View Full Version : Report: State sheds 'Taxachusetts' label

04-06-2007, 03:49 PM
Report: 'Taxachusetts' label remains part of Massachusetts' past
By Andrew Ryan, Globe Staff

Massachusetts has come a long way from its "Taxachusetts" days of the 1980s as its tax burden ranked 28th in the nation for the second straight year, according to a new report.

The Bay State came in far below all its New England neighbors except New Hampshire, according to the report issued this week by the Washington-based Tax Foundation.

The study found that the national average of state and local tax burdens was 11 percent, a 25 year high. The report based its rankings on all state and local taxes levied on income, goods, properties, businesses, and other sources. Massachusetts came in at 10.6 percent.

"The biggest reason that the 'Taxachusetts' label doesn't fit anymore is because of the flat income tax written into the state constitution by John Adams," said Curtis S. Dubay, an economist and author of this year's report for the nonpartisan research group. In 1980, Massachusetts had a tax burden of 11.3 percent, which ranked second in the nation.

Massachusetts' flat 5.3 percent income tax is in contrast to Vermont, which has the highest tax burden in the nation this year at 14.1 percent. In addition to other high property taxes and a 6 percent sales tax, Vermont has a graduated income tax that tops out at 9.5% for single or joint filers who make more than $336,550.

Maine finished a close second behind Vermont with a tax burden of 14 percent.

"It's an interesting situation up there because then you have New Hampshire, which is a low-tax state in the middle of a high-tax sandwich," Dubay said.

The study ranked New Hampshire 49th, as the Granite State came only before Alaska, which pays its residents dividends from oil revenues. New Hampshire has no sales or income tax, leaving its total tax burden at 8 percent. (Alaska?s was 6.6 percent.)

Link (http://www.boston.com/news/globe/city_region/breaking_news/2007/04/report_taxachus.html)

05-20-2007, 07:42 AM
"Taxachusetts" has always been a misnomer that follows from very misleading measures of tax burden that include the graduated federal income tax. Because higher incomes are taxed federally at higher rates, high income states have a higher total tax burden. When federal income tax is excluded from the analysis, the results are fairer and more telling.