The Governor recently announced the need to cut funding for school transportation, job training, health care, and other investments that support and strengthen our people and our economy. One of the reasons for these cuts was the anticipated triggering (which became official today) of an automatic tax cut caused by a twelve year old law.
"While our Commonwealth could be making investments to expand opportunity for all of our children and improve lives in our communities, this automatic tax cut will primarily benefit the wealthy and it will likely force cuts in education, transportation, and other investments in our people and our economy," said Noah Berger, President of MassBudget.
This tax cut, which primarily benefits the highest  income taxpayers, will cost the Commonwealth $145 million a year. It is part of a series of automatic income tax rate cuts that together will cost the Commonwealth $325 million this fiscal year. The annual cost could grow to over $800 million over the next five years. This could significantly weaken the Commonwealth's ability to rebuild our crumbling infrastructure, invest in expanding access to high quality education, and protect access to affordable health care.
MassBudget's new fact sheet Automatic Income Tax Rate Cuts: FAQ describes how this automatic tax cut works and examines its likely consequences. This tax cuts has its origins in a series of income tax cuts that began in 1998. Those tax cuts cost the Commonwealth over $3 billion a year and, in the years since, we have seen deep cuts in education, local aid, and other important public services (see chart above).
The primary beneficiaries of the automatic tax cut will be the very highest income households (see chart below), who already pay a smaller share of their income toward state and local taxes than do other households.
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