MASSACHUSETTS HOUSE BILL
Lost households, jobs, investment and disposable income: BHI study shows proposed “Millionaire’s Tax” will be harmful to state’s economy
Yesterday, the Beacon Hill Institute released a detailed study highlighting the economic harm posed by the so-called “Millionaire’s Tax” headed for the state ballot in 2022.
As approved by the ConCon legislative session today, House Bill 86 (H.B. 86) would amend the Massachusetts constitution by imposing a 4 percent surtax on income over $1 million. Several studies have warned of its effects but few have identified the economic losses in detail by using a tax model.
Overall, the proposed surtax would decrease the demand for labor services and the quantity of labor services supplied. It would further increase the cost of obtaining capital services by reducing the after-tax profits that owners could plan on receiving from investments in their business.
These effects would further manifest themselves as a reduction in private sector jobs, in disposable income, and in state gross domestic product.
In 2023, for example, more than 4,000 families would leave the Bay State with employment dipping by nearly 9,000 jobs. Workers will have less disposable income (-$963 million) and the state’s gross domestic project would shrink by $431 million.