Massachusetts Stands to Lose Billions Under Proposed State Income Tax Cut
State officials announced on Tuesday, Dec. 16, that a ballot proposal to cut Massachusetts’ income tax rate from 5% to 4% could hit the state with a nearly $5 billion…
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State officials announced on Tuesday, Dec. 16, that a ballot proposal to cut Massachusetts' income tax rate from 5% to 4% could hit the state with a nearly $5 billion loss in annual tax revenue.
The Boston Globe reported that state officials informed lawmakers during a revenue hearing that, if fully implemented, the proposal could eliminate between $4.2 billion and $4.8 billion from the state's revenue annually, gradually reducing the state's income tax rate by 2029.
Business groups reported that thousands of signatures have been obtained to move the proposal toward the ballot for voting next November. State elections officials, however, have not officially certified its appearance on the ballot.
If voters approve the measure, the revenue hit during that fiscal year alone could range from $800 million to $1 billion, according to Evan Horowitz, director of the Center for State Policy Analysis at Tufts University.
“It's an irresponsible step to be taking at this point in time, in the midst of all this other craziness that we're dealing with, whether it's from Washington or otherwise,” said state Rep. Aaron Michlewitz, the House's budget chief. “I don't think a 5% income tax [rate] versus a 4% ... is going to put us in any different standing in comparison to other states and is only going to have major impacts on the resources that we can provide to our constituents,” Michlewitz added.
Despite objections from lawmakers and state officials, a recent Suffolk University/Boston Globe poll found that approximately 67% of voters surveyed would approve cutting the tax rate to 4%.
Business groups and the Mass Opportunity Alliance, which has invested about $1.6 million to gather signatures for a possible record-setting slate of ballot measures, are leading support for the measure.
Michlewitz explained on Tuesday that he's “open” to discussing ideas with business leaders to improve the state's economy, but he cautioned that reducing the income tax rate was not the approach to take.
