Last week, Governor Patrick proposed increasing the income tax and eliminating over $1.25 billion worth of deductions to “support our schools and our highways and byways, and do it for every corner of our Commonwealth.” But his proposal isn’t just a net increase in taxes. It also involves significant redistribution. The income-tax hike would be coupled with two changes that shift the tax burden away from lower-income families: a 1.75-cent reduction in the sales tax and a doubling of the personal exemption.
Patrick’s two-pronged proposal deserves a two-pronged analysis: First, should the government spend more? Second, should the Massachusetts tax code become more progressive? On the latter point, playing Robin Hood at the local level could be dangerous, because businesses and prosperous residents can relocate so easily.