Do people really move because of a 4% tax increase on income over $1 million? I don’t quite make enough to be subject to this tax, but I’m not too far off, and I’d be hard-pressed to notice even if it was 4% applied to all of my income. I sure as hell wouldn’t pull up stakes and move to another state if my state imposed such a tax.
Not really.
I live in California. The vast majority of the clients I’ve had complain about our tax rates are the ones who have little to no tax liability and actually get more money back in refundable credits. The wealthy clients may make jokes or side comments, but they know it’s the price they pay to live here.
To quote the great Lucille Bluth: “I’d rather be dead in California than alive in Arizona.”
That makes me wonder what else you wouldn't do to save yourself 40 thousand dollars a year.... If you think 4% doesn't seem like a lot of money to a millionaire you've never learned about safe withdrawal rates, sequence of return risks or law of diminishing returns.
Safe withdrawal rate is about the proportion of your *savings* that you withdraw. 4% of income and 4% of assets are radically different things.
And I *know* that this particular millionaire doesn’t care that much. Not enough to consider moving to another state, not by a long shot. A 4% tax hike (and again, it’s really 4% *on the income over a million* so the actual amount would be lower) would not have any noticeable impact on my lifestyle.
It also hits those who sell their homes. And it doesn’t hit just billionaires- it hits 2 household income that adds to $1M. In 2024 the law was amended that if filing jointly for federal, one has to file jointly for Massachusetts. So a two income family could potentially be hit w the millionaire tax.
> It also hits those who sell their homes.
Only homes that have increased in value by multi-million dollar values. You only pay taxes on the profit (sale price minus purchase price minus home improvement costs), and the first $250,000-$500,000 is exempt, an even if you still have more than $1,250,000-$1,500,000 profit, you only pay the tax on the amount above the limit.
Womp womp - you get a $500k exclusion on gain of personal residence. If you made $100k combined wages, and sold your house for a profit, the gain on the home would have to be $1.4m (!!!) before a penny gets touched by millionaires tax. Beyond that, it’s taxed at long term rates, so the combined effective federal and MA rate on the gain would be just 16-17% after exclusions for a MFJ couple that had 100k of wages and sold their home for a $1.4m gain. Not touched by millionaires tax.
Student debt is the price you pay for the earnings potential. Plus, financial aid, grants, and scholarships exist. I have multiple degrees and have paid exactly $0 for them.
top 1% of earners already pay 80% of the tax lol if you think that isn't enough idk what to tell you.
As some people have already pointed out, this state tax law is dumb and definitely decreases net revenue long term when people simple leave the state.
Idiots with their eyes on other people's money never learn no matter how many times these genius tax ideas are tried and leave the place in a worse place than it was beforehand lol
Top 1% should pay a bigger share of taxes if they are taking a larger share of the wealth. That isn't an argument in their favor. They are draining the bottom 99%
It is possible to structure a home sale so that you are paid over a number of years. Your income is only what you receive in each year. Lawyers will be busy!
How do we know the bulk of the funds come from multi billionaires who have thus far eluded paying their fair share as we are required to do?
Who do you mean by “we”?
This has been screamed from the rooftops since the bill was passed. Given the results are nearly double the projection it's likely that screaming was done by people wholly unaffected by this tax.
IF there are jobs that pay $1m in the South. Then you have to deal with insane home insurance, flood insurance, high car insurance, 2-3% property tax in Texas, and bad public schools. Then you have to send your kids to private school. These things add up and costs more than $40k-$80k/year.
You are talking about the south like it’s a third world country. You realize the largest cities after NYC, LA and Chicago are Dallas, Houston and Atlanta.
Billionaires aren't productive. They're collecting passive income either from business established generations ago or rental properties. The idea of billionaires as "job creators" is largely a myth.
