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Massachusetts passed a 4% millionaire's tax last year. Now every public school student is going to get free lunch. | Business Insider México | Noticias pensadas para ti
www.businessinsider.comAbout $1 billion gathered from the new Massachusetts income tax will be used to provide all public school students in the state with free school breakfast and lunch.Mara Auster/Digital First Media/Boulder Daily Camera via Getty ImagesMassachusetts passed a 4% tax on people who make more than $1 million per year.Revenue from the new income tax is being used to give kids in the state free lunch and breakfast at school.Massachusetts is the eighth state to start free lunches since a pandemic-era federal program expired.Students in Massachusetts will get free lunch and breakfast at school thanks to a new 4% tax put on people who earn more than $1 million.Massachusetts voters passed a constitutional amendment that went into effect at the beginning of 2023 to put an additional 4% state income tax on people who make more than $1 million per year.Appropriation of the proceeds from the tax is subject to the state legislature, but lawmakers are expected to use it for public education and infrastructure repairs, according to local Boston television station WCVB.State House News Service, an independently owned news wire, reported that $1 billion of the state's record $56.2 billion fiscal budget for 2024 came from the state's new 4% tax on millionaires. Massachusetts Gov. Maura Healey signed the budget on Wednesday, making Massachusetts the eighth state to adopt a free school lunch plan since federal free school lunches which started during the COVID-19 pandemic ended.The outlet reported that a portion of the $1 billion gathered from the new income tax will be used to provide all public school students in Massachusetts with free breakfast and lunch. Some of the money will also be allocated to help undocumented immigrants who went to high school in Massachusetts qualify for lower in-state tuition rates, according to SHNS.According to WCVB, state lawmakers agreed to put $523 million of revenue from the new tax toward education and put $477 million aside for transportation.In February, President Joe Biden urged lawmakers to pass his billionaires' tax proposal, which would impose a minimum 20% tax on households with a net worth of more than $100 million.Jared Bernstein, a member of the White House Council of Economic Advisers, said the proposal would target "big corporations and the wealthiest Americans," while protecting people who make less than $400,000 per year from increased taxes, according to CNBC.Biden also signed the Inflation Reduction Act into law in February, which includes a 15% minimum tax on corporations earning more than $1 billion.Read the original article on Business Insider
Students in Massachusetts will get free lunch and breakfast at school thanks to a new 4% tax put on people who earn more than $1 million.
A European here. Aside from going in the right direction, I have a question: Don’t the rich already pay most of their earnings as taxes? So the problem is not that they are not getting taxed, but rather that they avoid paying them through loopholes? Or is that a billionaire problem?
Yeah. The problem is that the richest people have many loopholes to avoid paying taxes. Getting a minimal salary and then just taking loans against their assets is one of them.
This.
And to add to it. If you were making 10 million dollar and someone approached and said that they could make it so that you keep 1 million in taxes if you pay them 100 thousand you would most likely be one of the ones doing it.
If you make enough money you can afford hiring people to find new ways to keep your expenses down. Tax is an expense as any other to many rich people.
“After all, you made your fortune without getting any help so why should your earnings go to p1eople who use the system”
Is this the Steve Jobs $1 special??
Yes
Part of it is loopholes, but an equally big part is that we tax the way the rich earn their money differently. Most working- and middle-class earners make their money from a wage or salary, which is taxed as income. However, the rich make almost all of their money through dividends on stocks, low- or no-interest loans backed by assets, and selling stocks through the market or companies (that they have a seat on the board) doing stock buybacks. All of the income made from the above are taxed differently as “capital gains tax,” which is usually taxed at a much lower rate than income.
Capital gains tax isn’t ‘much’ lower, it’s like 5% lower, depending on the bracket.
Loans make it possible to avoid taxes–temporarily. You eventually have to pay off the loan, at which point you’ll pay taxes. Of course, if you’re making more from your investments than you’re paying in interest (and with plenty of collateral, you can get lower-interest loans), it makes sense to just pay the interest and never the principal of the loan. Of course, if loan interest rates shoot up (which they now have), this can suddenly stop working.
