Massachusetts on Track for $1 Billion Surplus Thanks to Millionaires Tax
Massachusetts is poised to announce another billion-dollar surplus, fueled by a tax on high earners that has far exceeded initial projections. The "millionaires tax," enacted two years ago, has generated over $2.6 billion this fiscal year alone, with two months remaining. The surtax applies an additional 4% to annual earnings exceeding $1 million, and in its first full year, it produced $2.46 billion in revenue.
This boost in revenue will provide new funding for transportation and education initiatives. Any surplus exceeding the already budgeted $1 billion will be allocated to a reserve account for potential one-time investments in various projects. Despite concerns from some pro-business groups about potential outmigration of wealthy residents, data shows an increase in the number of millionaires residing in the state from 2022 to 2024.
As lawmakers debate how to allocate the newfound funds, they acknowledge the unpredictable nature of the surtax’s contributions due to its sensitivity to economic conditions. With recent uncertainties in federal funding and other economic challenges, state officials, led by Governor Healey, are preparing for tougher times ahead, including instituting a hiring freeze in the executive branch.
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