State ‘Millionaires’ Taxes’ can fund key investments without harming state economies

February 7, 2019 – State income tax increases on high-income residents can raise substantial revenues for investments in people and communities and are more likely to boost long-term productivity than harm short-term economic growth, according to a new report from the Center on Budget and Policy Priorities (CBPP).

Of the eight states that have enacted these “millionaires’ taxes” since 2000, six states grew as fast or faster economically than their neighbors. Most of these states also experienced similar or better growth in jobs and the average individual income.

“Millionaires’ taxes are not harming state economies. Opponents of this policy rely on unproven claims and myths. Higher income tax rates at the top can help states invest in their futures without compromising job creation or economic growth,” said CBPP Senior Policy Analyst and report author Wesley Tharpe.

The Facts About State Millionaires’ Taxes

• States have increased their top income tax rates without harming their economies.
• Over the last 18 years, 15 of the 20 major studies examining states’ income taxes found little to no effect on their economic growth.
• Millionaire tax flight is uncommon and, therefore, does not weaken state economies. Less than three percent of millionaire households moved to new states in a given year.
• High-income tax increases can help North Carolinians afford investments that decrease racial inequities, build economic opportunity, and spur growth, such as high-quality education, improved support for low-income families, and better roads and other infrastructure.

“Tax increases on income over $1 million would allow us to make meaningful investments in our communities that ensure our children are ready to learn and reading by 3rd grade or our workers can upgrade their skills for emerging industries and career mobility. That’s the best pro-growth strategy that we have,” said Alexandra Sirota, Director of the Budget & Tax Center, a project of the NC Justice Center.

FOR MORE INFORMATION CONTACT Mel Umbarger: mel@ncjustice.org; Senior Communications Specialist, NC Budget & Tax Center; or Jacob Kaufman-Waldron: jkaufmanwaldron@cbpp.org; 202-325-8746; Center on Budget and Policy Priorities