The FY 2014 budget included new investments in transportation, education, and elsewhere. Part of the funding came from a “tech tax” that has since been repealed. Looking ahead, there are a variety of other ways to fund future investments in our economy and our communities.
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%.
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.
This Facts At A Glance examines a tax reform option that would make changes to the way the Commonwealth taxes wage and salary income as well as investment income. The Department of Revenue recently examined this reform option and estimated that the proposal’s combined changes would generate between $1.33 billion and $1.41 billion (middle of range = $1.37 billion) in new revenues in its first full year after implementation.
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.
In recent days, the Governor has proposed: 1) increased funding for education; 2) fixes and improvements to our transportation system; 3) a revenue plan to pay for these initiatives. We analyze how they would affect Early Education & Care, K-12, Higher Ed., Transportation, the Sales Tax, and the Income Tax.