New article: Gov. Patrick’s tax proposal would mean the same or lower rates for most taxpayers

Here is some analysis I did on Governor Patrick’s tax proposal from his State of the Commonwealth address. His proposal will move us from regressive to progressive in overall tax structure and most taxpayers will pay the same or lower rates.

Gov. Patrick’s tax proposal would mean the same or lower rates for most taxpayers


On Wednesday, January 16 Massachusetts Governor Deval Patrick gave his seventh State of Commonwealth speech. In his speech he called for increased investment in Massachusetts education, infrastructure, and transportation—a welcome message given the increasing pressures on public schools and deteriorating roads, bridges, and a struggling transportation system. In order to pay for these additional investments, Governor Patrick proposed tax system changes that would raise the state income tax from 5.25% to 6.25%, increase the personal income tax exemption to minimize the effect on lower income taxpayers, and lower the state sales tax from 6.25% to 4.5%.

Why did Governor Patrick propose lowering one tax and raising another tax to raise additional revenue, and how would these tax changes affect taxpayers at various income levels?

Read more…

Brent Benson (@bwbensonjr)


29 Comments . Leave a comment below.
  1. I can't support this.

    I love the fact that lower income people will get a tax cut, but middle income people (up to $100,000/yr or so) are in no position to deal with a tax hike, especially after getting the payroll tax increase this year. It makes no sense to increase taxes on people who are underwater in their mortgages, who barely meet their household budgets, people who are in deep with student debt, and people who are cutting back in their spending in order to survive. There has to be a better way.

    • Truth, fact, emotion, and pragmatism

      If the information in the thread-starter is true (and I haven’t confirmed it), then I suggest you rethink your opposition.

      First, your assertion that $100,000/year is “middle income” is, sadly, simply not true. The fact is evident in the “Average tax by income range” table — an income of $102,886 puts the recipient in the upper 20% of Massachusetts taxpayers. Unless you also assert that $21,570 (the income that marks the beginning of the 20% quintile) is also “middle class” (which I will vigorously dispute), then I think you’re asserting emotion rather than fact.

      The fact is that “middle income” in Massachusetts today is much closer to the $37,523-60,414 range. Maybe it spreads to $30-70K — but there is no interpretation of “middle income” that extends to $100,000.

      The actual increase for that middle quintile is actually $63.79-102.70 per year. I’m sorry, but anybody with a mortgage who can’t absorb that increase can afford their property anyway — taxes are the least of their problems. At even a modest appreciation in housing value, the increase in value of the property alone returns far more than that (a 1% increase in the value of $150,000 property returns $1,500!).

      Even the fourth quintile ($60,414-102,886) sees an increase of $302.07-514.43 per year. If an increase of $500 per year is even a noticeable burden for somebody earning $100K/year, then again — taxes are the least of their problems.

      The benefits to EVERY resident — especially the 80% who make less than $100,000 per year — greatly outweigh these very modest tax increases.

      If there is a better way, then by all means propose it — both here and to your state legislators. This proposal is the best I’ve seen in years, and I suggest that opposition to it is rooted in emotion and dogma rather than the pragmatic realism that results in healthy and effective governance.

      Opposition from the far-right starve-the-beast crowd (such as Barbara Anderson) is to be expected. I suggest that we progressives be careful to avoid making “perfect” be the enemy of “much much better”.

      • You are so incredibly out of touch

        $500/yr is a lot of money for a family that is currently running under budget every month, and truth be told, they can’t afford those houses anymore. You know, the ones they bought before oil prices sky-rocketed, the ones they bought during the peak housing boom when houses were way over valued, the ones they hold on to because they cannot sell for the same price. Nothing like taking a little more out of their household budget by force to garner that warm and fuzzy feeling toward government. Hey, I’m trying to help you here. It’s the real story of taxes in America. I hate to break the news to you, but $37,000 to $60,000 /yr may be the median income, unfortunately it’s also low income with today’s cost of living.

        • All over the map

          The family with the $500/year increase is the family bringing in $100K per year. If they can’t afford their house, then destroying the state’s economy isn’t going to help them. Some those families with college-age children (like mine) are able to provide a great college education at public schools like UMass-Boston with no student debt — those opportunities are greatly enlarged by the proposed increase, and the students will arrive with significantly improved secondary-school educations.

          You jump from $500/year (which is the tax increase to those families at $100K/year) to the $37-60K bracket. That may be “low income” in comparison to some remembered past, but it is squarely in the middle of today’s income distribution — and the $63-100 tax increase benefits them — directly — (better roads, better schools, better transit) far more than the $100 added cost.

