimates the Institute on Taxation and Economic Policy’s Marco Guzman, will raise the combined Massachusetts state and local tax rate on the state’s richest, but only to 8.7 percent.

In other words, advocates for tax justice in Massachusetts — like advocates for greater equality across the United States and all around the world — still have plenty of victories that need winning. But let’s make sure that we celebrate each victory along the way!

FALL FUNDRAISER

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