Determining who is affected most by the state’s tax system, as well as individual taxes, is important in considering the fairness of tax policy changes. While most taxes in Massachusetts have a fixed rate — for example, the state has a flat 5.3 percent income tax — different income groups are affected differently by each tax. These differences can be explained in terms of regressivity and progressivity–how taxes vary by income level.
The amount of state and local taxes paid in Massachusetts as a share of state personal income remained well below the U.S. average in Fiscal Year 2008, according to the U.S. Census Bureau’s newly updated survey of State and Local Government Finances.
In economic development legislation under consideration in the House, there are proposals for new corporate tax breaks. This Facts At a Glance provides information about the provisions. (Updated July 13, 2010)
National studies have consistently found that the overall level of business taxation is significantly lower in Massachusetts than in most states. One prominent study ranks Massachusetts 43rd for its overall business tax climate in Fiscal Year 2009.