Regardless of how you plan to vote on Question 1 in the Nov. 8 state election, there’s a good chance you’re sick of the dueling advertisements (photo, above) from supporters and opponents on local airwaves.
If approved, Massachusetts would add a 4 percent tax on annual income over $1 million. For example, if you earn $1.1 million per year, you’d pay an additional $4,000 in taxes on the $100,000 over $1 million, in addition to the state’s 5 percent flat tax on all income. Popularly called the “Fair Share Amendment” and the “millionaire’s tax,” it would raise $1.3 billion in 2023, according to a Tufts study. That money would be earmarked for education and public transportation projects.
Opponents of the tax, however, have pointed out that the tax doesn’t just apply to salaries: it would also be levied on income from home sales and the sale of small businesses. While fewer than 1 percent of Massachusetts households earn more than $1 million annually, the opposition advertising blitz has suggested the state’s hot housing market could mean the tax will hit middle class homeowners when they sell their homes. That opposition, funded by donations from business leaders, has helped kept it a competitive race in recent polls.
But new data from the Massachusetts Budget & Policy Center, a left-of-center think tank, shows the tax would have been applied to less than 2 percent of Massachusetts home sales in 2021. In Andover, there were 423 homes sold last year. But there were only nine, or 2.1 percent, where the sellers sold their homes for $1 million or more than they had paid for it and would have been subject to the proposed tax.
“On top of that, there are several types of deductions home sellers can use to further reduce their taxable capital gain from selling a home.,” MassBudget said in the report released last month. “Most home sellers would be eligible for a tax exemption that allows taxpayers to exclude up to $250,000 (or $500,000 if married filing jointly) of capital gains when selling a primary residence. With these deductions, most home sellers would need to sell a home for significantly more than $1 million over their previous purchase price before their taxable income reached the Fair Share threshold.”