Massachusetts voters approve tax on the richest

Massachusetts' highest-earning taxpayers will be charged an additional 4% on annual income over $1 million starting next year when the so-called "fair share" amendment to the state constitution goes into effect.

Background: The new funds are likely to be set aside for education and transportation projects, but are subject to appropriation by lawmakers.

• The ballot measure narrowly passed with 52% of the vote, AP reports.

What they're saying: "Our coalition will stick together to ensure that the money from Question 1 reaches our public school classrooms and college campuses, and our roads, bridges and transit systems," Fair Share for Massachusetts campaign manager Jeron Mariani said in a statement.

• Advocates will have to maintain pressure on legislative leaders to not divert the new funds to other spending areas.

Why it matters: A surge in funds for public school could mean better pay for teachers, smaller class sizes and better staffing for schools struggling to overcome pandemic learning loss.

• Legislative Democrats and Governor-elect Maura Healey are already considering a massive overhaul to the MBTA that could include millions more annually to operate the aging system.
• Public colleges and universities have struggled for decades to stay affordable for middle- and lower-income residents. A funding boost could help reduce public college tuition and boost faculty pay.

The other side: Opponents worry the new tax burden will stop companies from locating in Massachusetts, taking higher-paying jobs with them.

• High earners could also choose to move out of Massachusetts instead of paying the higher tax, keeping all of their income from the state coffers.

• "Today is a setback for the Massachusetts economy, a setback for small business owners, a setback for retirees, and a setback for homeowners who will be captured by this amendment," No on 1 spokesperson Dan Cence said in a statement after the AP called the race Wednesday afternoon.

How it works: The new 4% tax will apply only to income over $1 million, meaning an additional $40,000 per $1 million earned.

• If a person earns $999,999, they would pay no additional tax under the new law.
• An income of $1.1 million would be taxed an additional $4,000.
• The higher tax is estimated to directly affect the 0.6% of Mass. households that pay around one-fifth of all income tax.