"A millionaire levy in Massachusetts that New York City mayoral frontrunner Zohran Mamdani holds up as a model for taxing the rich has generated $3 billion more in revenue than expected without forcing significant high-profile departures from the state. In the two years since the state started charging a 4% surtax on incomes over $1 million, the effort has created a $5.7 billion windfall, with the surplus being used to fund bridge repairs, bolster literacy programs and address the transportation system's budget deficit."
"While other states have progressive tax brackets, the Massachusetts law stands out structurally in its targeting of incomes that exceed seven figures. That has infuriated business leaders who complain it makes the state less competitive and drives away the wealthy. Several are even backing ballot proposals to lower the state income levy and limit how much tax revenue can be collected in any given year as a way to diffuse the millionaire's fee."
"Some high-profile names have moved away, including Robert Reynolds, the former chief executive officer of Putnam Investments. But other anecdotes of bold-faced names or companies ditching Massachusetts are harder to come by, in contrast to tales of departures from New York, Chicago and San Francisco. That may change as more Internal Revenue Service data is released in the coming months, potentially bolstering the case for the tax or providing evidence of how it can undermine a state's appeal to the wealthy."
Massachusetts enacted a 4% surtax on incomes over $1 million that generated a $5.7 billion surplus in two years, about $3 billion more than expected. The additional revenue funded bridge repairs, literacy programs and helped close a transportation budget shortfall. Business leaders argue the surtax reduces competitiveness and have supported ballot measures to lower the levy and cap revenue collection. A few prominent individuals have relocated, but widespread departures have not been documented so far. Upcoming Internal Revenue Service data could clarify migration trends. Local officials emphasize talent, amenities and livability as retention factors.
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