In the pivotal midterm elections on Tuesday, citizens in Massachusetts and California must decide whether to act main tax policy changes, including hiking fees paid by the richest Americans.
Although about 0.6% of high-income households do not pay compared to 40% of middle-income, as estimated by the Tax Policy Center.
Only voters in Massachusetts approved a measure to raise taxes on millionaires, while Californians rejected a similar proposition that took aim at the wealthiest Americans living in the country.
Here’s a closer look at the tax-related results from Tuesday’s election:
In Massachusetts, voters passed a measure that would create a 4% tax on annual income above $1 million. That would be on top of the country’s 5% flat income tax, also starting in 2023.
Under the so-called Fair Share Amendment, billionaires would essentially pay a combined top marginal tax rate of 9%, thus ending the country’s more than 100-year history of having a flat rate individual income tax.
While supporters of the law framed it as an effort to ensure the wealthy pay their fair share, critics warned the levy could have negative economic consequences, including hitting small business owners.
The money generated from the tax will be used for public education, roads, bridges and public transport.
About 52% of voters approved the increase, according to the Associated Press, accounting for about 95% of the vote.
California voters rejected measures that would dramatically increase taxes on wealthy individuals in the country in order to raise money for climate-related projects.
About 59% of voters opposed Proposition 30, while 41% supported it, according to The Associated Press, with roughly 41% of the votes counted early Wednesday morning.
Size will have taxes go up by 1.75% for those earning $ 2 million per year, generating up to $ 5 billion in new income annually. Most of that money will go to programs that help people buy electric cars and install charging stations. A smaller portion will go toward wildfire prevention efforts.
The proposed wealth tax drew opposition from billionaire donors and Governor Gavin Newsom, a Democrat, in the run-up to the election.
That’s because the biggest financial contributor to the size of the ballot is ride-sharing company Lyftwhich contributes at least $45 million before the mandate that requires the majority of drivers to use electric vehicles by 2030.
Newsom dismissed the tax as a “cynical scheme” by Lyft to meet the state’s EV mandate — at taxpayers’ expense.
“Prop 30 is being advertised as a climate initiative,” said Newsom in an ad against Prop 30. “But in reality, it was devised by a single corporation to funnel state income tax to their company’s profits. Put simply, Prop 30 is a Trojan Horse that puts corporate welfare in high fiscal welfare of our country.
Supporters of the measure say it could help facilitate clean vehicle transfers that Newsom has pushed so hard in California — the biggest new car market in the country – trying to move away from gas-guzzling vehicles that are one of the main culprits of climate change.
Voters in Los Angeles, however, are likely to pass Measure ULA, a ballot initiative that intends to fund affordable housing and rental protections by applying a levy on property sales of more than $5 million.
The “mansion tax” is expected to generate about $900 million a year for housing subsidies and renter protection.
Critics of the tax have warned that it could ultimately backfire by causing rents to rise as developer fees increase.