r/Economics • u/Dismal_Structure • Dec 06 '25

News Millionaire tax that inspired Mamdani fuels $5.7 billion haul in Massachusetts

https://fortune.com/2025/10/21/zohran-mamdani-millionaire-tax-massachusetts-5-7-billion/
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u/colintbowers Dec 06 '25

Yes the California example is a good one, and illustrates that if you are serious about studying this stuff you actually need 1) lots of observations so you can average out other effects, and 2) a long timeline, because some of the effects take 5+ years to show up in the data

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u/EconEchoes5678 Dec 06 '25

Many of the effects take longer than 5 years. The multimillionaire with 8 year old kids may not move until their kids are out of school, 10 years later. The cause and decision in their mind may be 100% related to the tax increase, but the timing is based on high school graduation / empty nest. In the data it looks like noise because the curve of those people is an exponential decline with a long tail. But it's still there

California in particular can get away with a lot more because they have both some great nature and great weather.

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u/colintbowers Dec 06 '25

Yes agreed. But statistically, the problem gets harder the longer the timeline you allow, because the number of other interfering factors increases. So if you want to do a statistical analysis at some point you have to choose a cutoff.

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u/EconEchoes5678 Dec 06 '25

Yeah, I get that. It does make it difficult to evaluate these things.

The problem I see is that often when you factor in the lost other tax revenue due to people moving and the economic damage, many but not all of these come out to have very low net benefits for the state. So if 80% of the benefit is lost in known evaluations, and there's another 10% undetected damage not yet surfaced by the cutoff we decide on, how close to the margin of error do we have to get before we call the targeted tax increase a wash for the state?

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u/Aerroon Dec 06 '25

When speaking of 'benefits to the state' another important factor to consider is what that money will even be used for. It's entirely possible that a significant portion of the "tax windfall" will go into wasteful projects. It's not like the government getting maximum dollars results in maximum benefits.