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In 2022, the democratically governed US state of Massachusetts introduced a millionaire tax. Anyone earning more than a million dollars a year pays an additional 4 percent tax. Despite all the warnings from critics, the evidence shows that the economy continues to grow, the rich have not moved away, and the population is benefiting enormously. In the first three years, this tax generated 5.7 billion US dollars, which was used to improve infrastructure and significantly expand education.
The US state of Massachusetts provides an example of how a higher contribution from millionaires benefits everyone. A reform passed by voters in 2022 introduced an additional 4% tax on annual incomes above one million dollars. The resulting additional funds are earmarked for investment in public services.
The new mayor of New York, Zohran Mamdani, sees this so-called fair share tax as a model. During his election campaign, he also called for an additional tax of 2% on urban incomes above one million dollars. His goal: to use the money raised to finance the fight against New York’s housing shortage.
Various models for millionaire taxes
“Millionaire taxes“, or “millionaire levies“, is a term for taxes that must be paid by the richest people in the country. These can be levied on assets (also known as a wealth tax), gifts, and inheritances, or, in the case of Massachusetts, on particularly high incomes. They all share the high exemption limits, affecting only millionaires. Empirical evidence shows that in the vast majority of cases, such taxes neither harm the economy nor lead to an exodus of the wealthy, providing states with more money for investment and the expansion of the welfare state.
A wealth tax does not lead to economic crises or the exodus of the super-rich
Unsurprisingly, critics predicted economic crises and an exodus of the wealthy. The Cato Institute described Mamdani’s tax plans as ‘wishful thinking‘, while Andrew Cuomo, his rival in the race for New York City mayor, threatened to move to Florida.
The people of Massachusetts heard the same arguments in 2022. Led by multi-billionaires Robert Kraft (owner of the New England Patriots football team), Jim Davis (owner of New Balance), and Boston-based investment firm CrossHarbor Capital Partners, the opposition argued that the Fair Share tax would not solve the state’s financial problems but would lead to tax evasion and disadvantage homeowners who sell their homes.
Expectations exceeded: tax brought in twice as much money as planned
But what has really happened three years after the millionaire tax was introduced? The facts show that revenue from the Fair Share Tax has actually exceeded expectations. Since 2022, the Democratic-governed state has collected $5.7 billion from the tax, doubling its original projections.
Legislators had originally assumed that the additional tax would bring in around $1 billion per year. However, the first year exceeded the forecasts, generating a surplus of $2.2 billion. In the 2025 financial year, revenue from the Fair Share Tax even accounted for 5% of the total state budget.
Free meals for schoolchildren, free tuition and expansion of public transport
As stipulated in the amendment to the law, the additional revenue was used for education and transport infrastructure. For example, all schoolchildren in Massachusetts have been receiving free breakfast and lunch since 2023. Additional teachers have been hired, school buildings have been modernised, and all residents of the state have been given access to tuition-free community colleges.
And that’s not all: the Fair Share program also strengthened public transport. A total of 76 kilometres of suburban railway lines were renewed, 20 bridges were repaired, and rural roads were improved. In addition, $200 million was allocated to regional transport companies—for free bus travel, longer operating hours, and more drivers.
Despite millionaire tax, there is no exodus of the super-rich
Contrary to the widespread narrative about wealth taxes, there has been no significant exodus of wealthy residents. On the contrary, the number of millionaires based on net worth has increased by more than 30%, and the exodus of young, non-wealthy workers has slowed.
The data from Massachusetts clearly contradicts the dire warnings of the wealthy and their common self-image as rootless jet-setters who supposedly automatically migrate to the most tax-friendly areas.
According to economic sociologist Cristobal Young, a large part of wealth accumulation is still based on location and insider advantages. In concrete terms, this means that social factors make it clear that even wealthy people often remain where they live despite higher taxes.
Against the backdrop of increasing inequality, Massachusetts is demonstrating that a higher contribution from the wealthiest can promote social mobility and secure investment in infrastructure and public services.
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