Facts At a Glance:
Where Does the Taxachusetts Label Come From?

Thursday, September 9, 2010

Where Does the Taxachusetts Label Come From?

Overall, Massachusetts is a relatively low-tax state. Total state and local taxes paid in Massachusetts as a share of total personal income was 10.3 percent in FY 2008 (the most recent year for which national data is available). That is lower than the overal rate of taxation in 30 other states (see Figure 1). 1 Reasonable people can differ on whether it is a good or bad thing that our rate of taxation is lower than average, and that our state government does not have the resources to invest in education, infrastructure, safety net protections, and other public services that the Commonwealth would have if it had an average tax system. But as a factual matter, the label Taxachusetts is simply not accurate.

Figure 1.

Massachusetts in bottom 40 percent

Given that taxes are lower overall in Massachusetts than in most states, where does the Taxachusetts label come from? It comes from the 1970s. That is when the label was attached to the Commonwealth – and it had a basis in reality. In FY 1977 Massachusetts was a relatively high-tax state, as Figure 2 shows. In fact, taxes as a share of income were higher in Massachusetts at that point than in all but two other states.

Figure 2.

The Title

Since the late 1970s, tax policy in the Commonwealth has changed dramatically. The approval of Proposition 2 1/2 in 1980 reduced property taxes, and then, particularly in the 1990s, the Commonwealth reduced state taxes – primarily the income tax – significantly. 2 As a result, between 1977 and 2008, Massachusetts reduced taxes more than any other state in the nation, as Figure 3 shows.

Figure 3.

Long-Term Change in State and Local Tax Revenue

1 See MassBudget, “Facts At a Glance: Massachusetts Ranks 31st in Taxes in FY 2008,” available at: http://massbudget.org/doc/738

2 See MassBudget, “Understanding Our Tax System: A Primer for Active Citizens,” Chapter Four, available at: http://massbudget.org/doc/748/1330

-From: http://www.massbudget.org/documentsearch/findDocument?doc_id=752 retrieved 9/10/10.

 

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