          I repeat: this is the best alternative that’s been presented for years. If you have a better one, please share it. Continuing the downward spiral we’re on is disastrous for everyone, including all those families we’ve been talking about.

          • What trick did you use to qualify for free college education

            with our income at around $75,000/yr, we qualified for zero pell grants or state aid. It was all student loans, about half subsidized, the other half not. My daughter, now on her own and still in school expanding her education and working full time, still does not qualify for a pell grant or state aid, and as a single woman, she earns much less than what we as family earn. I would like to know your trick for getting free college tuition. Maybe I can use it for my next child heading that way. Sorry about jumping around with the numbers, but we’ve had this conversation before and I’m just not feeling like having it again. It doesn’t matter if it’s $100 or $500 in additional taxes, or if it’s $37,000 or $100,000 in income. As far as I’m concerned, those brackets are struggling and should be off limits for tax increases.

            • Please READ ... R-E-A-D ... before bashing!

              I didn’t say anything about “free”.

              First, tuition is only a small part of the cost of attending UMass. My child gets free tuition because of the “Abigail Adams Scholarship“. Next, we chose UMass-Boston because we are able to afford it’s $14,000/year cost without taking on student debt. Between the income my child earns from part-time work and our contribution as his parents, he avoids ANY student debt. It is most certainly NOT free.

              The tax increases we’re talking about will make programs like UMass-Boston more affordable for more students. Any family earning $100,000 per year in Massachusetts has far more ability to help their children get through college than any family earning $20,000.

              When you write “It doesn’t matter if it’s $100 or $500 in additional taxes, or if it’s $37,000 or $100,000 in income … should be off limits for tax increases”, you effectively end any constructive conversation — you create an impossible standard, and the result of that impossible standard is that we spin faster and faster into the death-spiral that we are already in.

              Life is hard enough for all of us — please don’t make it harder.

        • I think you are out of touch

          State money for education (and other local services too) removes a lot of pressure from the property tax. Most of us would like to go a few years with no need to consider prop 2-1/2 overrides, or further cuts to local services.

          I also have to say your pitch about breaking “news” to the rest of us is condescending and off-putting. And of course that there is no free lunch.

          • I was breaking news to sommervilletom

            Sorry about the dissension for new taxes on the struggling masses trying to avoid their own fiscal cliff. I’m sick of prop 2 1/2′s also. Got one in the tax bill this year. There is just no end in sight. So many tax increases on people who earn less than $250,000 a year. So not what the Democrats won the election on. Shame, shame.

          • No free lunch

            you got that right. Pay out of pocket for every single thing.

    • Did you know it's an extra $644/year for someone

      who commutes from Framingham to Newton and has to pay Mass Pike tolls? That’ll rise 5% under Patrick’s plan, to $676/year next year. The median household income in Framingham is about $67K/year.

      So the average Framingham resident who’s a highway commuter is being taxed an extra 1% of their income — for the general good of the entire metro Boston area and especially the city of Boston — compared to commuters who drive on any other highway in the commonwealth.

      Details: It’s $1.40 each way between exit 12 in Framingham and exit 17 in Newton Corner — not driving into Boston, let alone actually using the Central Artery, yet those tolls are paying for the Central Artery project. $14/week. $644/year assuming 46 weeks of commuting.

      That sure is a lot of extra money to ask only residents of the western suburbs to pay, for a specific project that isn’t located in the western suburbs.

      • Sounds like a sprawl tax to me

        and not a bad idea.

        Visualize high tolls and $12/gallon gas. Things change pretty radically, don’t they? Mr. or Ms. suburban commuter, and his or her employer, makes a lot of changes in response to new price signals.

        • So sprawl only happens west of Boston? Not north or south?

          I favor raising the gasoline tax, although certainly not so gas costs $12/gallon. I do not favor levying an extra 1% tax on one class of commuters in only one geographic region of the state. It’s hardly a sprawl tax if someone with a 15-mile commute from the west pays but someone with a 40-mile commute from the south doesn’t, is it?

          Either put the same value toll on every highway into Boston, or remove the tolls on the Mass Pike. Period.

          You either tax everyone fairly for the common good, or you create some sort of user fee. You don’t make one segment of the population pay for a specific project they aren’t necessarily even using, while most people who are actually using the project (commuters from the south driving the Artery) aren’t required to pay a fee.

          And by the way, for that Framingham to Newton commuter with a fuel-efficient car, the Pike toll is the equivalent of turning $3.40/gallon gas into $6.20/gallon.

