Because Massachusetts taxes capital gains as regular income, the question of the 4% surtax is not so simple. It is quite typical for a farmer or small business person’s retirement to be funded by the sale of their business and/or real estate. If that sale netted them $2 million, a very impressive figure on the face of it, after existing federal and state taxes, they would probably be left with about $1.4 million. That is about the capital value of a former state employee getting a $56,000 pension. A pension that is guaranteed, not subject to the whims of a stock market such as we are in today. So from this farmer we want to take an additional $40,000? Perhaps that should be taken from the state employee’s pension fund as well. It seems odd, in a time when the paper is full of the state doling out grants left and right plus refund checks because they have collected too much in taxes, that we need another tax to penalize success here in the commonwealth. I doubt there will be a flood of millionaires leaving the state but it will be another nail in the coffin of Massachusetts as a place to come to start a business.
David Short
Montague