Tax-the-rich measures pass in Massachusetts, fail in California

Voters in Massachusetts approved a measure to raise taxes on millionaires after a hard-fought battle that pitted unions against wealthy opponents, while Californians rejected a proposition that targeted the state's highest earners to pay for climate initiatives. 

The Fair Share Amendment in Massachusetts, known colloquially as the millionaires' tax, would amend the state constitution to allow for a 4% surtax on annual income over $1 million, lifting the rate from the current flat 5%. About 52% of voters approved the measure, according to the Associated Press. 

The resulting revenue, estimated roughly at $2 billion, is set to be earmarked for education, roads and bridges, and public transport. Advocates emphasized that the tax addresses inequality by tapping the top 1%; opponents evoked the state's old label of "Taxachusetts" and said the levies could hurt middle-class owners of homes and businesses who net a million dollars on one-time sales.

Benjamin Fanjoy/Bloomberg

Proponents, dominated by teachers' unions, raised more than $28 million for the measure, roughly double what opponents raised. The opposition included New England Patriots owner Robert Kraft and Jim Davis, chairman of Boston-based New Balance Athletics Inc., according to campaign-finance reports. Leading Democratic politicians including Maura Healey, the newly elected governor, supported the measure.

The result was a divergence from California, where opposition from Democratic Governor Gavin Newsom helped defeat Proposition 30. The measure, backed by rideshare company Lyft Inc., called for a 1.75% tax on income above $2 million to fund electric vehicles, build charging stations and hire firefighters for wildfires. 

The proposition proved divisive among California's business leaders and split Democrats in the liberal state, home to one of the highest tax burdens in the U.S. Newsom, who won re-election to a second term on Tuesday night, called the measure a corporate carve-out benefiting Lyft, which is facing a state mandate that 90% of rideshare vehicles be electric by 2030.

Lyft called the results "an unfortunate setback" for the climate movement.

"Millions were spent by the opposition to confuse and misguide voters, however we are undaunted," the company said in a statement. "We are proud to be a part of such a diverse and powerful coalition that includes some of the state's most prominent environmental, public health, social justice, business and labor organizations, and we remain committed to achieving our collective climate goals."

California's nonpartisan Legislative Analyst's Office estimated that the new tax would have raised $3.5 billion to $5 billion annually, but would have been subject to volatility given that the high-income residents' fortunes fluctuate with the stock market and economy. About 35,000 California taxpayers would have faced the higher rate, according to an argument for the measure.

— With assistance from Jackie Davalos