In Tuesday’s crucial midterm elections, residents of Massachusetts and California had to decide whether to pass major tax policy changes, including raising the rates paid by the wealthiest Americans.
Despite the fact that only about 0.6% of high-income households do not pay, compared to 40% of middle-income people, according to estimates by the Tax Policy Center.
Only Massachusetts voters approved a measure to raise taxes on millionaires, while Californians rejected a similar proposal that targeted the wealthiest Americans living in the state.
Here’s a look at the fiscal results of Tuesday’s election:
In Massachusetts, voters passed a measure that will create a 4% tax on annual income over $1 million. This would be in addition to the state’s 5% flat income tax, also from 2023.
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Under the so-called Equitable Distribution Amendment, millionaires will essentially pay a combined top marginal tax rate of 9%, eliminating the state’s 100+ year history of having an income tax. fixed rate individuals.
While supporters of the law have framed it as an effort to ensure the wealthy pay their fair share, critics have warned the levy could have negative economic consequences, including hitting small business owners.
The money generated from the tax will be used to fund public education, roads, bridges and public transportation.
The tax is expected to affect about 0.6% of Massachusetts households, according to a analysis from the Center for State Policy Analysis at Tufts University.
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About 52% of voters approved of the increase, according to the Associated Press, tallying about 95% of the vote.
California voters have rejected a measure that would have dramatically raised taxes on wealthy people in the state to raise money for climate-related projects.
About 59% of voters opposed Proposition 30, while 41% supported it, according to the Associated Press, with about 41% of votes counted early Wednesday morning.
The measure would have tax increase by 1.75% on those earning $2 million per year, generating up to $5 billion in new revenue per year. Most of that money would go to programs that help people buy electric cars and install charging stations. A smaller portion would have been devoted to forest fire prevention efforts.
The proposed wealth tax drew opposition from billionaire donors and Governor Gavin Newsom, a Democrat, ahead of the election.
This is because the largest funder of the election measure was the ride-sharing company Lyftwhich has donated at least $45 million ahead of a mandate that will require the majority of its drivers to use electric vehicles by 2030.
Newsom downplayed the tax, calling it a “cynical ploy” by Lyft to meet the state’s electric vehicle mandate — at the expense of taxpayers.
“Prop 30 is presented as a climate initiative,” Newsom said in an ad against Prop 30. “But in reality, it was designed by one corporation to funnel state income taxes to benefit their business. Simply put, Prop 30 is a Trojan Horse that puts corporate welfare above the fiscal welfare of our entire state.”
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Proponents of the measure said it could help facilitate the transfer of clean vehicles that Newsom has pushed so vehemently in California – the largest new car market in the country — try to move away from gas-guzzling vehicles which are one of the main culprits of climate change.
Los Angeles voters, however, seem likely to adopt Measure ULA, a ballot initiative that aims to fund affordable housing and renter protections by applying a home sales tax of more than $5 million.
The “mansion tax” is expected to generate about $900 million a year for housing subsidies and tenant protections.
Critics of the tax have warned it could ultimately backfire by driving up rents as costs for developers rise.
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