Massachusetts is not, in fact, “Taxachusetts.” Rather, the Bay State is right in the middle, neither high nor low, imposing less of a burden on its citizens than certain other states filled with anti-tax braggadocio (ahem, that would be you, New Hampshire). But “Taxachusetts” is also less about reality than it is a state of mind. We may not tax heavily now, but we used to — and if certain folks had their druthers, we would once again.
The financial website WalletHub just released its ranking of the best and worst states to be a taxpayer. On top was Wyoming (with average annual taxes of $2,365) while Massachusetts ($6,884) came in at 21. Some states with greater tax burdens defy stereotypes. South Carolina, for example, was 23rd, Georgia 26th, and the aforementioned Granite State was 28th ($7,419). That seems a puzzle. With no sales or income taxes, how can New Hampshire be worse off than Massachusetts?
Because politicians are crafty people. New Hampshire crows about the taxes it doesn’t have even as it finds other ways to reach into pocketbooks; its property taxes, for example, are among the highest in the nation.
In fact, the myth of Taxachusetts has been widely reported. The Massachusetts Budget and Policy Center observes the Bay State takes 10.4 percent of its citizens’ incomes as taxes, less than the US average of 10.6 percent. The nonpartisan StateMaster looked at taxes as a percent of GDP and ranked Massachusetts right in the middle, at 25. The Tax Foundation notes that, when it comes to taxes, Massachusetts is a “beacon of moderation.”
The Tax Foundation’s comment was made in 2007, by the way. So why does everyone still think of us as Taxachusetts? Perhaps it’s just that we all like clever wordplay (Connecticut has higher taxes than Massachusetts, but “Connectitax” just doesn’t have the same ring). Perhaps, as your mother likely once told you, a bad reputation is hard to shake. Or perhaps, like a trained tiger, the impulse to bite is never far from the surface.
We used to bite hard. Thirty-plus years ago, Bay State taxes really were among the highest in the nation. So what changed? Many deserve credit, but at the top of any list would be Barbara Anderson, founder of Citizens for Limited Taxation. She created CLT in 1974 to battle against a graduated income tax and then won a major set of victories in the 1980s that sharply limited property taxes. Anderson was irascible then, and she remains that way today, earning a good share of liberal wrath. Yet she helped usher in an era of significantly more responsible spending and — not coincidentally — a strong and sustained economic boom. A 16-year parade of Republican governors and substantially more tax-averse legislators (especially in the House) helped keep things in check.
But the tiger is getting restless. Last summer, Governor Deval Patrick led the charge for a major tax boost. One that passed — a tax on computer-based services — would have cost the state’s high-tech firms perhaps $500 million annually. After a threatened referendum and a raft of bad press, a chastened Legislature eventually repealed the measure. Earlier this month the Tax Fairness Commission, set up by the Legislature, released a set of recommendations to make the tax code “fairer.” I have much sympathy with the commission’s argument that lower-income families pay too much, but many of its proposals are worrisome. One, in fact, harkens back to CLT’s founding: It wishes to amend the state constitution to allow income taxes to be graduated.
This report, last year’s services tax, and a stream of other tax-hike ideas suggest we’ve become a little complacent about taxation. Granted, there are always good projects out there that deserve spending. Who wouldn’t like better roads, increased social services, and the like? The demands for more are insistent, and they are pushed by those with a strong interest in getting them through. The interests of taxpayers are more diffuse (remember Patrick justifying a gas tax increase by saying it was merely “the equivalent of one large cup of coffee a week?”) and the benefits of stable taxation harder to see. Like a movie monster that just won’t die, Taxachusetts could rise again.