$1.5 billion in estimated revenue: A look at the Mass. 'millionaire's tax' first year

Supporters of Massachusetts' Fair Share Amendment are celebrating the first year of the so-called "millionaire's tax," arguing the new revenue it's generating will bring significant improvements for public transportation and education.

Voters narrowly approved a 4% surtax on incomes over $1 million in a statewide ballot referendum in November 2022. It was a bruising campaign that saw millions of dollars in Super PAC spending on both sides, from teachers' unions to wealthy individuals and corporations.

Advocates promised the new tax would bring in over $1 billion a year in new revenue. And they quickly saw their predictions surpassed: the state Department of Revenue estimates it will generate over $1.5 billion in the fiscal year ending in June 2024.

That money is being allocated through the state budget to things like universal free meals in public schools, tuition-free community college, and repairs to the MBTA.

"The money is going where it was promised," said Raise Up MA Coalition spokesperson Andrew Farnitano in an interview. He said such investments are "only possible because the voters passed this constitutional amendment and we created this new tax."

But critics argue the tax is pushing more people out of Massachusetts.

"It is an incredibly foolish policy that drives out wealth," said Paul Diego Craney, of the conservative Massachusetts Fiscal Alliance.

Craney said the surtax "punishes people for being successful while a lot of other states across the country are trying to attract those same people that we are pushing out of our state."

Experts say it's too soon to tell how many people have left the state since the tax kicked in, and whether there's direct correlation.

But a recent report from the Massachusetts Taxpayers Foundation found the rate of people leaving Massachusetts is at its highest point in 30 years. The report found the general work force has fallen by about 130,000 people since 2019.

Meanwhile, overall state revenue collections are falling short of expectations, despite the new money from the millionaire's tax.

State finance analysts point to larger macroeconomic trends, like a drop-off in the purchasing of durable goods and a slowdown in hiring.

But Farnitano, of the Raise Up MA Coalition, said he isn't worried.

"I think what the decline in other state revenue shows is that if Fair Share wasn't in place, we would not be able to make these new investments," he said. "Those are fundamental investments in our economy that are needed to make sure it works for everyone."

Material from the State House News Service was used in this report.