Every public school student in Massachusetts will get free lunch, and it’s all thanks to the money generated by a new state tax on millionaires. The new 4% tax on income over $1 million, which voters approved last year and exists alongside the state’s fixed 5% income tax, will generate $1 billion of the state’s $56.2 billion budget for fiscal year 2024. The money will fund education and infrastructure projects in Massachusetts and is estimated to affect only about 0.6% of households, according to the Center for State Policy Analysis.
Massachusetts is one of several states, including California, Washington, New York and Connecticut, that is looking for ways to tax their wealthiest residents and start to reduce the gap in income equality in the U.S. These policies have their critics, with some arguing their economic viability is still unproven and that they promote costly tax avoidance.
But Massachusetts is one of the first states to show how the money generated by a fraction of its residents could benefit people statewide. Is it proof a millionaire tax is the silver bullet for income inequality that many hope it could be? Bob Triest, professor and chair of economics at Northeastern University, says the policy has a clear appeal, but it’s not that simple.