Even considering how higher-income households have more money to give away, the tax benefits of charitable tax deductions are heavily skewed toward the top.
How to collect enough revenue to pay for the things we accomplish together as a Commonwealth and how to collect that revenue fairly are questions that every community and every state need to examine. This paper describes 14 ways the Commonwealth could generate substantial new revenue in a manner that makes our tax system more progressive and would not require changing the state constitution.
Taxes are the main way communities pay for the things we do together. Taxes pay for essential programs and infrastructure we take for granted, like fire protection, public education, and health inspectors; roads, bridges, and public transit; and the support for people facing hard times. Examining how much people at different income levels pay in taxes is important when considering the fairness of tax policy.
The opportunity to live a healthy life begins long before a person shows up at the doctor’s office or hospital; health begins where people live, learn, work, and play. There is growing recognition that greater attention to the social determinants of health – things like having stable housing, safe, walkable neighborhoods with accessible transportation, grocery stores with affordable, nutritious options, schools that are equipped to provide high-quality education, and incomes that enable families to make ends meet – is critical to making meaningful improvements to health. This paper briefly examines the health impact of one program that provides economic support for low-income working families: the Earned Income Tax Credit (EITC).
Massachusetts can have an economy that generates broad prosperity and home-grown millionaires with world-class education and infrastructure. Several other states have top income-tax rates as high, or substantially higher, than what is proposed in Massachusetts. Those states do not have fewer millionaires, and have not seen less growth in their share of millionaires over time.
The new federal tax law reduces federal revenues by approximately $1.5 trillion largely by cutting taxes for corporations, people receiving inheritance from very large estates, and high-income owners of pass-through entities such as partnerships. The law provides reduced tax rates and relatively smaller tax reductions to most wage and salary earners while disproportionately benefiting those with high incomes. This paper examines the distribution of tax cuts, the impact of how they may be paid for, how the law interacts with Massachusetts policies, and what the Commonwealth could do to take its own direction different from the federal government.
The federal government has enacted very large tax cuts targeted mostly at higher-income taxpayers. The resulting loss of an almost $1.5 trillion in federal revenue is likely to lead to cuts in federal support for programs that are important to people in Massachusetts and to the state budget. Amid these deep tax cuts, a new federal limit on the deductibility of state and local taxes (SALT) has received a lot of attention. Households that itemize deductions and pay over $10,000 in combined state and local taxes will no longer be able to deduct more than this amount when calculating their taxable income for federal taxes.
Almost 20 years ago, a penny of the sales tax was dedicated to the MBTA to be a steadily growing source of revenue for the transit system. But despite some help from the Legislature, the sales tax transfer has grown slower than the economy, creating a persistent gap between the projected funds and actual sales tax transfers. Sales taxes have underperformed for the MBTA as a result of a shift to services, some transactions moving online, and exclusion of fast-growing meals tax revenues from the MBTA. An appendix explains the formula for determining the MBTA sales tax transfer and how other sales taxes are allocated.