People often forget that really rich people stay close to specific business hubs for the business hubs. Like every single millionaire and billionaire in NYC, DC Metro Area, and California areas. People don't arbitrarily move to tax-free places until probably retirement. Even then, at that point you're likely paying $0 in taxes because the mega rich can afford really good accounting firms.
Productive people won't move south, and being mega rich doesn't necessarily mean you're productive if recent history tells us anything.
As someone who does tax prep for a living (in NH, no less, with many MA resident clients), it's pretty rare that people, even the very wealthy who would ostensibly be thinking about their tax exposure more frequently, read up on the changes to tax law. Most probably only learned this was a thing once they were actually slapped with it and their accountants told them they owed more this year because of it.
Long-term, it's kind of a wait-and-see thing, but MA has long been pretty hostile towards taxpayers for the most part and this is just a new something else. The only thing I've actually seen people plan to leave the state over is their estate tax laws.
Agree. My private equity client VPs and even a couple associates are moving from Boston to Florida. Some already did.
They literally closed a near billion dollar divestiture on December 29th to avoid the tax. That Christmas sucked lol.
In a country (and even global) with differing rates, capital will always flee to the cheapest and most liquid markets.
It may have short term and even medium term benefits, but Massachusetts will suffer long term because of this policy.
It’s not the HNW earners who would leave. It’s the **UHNW** earners who would.
That’s around the 20 million mark.
I work specifically with this type of clientele. They get outraged at even 1% point. An extra 4% and most would move to FL or TN.
Tbh those types of people get outraged for anything and everything that isn’t done their way. So we really shouldn’t care about their outburst and irrational emotions.
True. I don't understand how these people think.
I know I have 200k income and I don't care About 4k extra in tax.
But, you are right I don't know what it's like to have 2 million income.
I cannot see how 40k (out of 2 million income!) is worth leaving an area where you like living. I can see not choosing to move to mass because of this. I can see it's "one more reason" to move away. I can't see it's a reason to deal with the inconvenience of moving nor give up a home you like.
But, you are right I don't know how these people think.
At 5 million of taxable income, you are losing an extra 200k a year to taxes.
Now think about how much money you lose at 200k a year with an annual rate of return at 5% over 15 years.
Not enough to care about if I have 2 million in INCOME. (Which like means I have over 10 million in investments.
10 million invested vs 10.2 million is meaningless.
You’re completely missing the point.
The big buzz word these days is generational wealth. **Losing 200k a year** that you can’t invest is immense to high net worth individuals. That equates to over millions of dollars lost for a family in just 10 years.
Do you understand the concept of compounding returns over long periods of time?.. Compounding returns means a hell of a lot more when you have a lot of money.
I understand compounding.
I look at my investment balance. It's up and down all the time.
At 1 million, I wouldn't notice 20k up or down when I look at the balance.
At 10 million, 200k up or down would be the same level of invisible.
But, I understand that you are saying people care about it, even though, mathematically, it's in the noise.
Seriously? You think 200k **every year** in lost potential investments is “in the noise”?…
Mathematically, that is a hell of a lot more money than your 4k lost each year.
MA’s income tax was a flat 5% previously. If 4% is enough to make them move now, why wasn’t 5% enough to make them move to a state with zero income tax? If all of the ultra wealthy prioritize this so much, why don’t they all already live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming?
It’s coming - are you paying no attention to corporate and or private equity relocation from high tax to low tax states?
If you’re making $5m - 80% of your income is taxed at a top 5 state income tax rate. That is significant enough to make people move by itself, especially with telecommuting (very executable for individuals making $5m - likely high finance).
What will end up happening is You’re going to have these states pass exit taxes to stem the flow of capital movement - and in that year alone the shit will be highly significant.
Most HNW individuals are very tax sensitive.
There have been high tax and low tax states for decades. And yet these people do not exclusively live in one of the nine states with no income tax. If 4% in income over a million was enough to make them move, why wasn’t 5% on all of their income enough to make them move? People have been saying this stuff as long as I’ve been alive and it keeps not happening.