          • Oh, the equity argument

            I agree that all interstate users should pay equally, I just didn’t see from your comments that was your point.

            It sounded as though you were saying that you derive zero benefit from the Big Dig (which is absurd, don’t you agree?) and must not be forced to contribute to anything that does not directly benefit you personally.

            $12/gallon was not, btw, a proposal for gas taxes. The free market is pushing us there with its own little invisible hands, and we’d all be wise to take that into account.

            • Fairness argument

              I’m actually not a Pike commuter anymore, haven’t been for some time now, but I still find the existence of those tolls here and only here to be extraordinarily unfair.

              I was mildly irritated when the tolls were being used solely for Pike maintenance — no one else was being charged a user fee for their highways on top of usual gas and other taxes. But I’m incensed that only users of the Pike are charged a fee to fund a massive Boston road project.

              Most people have no idea just how costly it is for daily users of the Pike vs. any other highway. I find it ironic that this financial burden is considerably more than the increase under Patrick’s proposal for many middle and upper-middle-income taxpayers. This is supposed to make things more fair? Sorry, doesn’t feel fair out here.

              Instead of trying to make this situation equitable by relying more on the gas tax, the governor will make it even worse by hiking Pike tolls. The highest financial burden for the Big Dig will still be determined by geography, not by ability to pay OR general road use (ie gas tax). How does that make any sense?

      • Expand rolling tolls to all our highways

        I agree with your objection to targeting only the western suburb commuters. I think (and I think I’ve written as much here recently) that we should apply a rolling toll to ALL our major highways.

        I also think that it should be less, rather than more, expensive to use the commuter rail when it is available. I note that in your example, the best rate possible (for an interzone 5 monthly pass) is $6.20/day. That’s four times as expensive as the toll.

        The commuter rail should be lower, the toll should be higher, and (rolling) tolls should be applied to I-93 north and south of the city, I-95, Rt. 3 from Burlington to NH and from Braintree to the Cape, Rt 2 from Alewife to the state line, and Rt 1 at least between Boston and Peabody.

        I think trickle-up is correct that we MUST start sending new price signals about private vs public transportation.

        • Cost of travel is more than tolls of course

          As I wrote in another post, calculating cost of auto vs. public transit travel needs to include gas, tolls and wear and tear on your car — everything from new tires and brakes to repairs and oil changes. Car travel per mile is a lot more expensive than many people think, even if you take away fixed costs like insurance that don’t change based on miles driven. Problem is, most people don’t associate the costs of new tires with driving instead of taking the train to Boston.

          That said, though, I support increasing the gas tax. Also wish there could be some sort of congestion zone tolls during rush hour for driving into areas that are served well by public transportation. I don’t consider anywhere west of Rte. 128 to meet that description (“well served by public transportation”) with the exception of travel to the airport via Logan Express.

  2. There's going to be a cut-off

    where people’s tax bill increases, and at the state level, it’s not going to be $250,000. We probably don’t have enough people at that level to raise the kind of revenue we need.

    What’s been left out of this conversation are two benefits of the Governor’s proposal: 1) jobs 2) an improved economy. That money is going to be spent on jobs and the materials to do those jobs. Much of that money will flow into the economy of the Commonwealth. I don’t know what the fiscal multiplier will be or whether it will be positive, but there will be a benefit.

    I feel your pain living at the margin of middle-class comfort. As a fellow member of the middle-class, we are experiencing the erosion of our standard of living. Unfortunately, there is no painless way out of the situation. Your daughter and mine are in the generation that will feel the worst of what the Republican radicalism and Democratic capitulation has done. Unlike the fake deficit crisis, we have a real crisis in our infrastructure. All my daughters will start at community colleges, even if they can get into more competitive colleges. My parents were able to pay for mine and my sisters’ educations, I might be able to help my daughters.

    • I don't expect that at the state level it will be $250,000

      but this proposal starts tax increases at $37,523. There is so much disconnect. I can’t pretend that raising taxes on struggling middle incomes is a solution to our state or country’s problems. It really does not make sense. There are other solutions and everyone knows it, except that many of the decision makers have no idea what it is to live paycheck to paycheck, or watch their standard of living decline in a private sector that is making it’s millions by scraping the wealth of the middle class.

      • Some of us ...

        Some of us recognize and respect the distinction between a penny, a dollar, ten dollars, and a hundred dollars.

        The increase for someone at $37,523 is $63.79. If that $37,523 is their sole income (there are many ways to have an income of $37,523 for tax purposes and have access to substantially more), they aren’t going to own a home and — as mark-bail observes (and you ignore) — the increase in the value of the goods and services provided to them by the government will greatly exceed that $63.79.

