Still time for Rhode Island to follow suit
SAM
PIZZIGATI for Inequality.Org
This spring has been an exceedingly good one for
Flightline Aviation Limited, a London-based enterprise that specializes in helping the world’s
deepest pockets find the private jet of their dreams.
“We have closed six sales in the past five weeks,”
Flightline’s Anna Campbell gushed at
London’s most celebrated luxury trade fair earlier this month. “Everyone seems
to want to get a plane for summer.”
Polly Toynbee, a veteran British political columnist,
happened to be at that same trade fair. She watched one gentleman talking with
a salesman about a showcased private plane and then approached that potential
buyer with a question. With so many families struggling to put food on the
table, Toynbee asked, shouldn’t the
U.K.’s richest be paying “a bit more” in taxes?
“Why would I?” the private-jet aficionado replied.
“Look,” he added, waving at the aircraft on sale all
around him, “take any more in tax and the wealthy would be off—away out of here
in one of these!”
Off to a place, that gentleman of means was implying,
smart enough not to inconvenience its richest residents with any sort of robust
tax on income or wealth.
The rich who call the U.K. home have, at the moment,
little reason to start looking for one of those tax-getaway locales. Britain’s
Labour Party, the likely winner in the nation’s next parliamentary elections,
is showing no interest whatsoever in subjecting the U.K.’s richest to any
significant tax hike.
“We have no plans for a wealth tax,” Rachel Reeves, the
Labour Party’s likely choice for finance minister, announced last
summer—and no plans either to put in place a mansion tax or a higher levy on
either capital gains or top tax-bracket income.
“I don’t see the way to prosperity as being through
taxation,” Reeves went on. “I want to grow the economy.”
The British economy is already growing quite nicely—for
the U.K.’s wealthiest. Since 1989, the University of Greenwich economist Ben
Tipper points out, the
nation’s 200 richest residents have seen their wealth—after taking
inflation into account—grow on average by 15% per year.
Throughout human history, adds the U.K.
High Pay Center’s Luke Hildyard, living standards for average households have
only improved when societies have in place mechanisms “to ensure that wealth
doesn’t overwhelmingly flow to the people with all the economic and political
power.”
Given that reality, Hildyard posits in his
just-published Enough: Why it’s Time to Abolish the Super Rich,
modern societies need to both tax the top 1% “more effectively” and get those
wealthy to pay more “to the workers at the companies they run and invest in.”
How best to accomplish all that? Progressives in the
United States—the only U.K. peer nation with less of a tax burden on its
richest—have plenty of ideas on that score. This past week we learned that one
of those ideas is generating some encouraging results.
The back story: In 2022, after seven years of dedicated
volunteer labor, the Raise Up Massachusetts coalition of over 150 community
organizations, faith-based groups, and labor unions had worked onto the
November statewide ballot a constitutional amendment to add what amounted to a
special tax on millionaires to the state constitution.
This “Fair Share Amendment” called for adding a 4% state tax on annual income over $1 million to the state’s existing 5% flat-rate income tax. That $1 million threshold, the amendment also spelled out, would adjust annually to reflect cost-of-living increases.
The proceeds from this special new levy on wealthy
taxpayers would all go for public education and maintaining and improving the
state’s public transit, roads, and bridges.
Voters turned out to like that notion. The Fair Share
Amendment passed comfortably, with over 52% of the vote, and went into effect
last year.
“The message sailed past billionaire money to victory,”
as Jacobin contributing editor Paul Prescod has noted, “because it
was clear, compelling, and broad-based: Make the rich pay so we have more
revenue to improve the lives of working people.”
How much of a difference has the new Massachusetts levy
on millionaires so far made? The Boston Globe earlier this
week headlined the
surprising answer: “‘Millionaires tax’ has already generated $1.8 billion this
year for Massachusetts, blowing past projections.”
Way past projections. With three months still left in the
state fiscal year, the new Massachusetts millionaires tax has already generated
$1.8 billion in added new revenue, some $800 million more than state officials
had projected the tax would raise in their budget for the entire fiscal year.
“Opponents of the Fair Share Amendment,” exulted Raise Up
Massachusetts spokesperson Andrew Farnitano, “claimed that multi-millionaires
would flee Massachusetts rather than pay the new tax, and they are being proven
wrong every day.”
That doesn’t surprise Omar Ocampo, a Massachusetts-based
analyst with the Institute for Policy Studies. Research from other states, he
notes, demonstrates that instances of “millionaires fleeing increased taxes”
turn out to be “extremely rare.”
Before the Fair Share Amendment’s passage, wealthy
Massachusetts taxpayers averaging $2.4 million in annual income were only
paying 6.8% of that income in state and local taxes, a
rate less than the 8.9% of their incomes that taxpayers in the
state’s bottom 99% were paying.
The new Fair Share Amendment, estimates the
Institute on Taxation and Economic Policy’s Marco Guzman, will raise the
combined Massachusetts state and local tax rate on the state’s richest, but
only to 8.7%.
In other words, advocates for tax justice in
Massachusetts—like advocates for greater equality across the United States and
all around the world—still have plenty of victories that need winning. But
let’s make sure that we celebrate each victory along the way!
SAM
PIZZIGATI, veteran labor
journalist and Institute for Policy Studies associate fellow, edits
Inequality.org. His recent books include: The Case for a Maximum Wage (2018)
and The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that
Created the American Middle Class, 1900-1970 (2012).