Voters and gubernatorial candidates are debating Question 3 in Massachusetts, a measure on the November 2 ballot that would lower the state’s sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. from 6.25% to 3%, starting January 1, 2011. The current 6.25% sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rate puts Massachusetts as the 30th highest state-local sales tax rate in the country; at 3%, they would be 46th highest. The sales tax rose from 5% to 6.25% on August 1, 2009.
State House News Service found in an August 29-31 poll that 54% of respondents support the tax rollback, 44% oppose, and 2% were undecided.
Question 3 dominated the recent gubernatorial debate. Gov. Deval Patrick (D), running for re-election, says he opposes Question 3 but will honor it if it passes. Charlie Baker (R) is instead pushing his “5-5-5” plan to reduce the sales tax back to 5%, reduce the income tax from 5.3% to 5%, and reduce the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. from 8.75% to 5%. State Treasurer Tim Cahill (I) echoed Patrick’s concern but Baker’s plan, and Jill Stein (Green-Rainbow) suggested an income tax on high earners coupled with a sales tax reduction.
Among the candidates for state treasurer, the Republican nominee supports Question 3 as a way of sending a message to reduce the sales tax to about 5%, while the Democratic nominee says the loss of $2.4 billion in revenue would be reckless.
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