State senator James Eldridge, an Acton Democrat
Last week, I filed a constitutional amendment to create a graduated, or progressive income tax that would allow us to invest in our communities to ensure a quality public education for every child in Massachusetts, improve our transportation infrastructure, provide police and fire protection to keep our neighborhoods safe, and enhance public and individual health.
Unfortunately, our current tax system is not doing that. Local aid has been cut 40 percent compared to a decade ago, our state has hundreds of roads and bridges in disrepair while our public transportation system ages, many police and fire departments have laid off staff, and hospitals and medical clinics continue to close across the state.
Meanwhile, for 20 years state government has increased taxes on working families while cutting taxes on corporations, banks, and the wealthy. This approach is not working for most families in Massachusetts. Two decades after the progressive income tax was last considered, it’s time to have a full discussion on the proposal.
Currently, our Massachusetts Constitution only allows a flat income tax. This is how a flat tax is unfair to working families: on Jan. 1, an automatic tax cut went into effect, reducing the state income tax from 5.2 percent o 5.15 percent. According to the Massachusetts Budget and Policy Center, this tax cut will result in a tax cut of about $19 for households earning approximately $58,000 a year; those earning around $168,000 will get a tax cut of roughly $66; and someone in the top 1 percent earning about $2.4 million will see a tax savings of approximately $936.
In 2013, the Massachusetts Legislature established the Tax Fairness Commission, a 15-member bipartisan commission, which concluded the following in its report: The overall tax system in Massachusetts is regressive, meaning middle and low-income taxpayers pay a larger share of their income in taxes than high income taxpayers.”
A progressive income tax would change this reality by empowering the public to create a fairer tax system that would reduce the tax burden on most working class and middle class families, while raising sufficient revenue to make the key investments in our communities that are long overdue.
Michael Widmer, a Belmont resident, is president of the Mass Taxpayers Foundation
Massachusetts already has a progressive income tax so my opposition to a constitutional amendment to institute a graduated income tax is not about progressivity. Rather, it is because the proposal would result in a greater tax burden on middle and higher income taxpayers and give the legislature open-ended authority to set rates as high as they wish indefinitely into the future.
According to the state’s Department of Revenue, for taxpayers in the lowest income quintile, 0.61 percent of their total income goes to the state income tax. By comparison, it consumes 3.6 percent of total income for the middle quintile of taxpayers—those with adjusted gross incomes between $25,200 and $47,710. For the top quintile, the state income tax consumes 4.75 percent of total income. Furthermore, the bottom three quintiles of tax filers contribute 12 percent to total state income tax revenues, while the top quintile contribute nearly 70 percent.
Adding to the tax burden of middle and higher income taxpayers, including businesses that pay personal income taxes, would pose one more disincentive to job creation in Massachusetts. These taxpayers, individually and collectively, are the ones who make decisions whether to invest, locate, consolidate, or expand here. And these are the taxpayers whose skills are critical for the future of the state’s economy.
Massachusetts’s high costs for businesses and individuals are one of the factors that has resulted in anemic job growth averaging 0.1 percent per year since 2001. The state has lost middle class manufacturing jobs at almost twice the U.S. rate over the past 35 years.
Furthermore, a constitutional amendment is open-ended and gives the legislature enormous latitude. At any time and without voter input, the legislature would have carte blanche to increase rates and apply them to whatever income levels it chooses. For example, the Minnesota legislature adopted a top rate of 9.85 percent in 2013. This uncertainty and unpredictability would pose yet another barrier to recruiting and retaining talented workers.
Economic inequality is a serious national problem. However, the factors driving this trend are deep-rooted and not solved through tax policy. A graduated income tax would have a limited, if any, impact in addressing this problem.