Massachusetts Rejects Higher Income Tax

July 8, 2013

Back in January, Massachusetts Gov. Deval Patrick (D) proposed a significant change to the state's tax system. He proposed raising the state's one-rate income tax from 5.25 percent to 6.25 percent while doubling the personal exemption and ending other carveouts, cutting the sales tax from 6.25 percent to 4.5 percent, along with higher cigarette and gasoline taxes.

The income tax increased ended up going nowhere, along with the sales tax reduction. (The Massachusetts Budget & Policy Center details what made it into the state budget, approved by the Legislature and now on the Governor's desk.) The $1-per-pack cigarette and 3-cent-per-gallon gasoline tax increases are in there, with the latter especially contentious: the Legislature relies on Massachusetts Turnpike tolls after their scheduled 2017 expiration, while the Governor wants a higher gas tax.

The budget also extends the sales tax to purchases of custom software, raises sales tax revenue through an agreement with, and pockets some revenue by delaying yet again the implement of FAS 109 tax deduction for corporations.

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