Where Millionaires May Soon Pay More Taxes

In two states, the ultra-wealthy might soon see more money coming from their earnings, as ballots to enact a “millionaire tax” are on the ballot in two of the highest income states.

According to CNBC, voters in California will decide if they want to enact Prop 30, which would add a 1.75% levy on annual income of more than $2 million, in addition to the state’s top income tax rate of 13.3%. In Massachusetts, the Fair Share Amendment would create a 4% levy on annual income over $1 million on top of the state’s 5% flat income tax.

Both states are among the highest-income states in the U.S. According to Investopedia, Massachusetts had the second-highest median income of $85,800 in 2021, while California ranked fifth with $80,400 in median income.

If the proposals pass, the two states will be among the only ones in the country to propose larger levies on the wealthy, something that has had growing interest over the years, yet failed to gain traction at a national level.

Democratic lawmakers have floated several proposals for similar taxes, including the Ultra-Millionaire Tax Act (a 2% tax on wealth over $50 million and 3% on wealth over $1 billion), a tax on those with either more than $1 billion in wealth or an adjusted gross income exceeding $100 million for three years, and even a proposal from President Joe Biden for a 20% levy on households worth more than $100 million.

The interest in taxing the wealthiest has only grown following ProPublica’s publishing of a treasure trove of documents from the Internat Revenue Service in 2021, which showed that at various points, some of the richest Americans, including billionaires Jeff Bezos, Elon Musk, Michael Bloomberg, Carl Ichan and George Soros, had managed to skirt paying income tax multiple times, despite their income and wealth. However, measures have not gained steam due to some Republican pushback, as well as voters questioning what would be done with the funds raised from such taxes.

It’s unclear if the current proposals will pass based on the plans for the revenue from them. In California, the plan is expected to bring in $3.5-$5 billion annually if it passes, and the revenue will be used to pay for zero-emissions vehicle programs and wildfire response and prevention. In Massachusetts, where it would be expected to generate $1.3 billion in revenue, money would fund public education, roads, bridges and public transportation.