        Lots of us see the private sector making it’s millions by plundering the middle class. Some of us also see the Barbara Anderson’s of the world pandering to the suffering that results from this plundering by demanding “no new taxes”. When you join those hard-line anti-taxers — as you are doing here — you encourage and enable the very plundering you complain about.

        The best way to stop the plundering of your children is to educate them — be sure they are literate enough, analytic enough, and insightful enough to see how they are being manipulated so that they can stop it. Resolutely opposing tax programs like this sabotages the efforts of the rest of us to help your (and our children) accomplish that.

        Some of us are working hard to raise ALL THE BOATS around us. Some of us seem to be solely concerned with their own. As far as I’m concerned, I will consider it a privilege and an honor to be in an income bracket where I am asked to pay more taxes.

        • Whatever sommervilletom

          we live in different worlds. KUDOS to you for sailing in a lifted boat. Taxing me more is not going to lift mine. Sorry, I just disagree. I have been taxed more for years now. My boat keeps sinking, as do the boats of many other people in this tax bracket. If you still don’t get that now, you never will.

          • All in the same boat

            You’re not in an individual boat. We’re all in the same boat. Raising taxes on you alone may not help your situation, but raising them on everyone will.

            • No, we are not.

              That’s supposed to be what the U.S. is about. We travel in individual boats. If we were all in the same boat, we would be a communist country. In our case, we promote free markets and then allow them to scrape the wealth from the powerless and then tax the powerless to help them. Just gotta wonder where this is gonna end up 100 years from now.

              • "Individual boat" or just plain selfish?

                You have a very different idea about “what the U.S. is about” than me.

                You seem to have missed the metaphor — it is the rising tide that lifts all the boats (each individual). You don’t seem to recognize the way that your self-centered “not a penny more in taxes from me” response simply advances precisely the game that the very wealthy are playing so effectively.

                You raise a concern about “where this is gonna end up 100 years from now”. The end result of the attitude you express here is that we’ll end up approximately where we were in, say, 1920 — a handful people with extraordinary amounts of money, a whole lot of people with nothing, no effective protection from the worst excesses of private and public plunderers, and with a catastrophic collapse in the cards.

                The only way we can collectively create the tide that lifts ALL of our individual boats is get more wealth back into the hands of consumers. In the immediate short term (as in this year) in Massachusetts, that means that we must resume investing in our transportation system and our children’s education.

                We have been spending down the enormous investments our ancestors bequeathed us in those two areas for too long already. The tax dollars that created our current transportation and education systems were just as dear as that $67.00 seems to be to you.

                Our ancestors recognized the stakes and did the right thing — so should we.

                • You pretty much just made my point

                  incredible how quick after the election we went from tax the rich to tax the middle class. We’ll see what comes out of the legislature. It had better not be a whole heap of regressive taxes.

      • Brent does a good job presenting

        the information we have so far, i.e. the rates. What I’d like to see is an estimate of the actual dollar amounts the average person in each quintile spends on sales taxes. Rates are what we have right now, but I’d like to see actual dollar amounts.

        I bought a car this year. How much less would I have paid? About $280. Almost a car payment.
        I’m not sure what my cable bill is, but I would save at least $30 a month.
        I don’t know how much I pay on non-food groceries, but I guess that adds up too.

        Personally, I think An Act to Invest in Our Communities is the way to go. It’s even more progressive. But it requires a change to the state Constitution. Oliver Wendell Holmes may have set a formidable precedent, but nobody’s right 100% of the time. Stare decisis may mean it’s set in stone, but even stone can be changed.

        The other thing to remember is that whatever Patrick eventually offers for a bill, it’s not likely the legislature will send it back to him the way it came.

        • An Act to Invest in Our Communities....

          does *not* require any change to the state Constitution. It proposes an increased but still flat income tax rate combined with perfectly Constitutional increases in the personal deductions. Nothing in the bill requires a Constitutional investment.

          That said, it creates a slightly more progressive structure but (when factoring in the reduction in the sales tax) the Governor’s proposal is almost as progressive. And the Governor’s bill raises about $500 million more annually than an Act to Invest in Our Communities. For that reason, I prefer the Governor’s proposal.

        • I would like to know that too

          of course it varies from week to week, and not sure I have the time to sit down and calculate a years worth of purchases. Maybe I will. I’m not looking for a tax cut, but I can’t support a tax increase right now. I wish I could; I just can’t. In no position to offer more money.

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