According to 2011 data recently released by the census bureau, state and local taxes in Massachusetts amount to 10.4% of our total income, which is slightly below the national average of 10.6%.
Law & Public Safety programs help us keep our communities safe and our economy growing. The House budget proposal for FY 2014 would slightly reduce funding for those programs. That includes significant cuts to Indigent Defense and Shannon Grants, but also increases in other areas.
To pay for investments in our people, our communities, and our economic future, Massachusetts relies primarily on tax revenue. And the single largest source of tax revenue in our state is the income tax.
To pay for significant new investments in education and transportation, the Governor has proposed a revenue package that eliminates a number of popular personal income tax exemption. It is possible to raise similar revenue—and increase tax fairness—without eliminating those exemptions.
In his FY 2014 budget, the Governor funds new investments in education and transportation and reduces cuts to other programs using revenues generated through a series of changes to tax rates, income tax deductions, and business taxes.
Ultimately the goal of state economic policy is to raise the living standards of the people of the state. This generally requires jobs that pay good wages and provide decent benefits. The crucial questions of economic policy are about how to create an environment in which businesses that create such jobs can prosper. What levels of education and what skills do such employers need their employees to have? What type of transportation infrastructure do these businesses need for their employees to get to work and for their distribution networks to operate efficiently? What help do these businesses need gaining access to capital? Are there types of technical assistance that can help them to operate more effectively, and how important are special tax breaks that the state might offer? What is the appropriate role of government in each of these areas?
On October 31 the U.S. Census Bureau released its annual update of State and Local Government Finances, providing national data for Fiscal Year 2009. The amount of state and local taxes paid in Massachusetts as a share of total personal income was 9.8 percent in FY 2009. By this measure, Massachusetts had lower taxes than 32 other states. Measuring taxes as a share of total personal income allows for a meaningful comparison among states.
This primer provides an overview of the Commonwealth’s tax system as well as clear information and analysis of how Massachusetts compares to other states and how our state’s tax system has changed over time. Also please see individual fact sheets on the income tax, the sales tax, tax fairness, and on the “Taxachusetts” label.