One Blue State Passes, Another Blue State Rejects Hefty New Taxes On Millionaires

One Blue State Passes, Another Blue State Rejects Hefty New Taxes On Millionaires

Voters in Massachusetts approved a significant tax hike on millionaires while voters in California rejected a similar measure, even though residents of both states granted overwhelming electoral victories to Democrats and are among the most heavily taxed in the nation.

Residents of Massachusetts were presented with a possible constitutional amendment creating a 4% tax on income above $1 million, which would add to the commonwealth’s existing 5% flat-rate income tax in order to fund education and transportation. The ballot measure, Massachusetts Question 1, passed 52% to 48%, with most precincts reporting as of Monday.

Sen. Elizabeth Warren (D-MA) and Rep. Ayanna Pressley (D-MA) were among the elected officials who supported the policy. In an opinion piece for the Boston Globe, the lawmakers wrote that Question 1 represented “a chance to make sure everyone pays their fair share in taxes.”

Meanwhile, residents of the Golden State were presented with California Proposition 30, a measure that would have increased taxes on personal income above $2 million by 1.75% to increase funding for zero-emission vehicle infrastructure and wildfire prevention. Voters rejected the proposal 59% to 41%, with one-third of precincts reporting.

A recent policy from the California Air Resources Board will require all new vehicles to be zero-emission by 2035. Experts have warned, however, that the state’s electric grid will require significant upgrades to manage a rapid transition away from internal combustion vehicles.

With an effective tax rate of 13.5%, California is among the most heavily taxed states in the country, according to an analysis from the Tax Foundation. Massachusetts has a tax burden of 11.5%, likewise placing the commonwealth among the most aggressively taxed states.

Wealthy Americans already provide an outsized share of federal tax revenue, even when compared to the rich in other developed countries, according to another report from the Tax Foundation, which noted that the top 1% of earners paid more than 40% of federal income taxes in 2018. Warren nevertheless proposed a federal “ultra-millionaire” tax last year that would institute a 2% annual tax on households and trusts with net worths above $50 million. Any households and trusts with a net worth of more than $1 billion would pay another 1% annual surtax.

“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” she asserted. “As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate.”

Amid the differing outcomes on tax hikes for the wealthy, residents of Massachusetts and California chose members of the Democratic Party to control both chambers of their respective legislatures. Governor Charlie Baker (R-MA) will be replaced by Massachusetts Attorney General Maura Healey, granting the Democrats a governmental trifecta in the commonwealth for the first time in nearly a decade.

The midterm elections were underwhelming for Republicans across the country after a widely anticipated red wave failed to materialize. Democrats seized control of multiple legislative chambers in battleground states such as Pennsylvania, Michigan, and Minnesota.

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