Massachusetts millionaire tax

People in Massachusetts are trying to decide whether or not to tax people who earn over $1 million per year at a rate, for however much they are over $1 million, that is 4 percentage points higher than the rate paid by the common rabble. (article) Moving to a California-like system of progressive state income tax rates may require an amendment to the state constitution.

As a member of the common rabble, I of course support the idea of rich people paying my bills. As most other voters probably can’t see the days ahead when (a) politicians define down the “rich” threshold to capture revenue from people formerly not thought of as rich, and (b) $1 million is also the price of a Diet Coke, I think this idea of higher taxes on “the rich” has a good chance of adoption. (Also predicted by Russell Long‘s class poem:

Don’t tax you,
don’t tax me,
tax that fellow behind the tree!

; Long also predicted my personal support for the new tax: “A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform.”)

Readers: What can we expect to change for the Massachusetts economy once this does go through?

(My predictions:

• further decline of the tech startup industry here relative to California; people who work in startups often have years of pretty low cash compensation and then one big year. If they’re going to pay California tax rates during that big year, why not just move to the center of the tech universe to begin with?
• slowdown of the real estate craze; there will be fewer people wanting to live in a $4 million house in Weston (but I think that Boston and Cambridge will continue to be in demand due to the meltdown of the U.S. transportation system and the lack of new walkable pleasant urban environments being built in the U.S.)
• heating up of the private jet business as more people decide that living in tax-free Florida for 183 days per year, but visiting New England frequently (rich people: watch out for “permanent alimony” in Florida compared to the theoretically limited term in Massachusetts!)
• increased values for Portsmouth, New Hampshire real estate (walkable pleasant town; water views everywhere); rich people: watch out for unlimited child support in New Hampshire, albeit not as lucrative as in Massachusetts
• earlier retirements for some successful folks; if you don’t need to keep working, a higher tax rate should provide encouragement to retire and move to a state with good weather and no estate tax (map). This could make Massachusetts a better place to be young and still climbing the ladder in, e.g., a big money management firm?

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