Board member Mohammed Missouri was featured in the Boston Globe‘s “The Argument” section, making the YES case for the question “Should Massachusetts tax unearned income at a higher rate than earned income?” Read it on the Globe website or below.
Do you want to live in a society where no one is hungry and everyone has a warm, safe home? Is it a priority for you that we collectively help those who are going into deep poverty because of COVID-19?
For me, the answer to these questions is a resounding “yes,” and that’s why I support raising taxes on wealthy households during this profound economic crisis. Why focus on unearned income, though, and not raising taxes on high salaries? Well, to raise taxes on earned income above $1 million — the so-called millionaires’ tax — would require a constitutional amendment, which could take years. We can’t wait. The pandemic is throwing Massachusetts residents into crushing poverty right now while 20 Massachusetts-based billionaires saw their collective wealth rise $17.2 billion from March through October.
Beacon Hill could raise taxes tomorrow on unearned income — dividends, interest, and capital gains — the profit people make from selling stocks, real estate, and other assets. The House defeated a plan to do that last fall, but we should continue the effort.
Currently, unearned income except short-term capital gains is taxed at 5 percent, the same as earned income. According to the Massachusetts Budget and Policy Center, each additional percentage tax increase to long-term capital gains would raise approximately $365 million annually in state revenue “during periods of strong economic and/or stock market performance.” Each 1 percentage point tax increase on income from dividends and interests would generate about $100 million yearly during similar conditions.
We were already a society of haves and have-nots before COVID-19, and this ugly reality has only gotten worse with more than a million Massachusetts residents going hungry. Increasing taxes on unearned income would help correct some of our society’s wealth imbalance because more than half the investment in corporate stocks and mutual funds in the US is held by the wealthiest 1 percent, whereas the bottom 90 percent of the population holds less than 12 percent. An added tax on unearned income — particularly if combined with a future increase on annual incomes over $1 million — would help us reduce this inequality and begin to end homelessness and food insecurity in Massachusetts.
