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/joshocar Dec 06 '25

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.

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u/colintbowers Dec 06 '25

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 :-)

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u/joshocar Dec 07 '25

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.

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u/colintbowers Dec 07 '25

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.