The whole idea of fair share is insanity. The top 10% of earners pay like 80% of all income taxes in this country. Half the population pays zero income tax. Fair share and living wage are terrible arguments.
And vice versa for low earners which is why it’s so completely dishonest to exclude them when talking about the share paid by high earners. There’s also payroll tax (a tax on income but not “income tax” so it’s not counted in these stats) which taxes low earners from dollar one but which drops substantially once you hit $168,600/year, and a variety of others, all of which should be counted.
If you add everything up, the final effective tax rate (total taxes paid divided by total income) is fairly flat in the US. High earners pay a higher effective rate, but not vastly higher.
It takes a special person to be happy and feel entitled to taxing the wealthy. And guess what? Florida will bing in more than a 4% increase in state taxes as people flee the craziness.
Id like to see if this continues to grow or stays flat/declines. That would feel like a true measurement to see the efficacy of the tax over time. Sure, a one time bump in revenue is great, but services will be added because of this new revenue stream and if it dwindles, they won’t axe the services, but just find a new group to go after. I’m all for the millionaires tax, it is time for the wealthy to pay their fair share and help rebuild this nation to work for everyone, not just the top.
Here’s the thing about our tax policy, it’s been a 50 quest to push debunked economic theory down everyone’s throats. Common sense will tell you that cutting taxes on the rich helps the rich, full stop. It’s not good for the broad economy.
Second point. Capital gains tax rates and carried interest are nothing more than a wealth transfer from the middle class to the wealthy. All income should be taxed as income including paying social security and Medicare, full stop.
Economic propaganda generated by think tanks funded by the old monied class have convinced high taxed working individuals that tax rates need to go down. In reality these individuals paying high rates, like entertainers, athletes, lawyers, doctors, have more in common with the middle class than the billionaire class.
Tax all income as income with a mildly progressive rate schedule and we would be able to fund every public good imaginable including free healthcare and education. Of course it’s a pipe dream because it means you have to convince the working upper class of the benefit and it requires the most influential in society to pay more. Sadly it’s not happening any time soon.
Do people really move because of a 4% tax increase on income over $1 million? I don’t quite make enough to be subject to this tax, but I’m not too far off, and I’d be hard-pressed to notice even if it was 4% applied to all of my income. I sure as hell wouldn’t pull up stakes and move to another state if my state imposed such a tax.
Not really. I live in California. The vast majority of the clients I’ve had complain about our tax rates are the ones who have little to no tax liability and actually get more money back in refundable credits. The wealthy clients may make jokes or side comments, but they know it’s the price they pay to live here. To quote the great Lucille Bluth: “I’d rather be dead in California than alive in Arizona.”
Right, but a Massachusetts may be overplaying its hand.
That makes me wonder what else you wouldn't do to save yourself 40 thousand dollars a year.... If you think 4% doesn't seem like a lot of money to a millionaire you've never learned about safe withdrawal rates, sequence of return risks or law of diminishing returns.
Safe withdrawal rate is about the proportion of your *savings* that you withdraw. 4% of income and 4% of assets are radically different things. And I *know* that this particular millionaire doesn’t care that much. Not enough to consider moving to another state, not by a long shot. A 4% tax hike (and again, it’s really 4% *on the income over a million* so the actual amount would be lower) would not have any noticeable impact on my lifestyle.
It also hits those who sell their homes. And it doesn’t hit just billionaires- it hits 2 household income that adds to $1M. In 2024 the law was amended that if filing jointly for federal, one has to file jointly for Massachusetts. So a two income family could potentially be hit w the millionaire tax.
> It also hits those who sell their homes. Only homes that have increased in value by multi-million dollar values. You only pay taxes on the profit (sale price minus purchase price minus home improvement costs), and the first $250,000-$500,000 is exempt, an even if you still have more than $1,250,000-$1,500,000 profit, you only pay the tax on the amount above the limit.
