In his Jan. 24 Op-ed column “Invest, but don’t play Robin Hood,” Edward Glaeser criticizes Governor Patrick’s tax proposal as an inappropriate effort to use the state tax system for redistributive purposes. Reasonable people can debate whether state taxes are an appropriate means of pursuing redistribution of wealth. But labeling Patrick’s proposal as redistribution flies in the face of the facts.
At present, the Massachusetts tax system is regressive. Poorer households pay a higher share of their income in taxes than wealthier households. The governor’s proposal would reduce this regressivity, but it wouldn’t eliminate it. Poorer households will still be taxed more heavily than richer ones.
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Massachusetts state taxes are not regressive (though some fees may be). First off, the lowest income earners are exempt, while, of course those who earn no income pay no income tax either. Secondly, captial gains (interest, dividends..) are taxed at 12%, over twice the earned income rate. And, of course, higher-income individuals earn more capital gains - both in total and as a proportion of their income.
With regard to sales taxes, which generally are regressive holding taxable purchases constant between income groups, in fact, higher-income persons buy more and buy more big ticket items. But the big thing that reduces sales tax regressivity in Mass is that food and clothing (under $175 per item) are exempt from the sales tax. And lower-income persons spend a greater proportion of their money on food and lower-priced clothing.
One thing that does make our taxes regressive is our high cigarette tax. Yet Patrick wants to raise that further and to also tax candy and soda, all of which would be quite regressive.
At the local level, the primary tax is the property tax which could be regressive or proportional, depending on several factors. Yet with respect to low-income households, if they manage to get government subsidized housing, they pay no property tax. Where I live in Boston, my property taxes are quite high, as are my neighbors who reside in private dwellings. Yet all the projects, big and small around here, all the Section 8 single-family homes and apartments in brownstones, all off the tax rolls.
Your letter shows that you have NO CLUE as to why Patrick wants to raise the taxes. It's NOT to improve Transporation, and it's NOt to improve education. It's to pay for the COST OVERRUNS of the MA Health care law. Just check what Patrick wrote in this years budget.