MA 2022 Question 1 (sales, how much, buy)

[BostonMike7]

Mixed opinion. While the money would be great to have, I'm not a fan of voting to force others to be taxed especially when the vast majority of folks in this state will never be affected by it. Secondly, the state currently has a surplus of finds and is in process of mailing funds back to citizens. Do we need more taxes?

[MikePRU]

Yeah. I'm leaning toward "no" for several reasons . . .

First, the state has an excess of funds currently. So why vote for more taxes?

Second, people who earn this kind of money tend to have the resources to get out of paying their fair share of taxes anyway. So, IMO it's just lip service to do such a thing.

If the proposal was more along the lines of "lower the flat tax to 4% and add an additional tax for earners of $1M+ of 4%" I'd be all about that.

So mostly I'm voting "no" on this one because I don't think it's a well developed/thought out proposal.

[bizcuit]

Originally Posted by MikePRU

Yeah. I'm leaning toward "no" for several reasons . . .

First, the state has an excess of funds currently. So why vote for more taxes?

Second, people who earn this kind of money tend to have the resources to get out of paying their fair share of taxes anyway. So, IMO it's just lip service to do such a thing.

If the proposal was more along the lines of "lower the flat tax to 4% and add an additional tax for earners of $1M+ of 4%" I'd be all about that.

So mostly I'm voting "no" on this one because I don't think it's a well developed/thought out proposal.

Really good points.

I want to thank the OP for starting this thread. These types of debates really help us be ready for the voting booth.

FWIW, I have not decided yet, but am glad for the pros & cons that everyone is bringing up.

[lrfox]

Originally Posted by simplexsimon

The additional 4% is only on amounts above $1 million and I doubt that amount will derail someone’s retirement.

For those selling homes there’s a $250k/$500k exemption on capital gains, so we’re talking about $1.5m+ in sale price for a married couple before a dollar is taxed at the higher rate and that’s assuming the home was bought for nothing and no improvements were made.

I don't think it would necessarily derail a retirement, but $40,000+ is not an insignificant amount of money to be added to the existing tax burden. The example in the Globe article of the woman looking to sell her business for ~$2 Million and use that money to funder her retirement is a good one. She'll take an additional $90k hit if Q1 passes which won't cause her to be destitute by any means, but that amount can have an impact. The impact on those selling homes is likely to be less, but not zero.

Ultimately, I'm not completely opposed, but I'd rather see more exemptions built in for the people who aren't earning $1,000,000+ year after year.

[simplexsimon]

Originally Posted by lrfox

I don't think it would necessarily derail a retirement, but $40,000+ is not an insignificant amount of money to be added to the existing tax burden. The example in the Globe article of the woman looking to sell her business for ~$2 Million and use that money to funder her retirement is a good one. She'll take an additional $90k hit if Q1 passes which won't cause her to be destitute by any means, but that amount can have an impact. The impact on those selling homes is likely to be less, but not zero.

Ultimately, I'm not completely opposed, but I'd rather see more exemptions built in for the people who aren't earning $1,000,000+ year after year.

I can't read the article due to paywall but how is it an additional $90k?

[lrfox]

Originally Posted by simplexsimon

I can't read the article due to paywall but how is it an additional $90k?

I misquoted. It's $90k total on the second million rather than $50,000. Not insignificant, but obviously not as bad as an additional $90k.

Sullivan figures that if she sells her company and nets $2 million, the first million will be taxed at the rate everyone pays, which is 5 percent, and then the next million dollars would be taxed at 9 percent. Instead of paying $50,000 in taxes on the next million dollars, she would owe $90,000 if the ballot question passes.

[simplexsimon]

What kind of business is it? Unless it's a tech app, a company that is valued at $2 million is cash flowing pretty well and its likely she's been able to take a bunch of business deductions over time and paid less taxes than someone who made the same amount on W-2 income.

Re: the high income earners leaving the state - what's the real expectation that this will happen? NH already has no income tax.

[New Englander]

As someone who has built up and sold one venture in Massachusetts and willingly paid taxes and fees, despite my M&A attorney advising me to fast-track a registration in NH, I definitely want to support the Commonwealth, however, I am opposed to this increase for several reasons:

1. It disproportionately impacts smaller businesses where an extra $40k, $90k, matters.
2. Stewardship of funds: I know promises are made that the funds are going to be applied towards education and transportation, unfortunately, waste, and political distortions will impact what actually occurs with the funds.
3. I have a new venture, which is registered in MA, but doing a lot of business in NYC. As someone correctly mentioned, I can always get my tax advisor to minimize/eliminate the new tax levy, if this ballot question passes. Failing that, I can always switch to NH/FL. I am not saying that I would necessarily do that as of right now, however, if this question passes, then I'll have to reconsider.

I'm willing to pay extra taxes to MA because my business and I have benefitted from the infrastructure, and human resources available in this state. Not inject politics, but I'm a Republican who really likes Charlie Baker has run the state and would have felt more comfortable forking over additional tax dollars. Healey, who is likely to become the new Governor, is a huge question mark in mind.

So I'll vote no and see how it goes..

[MikePRU]

Originally Posted by lrfox

I don't think it would necessarily derail a retirement, but $40,000+ is not an insignificant amount of money to be added to the existing tax burden. The example in the Globe article of the woman looking to sell her business for ~$2 Million and use that money to funder her retirement is a good one. She'll take an additional $90k hit if Q1 passes which won't cause her to be destitute by any means, but that amount can have an impact. The impact on those selling homes is likely to be less, but not zero.

Ultimately, I'm not completely opposed, but I'd rather see more exemptions built in for the people who aren't earning $1,000,000+ year after year.

Although, I'd be more concerned about the little old lady selling her house for $1M because it represents the majority of her retirement savings then I would be about the person selling their business for $2M. If they have a business worth that much, they've probably made a good living to this point.

Regardless, you've raised more good points about why this law is a half baked idea.

[simplexsimon]

The old lady would not be impacted by the 4% additional tax if she sold for $1m. And cmon…$1m is a lot.