Lead Sponsor: Senator Jamie Eldridge
Summary: This amendment would give the legislature the authority to set tax brackets and establish different rates in the same way as the federal government and thirty five other states.
Why This Matters: Few people would consider a tax system to be fair if the poorer you are, the more of your income you pay in taxes – and yet that’s exactly what the Massachusetts tax system currently does.
When you combine all the taxes that Massachusetts residents pay – including income, sales, and property taxes – the overall effect is that middle- and low-income families pay a much greater share of their income in taxes than the wealthy. According to the Institute on Taxation and Economic Policy, a non-partisan research organization, the effective total Massachusetts tax rate on those making less than $21,000 a year is 10% — compared to an effective total Massachusetts tax rate of 4.9% for those making $780,000 a year or more.
This is primarily because we currently have a “flat” income tax system (which means every family pays the same income tax rate), but our property and sales taxes are regressive (that is, lower-income families pay a higher percentage of their income than wealthier families). As a result, our overall tax structure is very regressive.
Most other states, as well as the federal government, allow for a graduated rate structure, which allows them to create a more progressive tax structure. In fact, Massachusetts is one of just seven states that still uses a flat tax rate on income.
By amending the constitution to allow the Legislature to set multiple tax brackets, we could create a much fairer tax system – one which would ask those who could afford it to pay more, and those who can’t, less.
This system would also potentially allow us to lower taxes for the majority of Massachusetts residents – low-to-middle income families – without losing revenue for the state, by asking a small percentage of residents with very high-income to pay their fair share.
What this Bill Would Do: This constitutional amendment would amend Article 44 of the Articles of Amendment of the Massachusetts Constitution in order to establish the right of the legislature to set multiple tax brackets and tax different levels of personal income at different rates.
View the full text of the bill and track its history here.