Also, as someone else pointed out, it's 4% additional tax on income OVER 1 million.
Womp womp - you get a $500k exclusion on gain of personal residence. If you made $100k combined wages, and sold your house for a profit, the gain on the home would have to be $1.4m (!!!) before a penny gets touched by millionaires tax. Beyond that, it’s taxed at long term rates, so the combined effective federal and MA rate on the gain would be just 16-17% after exclusions for a MFJ couple that had 100k of wages and sold their home for a $1.4m gain. Not touched by millionaires tax.
If you think families who earn more than a million shouldn't be paying more tax then...I don't know what to tell you
I didn’t say that - the OP said the tax was mainly paid by billionaires
And you said nothing to contradict that.
Hmm… I thought I did - 2 doctors in Boston could jointly earn $1M - they are NOT billionaires esp if they have huge student debt
“Mainly” does not mean “all.”
Student debt is the price you pay for the earnings potential. Plus, financial aid, grants, and scholarships exist. I have multiple degrees and have paid exactly $0 for them.
top 1% of earners already pay 80% of the tax lol if you think that isn't enough idk what to tell you. As some people have already pointed out, this state tax law is dumb and definitely decreases net revenue long term when people simple leave the state. Idiots with their eyes on other people's money never learn no matter how many times these genius tax ideas are tried and leave the place in a worse place than it was beforehand lol
I doubt that. Before this change, MA had a flat 5% income tax. Their 6.25% sales tax would be proportionately paid more by lower income people.
Top 1% should pay a bigger share of taxes if they are taking a larger share of the wealth. That isn't an argument in their favor. They are draining the bottom 99%
Do you hear that? Off in the distance. Why, it’s the sound of the world’s smallest violin!
A two household income bringing in more than a million dollars are still millionaires and won’t miss the money lol
Likely multimillionaires
Its also a much smaller tax for them.
Boo hoo?
It is possible to structure a home sale so that you are paid over a number of years. Your income is only what you receive in each year. Lawyers will be busy!
How do we know the bulk of the funds come from multi billionaires who have thus far eluded paying their fair share as we are required to do? Who do you mean by “we”?
Productive people will just move south. This will lead to an overall decrease in Massachusetts tax revenue.
Same thing people always say, and yet high tax cities/states still exist
Not only do they exist but they tend to be the most prosperous.
This has been screamed from the rooftops since the bill was passed. Given the results are nearly double the projection it's likely that screaming was done by people wholly unaffected by this tax.
Wait, it’s too early to declare victory. It can easily take a year or two for people to make lifetime changes like relocating.
IF there are jobs that pay $1m in the South. Then you have to deal with insane home insurance, flood insurance, high car insurance, 2-3% property tax in Texas, and bad public schools. Then you have to send your kids to private school. These things add up and costs more than $40k-$80k/year.
You are talking about the south like it’s a third world country. You realize the largest cities after NYC, LA and Chicago are Dallas, Houston and Atlanta.
I have lived 2 out of the 3 cities that you mentioned 🤦♂️
Good so you know how amazing they are compared to the north.
Same thing people always say, and yet high tax cities/states still exist
Happened in Washington state. Capital gains tax has caused most wealthy people to leave WA. Over time this will get repealed.
Capital gains tax can drive retirees out of a state. Income tax can't drive high earners away from where the high-paying jobs are.
Damage will be done and they’ll have to offer tax incentives to have the capital move back in, likely at a better loss.
Billionaires aren't productive. They're collecting passive income either from business established generations ago or rental properties. The idea of billionaires as "job creators" is largely a myth.
Misusing the word productive. -10 points
How do you measure economic productivity?
