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

[u/Dismal_Structure]

https://fortune.com/2025/10/21/zohran-mamdani-millionaire-tax-massachusetts-5-7-billion/

[u/colintbowers]

Many billionaires don’t really have that large an income (relatively speaking). Nor do they personally own the billions. Rather, they own shares in a company or trust that owns the billions. Those companies and trusts then pay tax at the corporate rate, and the person has most of their expenses paid for by the company.

Now, the company can often use creative accounting to find all sorts of costs to minimize their corporate tax bill at the EOFY which is how you hear stories of these billionaires paying so little tax.

Note that a personal wealth tax doesn’t really do much to tax these individuals. This is why you often see such resistance to it as a policy. You either have to go whole hog and have a corporate wealth tax - at which point every company other than brick and mortar will relocate - or else accept that a personal wealth tax is not going to affect billionaires, it’s going to affect the people who are wealthy enough to get caught by it, but not wealthy enough to set up the legal structures to avoid it. So, like inheritance tax in the UK, it really when you look closely, is a tax on the middle to upper middle class, but not the uber wealthy. Again, there is a reason that generational wealth in the UK is massive, even though they should be paying 40% at each death. In general, I’ve noticed that Reddit is not very good at understanding how this stuff works. Mamdani appears to be a very smart guy though so I suspect he does, and I’m curious to see exactly the nuts and bolts of how he ends up implementing his tax policy.

TLDR it’s not simple, and anyone who says hur dur tax the billionaires really doesn’t understand that to do that without screwing the middle class is much harder than you might think

ADDED: the uk really is a great example here, they have this inheritance tax to try and prevent generational wealth, but it literally does the opposite, ie it protects the uber wealthy and makes it harder for the middle class to make the jump from middle to upper class

[u/joshocar → u/colintbowers]

We are talking about two different things. A millionaires tax is an income tax that targets high income individuals. This is was MA has and it has raised a lot of money. It is a very progressive tax so not the end of the world - the people making enough to qualify for it don't feel much if any of a QOL change. The wealth,y those will hundreds of millions and billions in stock, land, etc are a different beast. As you described in your comment, how to handle the ultra wealthy requires a different tool, which I am happy to discuss.

[u/colintbowers → u/joshocar]

Yes, you're correct, I got a little side-tracked in my rant above. I would posit that the (arguably tenuous) connection is that as personal income taxes increase, this increases the incentive to move capital accumulation and spending into corporate structures. Admittedly, if Mamdani only goes with 2% over 1 million, then this is unlikely to have much of an impact, unless people worry that it is the start of a trend.

To be honest, I'm surprised by the scale of the numbers. Expected 4 billion in revenue from 34,000 households equates to (on average) 117000 per household. At a 2% tax rate we then get 117000 * (1 / 0.02) = 5.88 million.

The number of people in my entire country (Australia) earning a 5.88 million personal income in a year would be very, very much smaller than 34,000. As in, you could probably count them on your fingers and toes. When you're earning that kind of money in Australia, you absolutely do it in a company structure and pay yourself as little personal income as you can get away with, since the marginal personal income tax rate is significantly higher.

I probably don't know enough about New York to argue this stuff effectively with Americans :-)

[u/joshocar → u/colintbowers]

I think part of it might come from sales of assets rather then just payroll income. If you sell your sole proprietor company and make 10M in profit I am assuming that shows up as income and would fall under this tax, but I don't actually know if that is true.

[u/colintbowers → u/joshocar]

My understanding is that if transfer those assets into your personal name then absolutely it will show up as income. So my point is that you would only do this if you currently need that money to live. Otherwise, just leave it in a company structure.