The income tax surcharge, aka the millionaire’s tax, aka the Fair Share Amendment received the approval required to move the proposal to the 2022 ballot last week. Legislators gathered in a Constitutional Convention to overwhelmingly support legislation that would amend the state constitution to add a 4% surtax on income greater than $1 million. That means a 9% tax rate rather than the flat 5%.
NFIB served as a plaintiff in the lawsuit to successfully remove a similar question from the 2018 ballot. But now legislators filed their own ballot question, that requires the vote of two consecutive legislatures (2019-20 and 2021-22) before moving to the voters.
How will this impact small businesses? Businesses that file their taxes as pass-through entities could be impacted by this policy if it becomes law. Sole proprietorships, S-corporations, limited liability companies, and partnerships could face the higher tax rates on their income over that $1 million threshold. While many businesses never have earnings that high, a business owner seeking to sell their business upon retirement may easily exceed $1 million.
NFIB strongly opposed the so-called millionaire’s tax and sees the policy as a disincentive to growth in Massachusetts. Our flat tax rate was one of the few benefits to doing business in the Commonwealth, this new graduated tax may drive wealthy earners and businesses from the state, while dissuading others from opening shop here. We will continue to provide updates as this process moves forward.