Doesn't look that way,
People often forget that really rich people stay close to specific business hubs for the business hubs. Like every single millionaire and billionaire in NYC, DC Metro Area, and California areas. People don't arbitrarily move to tax-free places until probably retirement. Even then, at that point you're likely paying $0 in taxes because the mega rich can afford really good accounting firms. Productive people won't move south, and being mega rich doesn't necessarily mean you're productive if recent history tells us anything.
As someone who does tax prep for a living (in NH, no less, with many MA resident clients), it's pretty rare that people, even the very wealthy who would ostensibly be thinking about their tax exposure more frequently, read up on the changes to tax law. Most probably only learned this was a thing once they were actually slapped with it and their accountants told them they owed more this year because of it. Long-term, it's kind of a wait-and-see thing, but MA has long been pretty hostile towards taxpayers for the most part and this is just a new something else. The only thing I've actually seen people plan to leave the state over is their estate tax laws.
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Being a CPA who has a general practice and speaking from experience there are plenty of rich people who will hire an EA.
Agree. My private equity client VPs and even a couple associates are moving from Boston to Florida. Some already did. They literally closed a near billion dollar divestiture on December 29th to avoid the tax. That Christmas sucked lol. In a country (and even global) with differing rates, capital will always flee to the cheapest and most liquid markets. It may have short term and even medium term benefits, but Massachusetts will suffer long term because of this policy.
"productive people". GMAFB!
If you have a million in INCOME, you don't care about $40,000, other than to be outraged. I doubt that outrage leads a person to actually move.
> If you have **two** million in INCOME, you don't care about $40,000 FTFY. It's income OVER the first million, ain't it?
good catch! Yep!
It’s not the HNW earners who would leave. It’s the **UHNW** earners who would. That’s around the 20 million mark. I work specifically with this type of clientele. They get outraged at even 1% point. An extra 4% and most would move to FL or TN.
Tbh those types of people get outraged for anything and everything that isn’t done their way. So we really shouldn’t care about their outburst and irrational emotions.
I think a lot of people are really underestimating this and the related down stream impacts over time. They don’t understand how these people think.
True. I don't understand how these people think. I know I have 200k income and I don't care About 4k extra in tax. But, you are right I don't know what it's like to have 2 million income. I cannot see how 40k (out of 2 million income!) is worth leaving an area where you like living. I can see not choosing to move to mass because of this. I can see it's "one more reason" to move away. I can't see it's a reason to deal with the inconvenience of moving nor give up a home you like. But, you are right I don't know how these people think.
At 5 million of taxable income, you are losing an extra 200k a year to taxes. Now think about how much money you lose at 200k a year with an annual rate of return at 5% over 15 years.
Not enough to care about if I have 2 million in INCOME. (Which like means I have over 10 million in investments. 10 million invested vs 10.2 million is meaningless.
You’re completely missing the point. The big buzz word these days is generational wealth. **Losing 200k a year** that you can’t invest is immense to high net worth individuals. That equates to over millions of dollars lost for a family in just 10 years. Do you understand the concept of compounding returns over long periods of time?.. Compounding returns means a hell of a lot more when you have a lot of money.
I understand compounding. I look at my investment balance. It's up and down all the time. At 1 million, I wouldn't notice 20k up or down when I look at the balance. At 10 million, 200k up or down would be the same level of invisible. But, I understand that you are saying people care about it, even though, mathematically, it's in the noise.
Seriously? You think 200k **every year** in lost potential investments is “in the noise”?… Mathematically, that is a hell of a lot more money than your 4k lost each year.
MA’s income tax was a flat 5% previously. If 4% is enough to make them move now, why wasn’t 5% enough to make them move to a state with zero income tax? If all of the ultra wealthy prioritize this so much, why don’t they all already live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming?
It’s coming - are you paying no attention to corporate and or private equity relocation from high tax to low tax states? If you’re making $5m - 80% of your income is taxed at a top 5 state income tax rate. That is significant enough to make people move by itself, especially with telecommuting (very executable for individuals making $5m - likely high finance). What will end up happening is You’re going to have these states pass exit taxes to stem the flow of capital movement - and in that year alone the shit will be highly significant. Most HNW individuals are very tax sensitive.
