, Salem, MA


December 5, 2012

Anderson: What about the Bay State's fiscal cliff?

So as the national government heads for “the fiscal cliff,” how’re we doin’ in Massachusetts?

An estimate by the Heritage Foundation of the impact on each state’s taxpayers if the “Bush tax cuts” expire shows the average increase per tax return in Massachusetts falls into the $4,001 to $5,200 range, among the highest in the nation because of our state’s high personal income. I’m not one of “the rich,” or even the “typical family” looking at an increase of $2,200, so except for losing the payroll tax break, this doesn’t directly impact me: I’m not counting on one of those rich people to create me a job.

However, we all have to be concerned about the Massachusetts economy, and what the Patrick administration will do with the “fiscal cliff” spending cuts that could impact both our private and public sector. Even before that happens, the state budget is $256 million in deficit for this fiscal year, which is half over. This means that the budget for next year, always planned as an increase on the previous year, will also have to be cut.

The usual liberal/union groups are still advocating an increase in the state income tax rate from its present 5.25 percent to 5.95 percent. Gov. Deval Patrick is hoping to be able to apply the state sales tax, which he increased from 5 percent to 6.25 percent, to Amazon Internet sales.

Some Washington politicians and advocates have been urging the federal government to raise the federal gasoline tax to pay for increased highway spending. Some local political, union and business groups have long wanted an increase in the state gasoline tax to pay to fix the infrastructure that no one seems to properly maintain here. The combination hike could be large.

Not to be outdone, a local coalition of unions/liberal action groups, calling itself Public Transit-Public Good, has come up with a brand-new bright idea for raising Massachusetts taxes. At a Statehouse hearing last week, they pitched a payroll tax on employers to cover all employees who earn more than $100,000 (the standard for being considered “rich” seems to be slipping). The money would be used to maintain the transportation infrastructure, including the MBTA.

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