syst3x t1_ivpvvid wrote
Reply to comment by noob_tube03 in In divided U.S., Massachusetts turns deeper blue; Turnout in Cambridge, Somerville is under 50% by blackdynomitesnewbag
Research out of Tufts showed that this would affect ~0.6% of MA taxpayers. Please explain how that translates to "upper middle class".
noob_tube03 t1_ivpwzqe wrote
from the Tufts study. I don't blame the general public for eating the "tax the rich" narrative, but even the Tuft study points out that anyone who is likely to be consistently impacted by this will just leave the state. Even Tufts seems to agree the outcome of this might not be what proponents are advertising
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https://cspa.tufts.edu/sites/g/files/lrezom361/files/2022-01/cSPA_Evaluating_MA_Millionaires_Tax.pdf
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A very small number of taxpayers take home more than $1 million on a consistent basis. Indeed, just 6 percent of Americans who exceeded the threshold between 1999 and 2007 did so in every one of those years; only 20 percent did so more than half the time.
By contrast, half of all million-dollar earners between 1999 and 2007 were one-timers. This matches what we know about life-cycle earnings. It’s much more common for families to experience a one-time million-dollar windfall than to make $1 million year after year: think of dentists who sell their practices, business-owners bought out by their partners, or individuals selling a valuable investment they’ve held for decades.
pajamaset t1_ivsrrto wrote
So you have explained that it won’t hit most of the people that it hits repeatedly but you have not explained how it will hit the upper middle class, which is what he asked, and something I would love to see answered.
noob_tube03 t1_ivtx6vl wrote
the description from tufts covers that no? Even just using real estate as an example, who do you think is buying sub million dollar real estate and then having it turn into a profit decades later? I feel like I'd describe someone who can afford 500-800k property as upper middle class no? Just look at the other post about Darwin's owners closing the business. Are they wealthy or just upper middle class?
pajamaset t1_ivuknbd wrote
The upper middle class are not in the .6% of the Massachusetts population making a million dollars a year, even if they are selling big fancy houses. Selling a million dollar house does not mean a million dollars of income, for tax purposes.
noob_tube03 t1_ivuqw3i wrote
I mean, you're clearly biased so nothing I say will change you mind, but for an example
House prices since the last recession have gone up over 60%. It wouldn't even take someone living a lifetime to have appreciation of over a million dollars if you bought after the dot com bubble.
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Similarly, as its been repeatedly pointed out, middle class people can have all types of windfall events. https://www.bizjournals.com/boston/news/2022/07/13/ipo-market-boston-downturn.html#:~:text=The%20Bay%20State%20closed%202021,2018%20and%2021%20in%202017.
Over 20 Boston area companys per year IPO. Anyone working those could be making even just 5 figures, and still see a sudden pile of cash from an IPO event. As the study points out, most people who breach 1 million a year in income are doing it just once. It's not CEOs making 800k a year suddenly getting a nice bonus (I mean, it is going to be that too), but it's mostly people having some once in a lifetime scenario that helps move them out of the rat race.
pajamaset t1_ivuz700 wrote
I’m not biased I just know super wealthy people, people working in startups, people living in and selling extremely expensive homes. We are upper middle class and I promise you this tax does only good for us, no harm at all.
Over the summer our friends sold their house for $1.3 million more than they purchased it. Their capital gains were nowhere near a million dollars because of their capital improvements.
I know you think I’m biased but you seem emotional. You feel like some day this tax could cost $.04 for every dollar over a million that you make in a year, but you’re not being logical at all. The likelihood that you ever make $1,000,001 in a single year is very low.
Theoretically, let’s say you have an income of $150k and you sell your house for $1,000,000 more than you spent on it with no qualifying capital improvements. That means you’ll pay an extra $6k in taxes. Given that you just sold your house and made seven figures, I think you can afford the $6k and also likely won’t feel it much.
But, let’s also look at absolute numbers for home prices since the recession. If you spent $500k in 2008 on a house, and it has appreciated 60%, that means the house is now worth $800k, for a gain of $300k. That means in order to feel this tax for even $.04, you would need an annual income of $700,001.
In the event of a windfall that sets your annual income — even for a year — at a million dollars, I’d argue that you’re no longer middle class.
I just think you are proving the whole temporarily embarrassed millionaire thing and it’s not a great look.
noob_tube03 t1_ivvcq60 wrote
>I’m not biased I just know super wealthy people, people working in startups, people living in and selling extremely expensive homes. We are upper middle class and I promise you this tax does only good for us, no harm at all.
It feels strawman, you're the second person to reply saying "I think this tax is great and I look forward to paying it". Massachusetts already has an optional higher tax rate (and surprise, no one pays it). To your point though, no one making a million dollars, even in a windfall event, is really going to think the extra 6000 in taxes is life changing, especially since at that point they likely will have paid hundreds of thousands in federal and other state taxes. It does feel like a gross money grab, and that's why I'm much more a fan of increasing the cooperate taxes instead. Why does the mob think it's okay to scream "eat the rich" because some one got a windfall? There are plenty of places that money can come from.
I know someone who had a windfall like that. They had to pay over a million dollars in taxes that year. It feels dishonest to say "They didn't pay enough. We need even more of that money". I think putting in a carve out for the windfalls would have also helped target the truly wealthy while letting the middle class continue to build wealth
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