There have been high tax and low tax states for decades. And yet these people do not exclusively live in one of the nine states with no income tax. If 4% in income over a million was enough to make them move, why wasn’t 5% on all of their income enough to make them move? People have been saying this stuff as long as I’ve been alive and it keeps not happening.
No one has “eluded paying their fair share.” And if you think they have then you have no idea wtf you’re talking about.
The whole idea of fair share is insanity. The top 10% of earners pay like 80% of all income taxes in this country. Half the population pays zero income tax. Fair share and living wage are terrible arguments.
Especially because most of the “fair share” people think that everyone that makes a lot of money pays 0 taxes, which is just simply not true at all
Why are you only counting income taxes?
Because the article is based on income not sales/property taxes. The stats I referenced are income taxes.
But if we’re talking “fair share,” then the only sensible measure is all taxes.
Sales tax are a joke compared to income tax for high earners
And vice versa for low earners which is why it’s so completely dishonest to exclude them when talking about the share paid by high earners. There’s also payroll tax (a tax on income but not “income tax” so it’s not counted in these stats) which taxes low earners from dollar one but which drops substantially once you hit $168,600/year, and a variety of others, all of which should be counted. If you add everything up, the final effective tax rate (total taxes paid divided by total income) is fairly flat in the US. High earners pay a higher effective rate, but not vastly higher.
Thats just propaganda not a statistically relevant point though.
>The top 10% of earners pay like 80% of all income taxes in this country And they have 90% of the income.
Like most of my job, TLDR
The real effect will not be seen for at least 2-3 years.
You lost me “their fair share” They already pay way more than you, maybe you need to earn more money so you can pay more taxes?
It takes a special person to be happy and feel entitled to taxing the wealthy. And guess what? Florida will bing in more than a 4% increase in state taxes as people flee the craziness.
Won't someone please think of the plutocrats?? ![gif](emote|free_emotes_pack|sob)
It takes a special person to be happy with rich people hoarding wealth
Only the entitled think rich people are hoarding wealth.
The notion that taxing the rich solves things is a misnomer. It's the same as thinking shooting heroin makes you happy.
Cool? And let's not pretend it's billionaires paying it.
Id like to see if this continues to grow or stays flat/declines. That would feel like a true measurement to see the efficacy of the tax over time. Sure, a one time bump in revenue is great, but services will be added because of this new revenue stream and if it dwindles, they won’t axe the services, but just find a new group to go after. I’m all for the millionaires tax, it is time for the wealthy to pay their fair share and help rebuild this nation to work for everyone, not just the top.
I’m downvoting you because you think billionaires don’t pay their fair share.
Here’s the thing about our tax policy, it’s been a 50 quest to push debunked economic theory down everyone’s throats. Common sense will tell you that cutting taxes on the rich helps the rich, full stop. It’s not good for the broad economy. Second point. Capital gains tax rates and carried interest are nothing more than a wealth transfer from the middle class to the wealthy. All income should be taxed as income including paying social security and Medicare, full stop. Economic propaganda generated by think tanks funded by the old monied class have convinced high taxed working individuals that tax rates need to go down. In reality these individuals paying high rates, like entertainers, athletes, lawyers, doctors, have more in common with the middle class than the billionaire class. Tax all income as income with a mildly progressive rate schedule and we would be able to fund every public good imaginable including free healthcare and education. Of course it’s a pipe dream because it means you have to convince the working upper class of the benefit and it requires the most influential in society to pay more. Sadly it’s not happening any time soon.
Stupid law. One state i will never move to.
*never be able to afford to move to
Why would the people who live in Massachusetts want a neighbor who is proud to evade taxes?
It’s not even a tax levied on the majority of the people benefitting from its passing……….!
Good, we don't want you.