And right now, there is a loophole related to carrying loans–but it requires you to die. When you die, your heir is allowed to sell assets to pay off your loans without paying capital gains tax (or not as much? I don’t quite remember).
Thanks for your answer to my question! More specific answers like this one really help reinforce what the other told me. I also appreciate you not going into politics, like a few others have.
Don’t let anyone tell you high income earners don’t pay tax. I’m a CPA (tax) and most of my individual clients are high and ultra high net worth.
One of my biggest clients is a group of four hedge fund managers in NYC for example. They earned about $50 million each in the last few years. Idk what their net worths are but I’d imagine it’s at least a few hundred million each. They pay at least 37% federal, plus investment income tax (Obamacare), plus 10% to the state of NY plus NYC. It’s a lot and winds up being over $25 million a year. I don’t shed any tears for them because they are left with $25 million to play with (each, per year), which they should be able to scrape by on.
You can certainly argue it should be higher or lower or whatever but there’s this idea out there that wealthy people don’t pay tax and it’s just absurd. Also frankly it makes my job harder because people think I’m a magic anti tax wizard that just makes it go away, I’m just sitting here like you made a fuckton of money and owe a fuckton of tax, what’s the question? ¯\(ツ)/¯
Do you ever get a sense of whether your clients ‘get’ just how disproportionate there income is compared to the median?
According to this $50 million puts them comfortably in top 1%, receiving median annual US income in just under two hours (if my math is good:
(40*52)*(46,001/50000000) = 1.91?).Yeah it’s really hard to see that in the context of kids literally starving.
Regarding your question, it’s a mix. I would say many if not most understand they are extremely successful and fortunate. The variance is how out of touch they are. Some are incredibly generous, while others are grumpy or miserable. Some actually want higher taxes, some are Scrooge types.
I once had an UHNW individual who consistently donated so much to charity that he exceeded deduction limits. I had to research ways to optimize his giving, which was refreshing.
Then there was a trust fund beneficiary worth at least $100 million, a really nice guy who lived modestly, bought the whole office lunch and dressed casually. Very down to earth. We were in the process of setting up a charity trust for him before I left that firm.
Other end of the spectrum, I had a paranoid and unstable client who repeatedly pushed us to do unethical and illegal things, making everyone uncomfortable. We fired him even though he was a ~100k/yr client for us. Easy decision.
All kinds really.
Thanks for the answer to my question! I did not really look into this for a few years. And those that I did were when I really got into US politics. Thankfully I did 180 on that, but my knowledge from that time is untrustworthy to say the least.
Your answer really clarified and added a lot rather than repeating what others said, along with it being from a professional, which is well appreciated. So again, thank you and the others for taking the time to answer my question.
The issue is more likely that taxes aren’t being used in ways that benefit the public, like they are in other countries. But also many Americans don’t want that because grrr filthy socialism
That’s hilarious. Only the “little people” pay taxes.
Douchebag Trump hasn’t paid taxes in about a decade
While true …. We have different income tax brackets where those with a higher income pay a higher percentage, for federal tax. However Massachusetts had a flat tax rate on income: we all pay the same percentage. Now that state tax will be more progressive, at least to the extent that rich people have “income”
Thanks for your answer to my question! Simple and to the point, without getting into politics, like a few others have. I had a more general knowledge from a few years ago, so a specific for this case helped.
Again, thank you and the others who took their time to answer me.
Even ignoring every singly loophole, we tax the ways the rich collect and store their wealth at a much lower percent than actual income. Meaning even if the rich didn’t dodge taxes, they end up paying much less % wise.
Adding in loopholes they pay nothing or next to nothing.
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What do you propose the government should limit/stop spending on to reach over 0.5% of the real yearly earnings of Gates, Musk, Bezos, the Waltons and all their billionaire friends?
(Note that I’m not even asking about if the actual real yearly earnings of millionaires.)