Millionaire tax will put Massachusetts back on track
WE ALL WANT a future for our Commonwealth in which our economy continues to grow, the great quality of life enjoyed by some of us is enjoyed by all of us, and our young people in every community have the opportunity to reach their potential. Building that future requires that we take action today to address significant obstacles to a vibrant future.
As CEO of a Boston-based technology company and as a professor who studies the Massachusetts economy, we know that our Commonwealth’s greatest strength is that we have the best educated workforce in America. However, our ability to grow is severely limited because we still have fewer educated workers than we need. Recent studies of the state’s economic growth predict a significant slowdown in the coming years due to shortages of skilled workers. Further, getting the workers we do have to work and back home is increasingly difficult. Our roads are in poor condition, our decades-old trains break frequently, and the overall transportation system is failing to meet our needs.
Unlike many seemingly intractable problems, these are challenges we can and must solve. There will likely be a proposal on the state ballot in 2018 that would raise $1.9 billion each year, specifically to fund investments in education and transportation. This proposal, known as the Fair Share Amendment, would raise the revenue for these investments by adding an additional 4 percent tax on income over $1 million a year. This rate would be similar to the top rates in a number of high-income states, like New York, New Jersey, Maryland, and Minnesota — and still well below California.
By building an education system in which all our kids get a top-quality education and those who want to go to college can afford to do so, we will address the biggest challenge facing Massachusetts employers: finding the employees we need to grow our businesses. We will also send a message to young people in every community: Your success is crucial to our success as a state — and we are committed to helping you succeed.
The need to fix our transportation systems is equally urgent. When people can’t get to work and supply chains can’t function smoothly, it chokes our economy. When poor transportation infrastructure leads to people spending hours in their cars or on unreliable public transit, it limits where people can live and raise their families. Trains and buses that don’t break down, switching systems to allow trains to run on time, and roads and bridges that work, together save our people and our businesses time and money that exceeds the short-term costs.
The time to make these investments is now. Firms are drawn to Massachusetts by its large and skilled labor force. If our labor force declines in response to massive retirements of baby boomers in the next several years — as some projections suggest — the state risks a loss of firms that could lead to a downward spiral. We can prevent this from happening. Investments in education will increase the labor force participation and skills of existing residents, and high-quality education entices more families to stay or to migrate here. Similarly, a better transportation system retains existing firms and workers, and will attract others to our state.
Currently our highest income residents pay a smaller share of their income in state and local taxes than the rest of the population. Some fear that an increase in taxes on very high income taxpayers will lead to an exodus from the state. All of the serious academic studies show that that’s not what happens. There is no shortage of millionaires in Manhattan, where the top tax rate is over 12 percent (including local), and growing businesses create millionaires every day in Silicon Valley, where the top tax rate is over 13 percent.
Those of us who run businesses and study economic development know that we need a Commonwealth where our businesses and people can continue to thrive, with communities of well-educated workers, a working transportation system, and a good quality of life. The proposed Fair Share Amendment is an important step to ensuring a vibrant future for all of us.
Mohamad Ali is president and CEO of Carbonite. Alan Clayton-Matthews is associate professor in the School of Public Policy and Urban Affairs and the Department of Economics at Northeastern University.