MASSACHUSETTS INCOME TAX STIFLES EMPLOYMENT AND INVESTMENT
September 24, 2004
A new report says Massachusetts could create thousands of new jobs and millions of dollars in new investment if the state legislature cut the income tax from 5.3 to 5 percent in fiscal year 2005.
Currently, Governor Mitt Romney (R) is attempting to push the tax cut through the state legislature. The Heartland Institute, citing figures from an economic analysis by the Beacon Hill Institute (BHI), says that the proposal would be boon to the economy:
- The tax cut would result in an immediate boost in employment by about 3,700 jobs and in investment by $7.3 million.
- Real (inflation-adjusted) disposable income would rise by $243 million in the first year after tax cut.
- By 2008, the state would have about 7,900 new jobs, $17.1 million in additional investment, and $469 million in additional disposable income.
The report also says the state could even increase spending next year by 7.6 percent because the lower tax rate will generate some $775 million in new tax revenues in the first year alone. Overall, the tax cut would increase FY 2005 tax revenues by a net $307 million -- a 2 percent increase.
Source: Frank Conte, "Massachusetts Should Cut Income Tax to 5 Percent," Heartland Institute, July 2004.
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