Advocates for changing Massachusetts’ personal income tax may have new fuel for their campaign, as a new national study suggests that a more progressive income tax that requires wealthier individuals to pay higher tax rates could help states deal with revenue problems.
Standard & Poor’s, in a study released Monday, found that the improving fortunes of the nation’s top earners correspond with a decadeslong slowdown in tax revenue growth among states. The rating agency says states that adopt more progressive, or graduated, income tax rates could be more insulated from the problem, though it stops short of endorsing such policy changes.
‘‘In the setting of rising income inequality, the move toward more progressive tax rates may help states generate faster tax revenue growth than would flatter tax regimes,’’ the report concludes.
State Representative Jay Kaufman, a Lexington Democrat who chairs the Legislature’s Revenue Committee, said he’s not surprised. He hopes the report helps bolster efforts to address tax issues in Massachusetts.
‘‘It’s a conversation whose time has come,’’ he said. ‘‘The problems that we’ve got, both with wealth inequality and our regressive tax system, are worth addressing. Our failure to address them would continue the unfairness of the system and the challenges that we have with revenue.’’
The Tax Fairness Commission, which Kaufman cochaired earlier this year, found that Massachusetts’ overall tax system, including state income and sales taxes and local property taxes, places a greater burden on middle- and low-income taxpayers than on those with higher incomes.
Among that bipartisan commission’s recommendations: Discard Massachusetts’ flat income tax rate in favor of graduated rates.
Of the 43 states that have a personal income tax, Massachusetts is one of just seven that uses a flat rate, currently 5.2 percent. Changing the tax’s structure would require voter approval of a constitutional amendment.
Michael J. Widmer, a member of the Tax Fairness Commission who opposed the recommendation, said such an overhaul would compound income inequality by discouraging business investment.
Widmer, who is president of the Massachusetts Taxpayers Foundation, a business-backed group, suggested more modest changes, such as raising the value of certain tax exemptions for individuals and married couples. ‘‘That goes directly to the spending power of that person on the lower end that’s living in a high cost state and trying to make ends meet,’’ Widmer said.
But Noah Berger, president of the Massachusetts Budget and Policy Center, a left-leaning research group, said the state has enacted changes over the past 15 years that have primarily benefited the wealthy, including reductions in the overall income tax rate and the tax rate on investment income.
The result, he said, is the lowest-income households — less than $21,000 a year — pay 9.5 percent of income toward state and local taxes while those in the top 1 percent — about $700,000 or more — pay just 6 percent.