MassBudget: Analyzing Education and Transportation Tax Reform Proposal

MassBudget    Information.    Participation.  Massachusetts Budget and Policy Center    Democracy. Funding Improvements for Schools, Roads, and Public Transit with Tax Reforms that Improve Fairness A ballot question has been proposed that would support investments in education and transportation with revenue from an additional 4% tax on income over a million dollars a year. Funding Improvements for Schools, Roads, and Public Transit with Tax Reforms that Improve Fairness examines this proposal and how it relates to longer term economic and policy trends in Massachusetts. A wide body of research shows that a well-educated workforce and well-functioning transportation system together serve as a critical foundation for state economic success. In Massachusetts, our ability to make smart investments in education and transportation has been hampered by a tax system in which our highest income residents pay a much smaller share of their income in taxes than almost everyone else.   This has proven particularly problematic because our highest income residents have also seen a disproportionate share of the income growth in the Commonwealth over the past few decades. When those whose incomes are growing the most pay the smallest share of their income in taxes, that reduces the state's ability to invest in things like improving our schools, making public higher education affordable, and maintaining our transportation systems. An additional 4% tax on income over a million dollars would have a modest effect on the few taxpayers - less than one percent of all filers - who would be affected. Because the tax doesn't apply to the first million dollars of income, and because state taxes are deductible from federal taxes, the effective tax rates (ETR) for those affected would be significantly below the marginal tax rate.   To read the full factsheet, please click HERE. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

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