Let’s Raise Taxes Now

By Steve Poftak
August 8th, 2008

Got your attention? I thought so.

The title is pretty much what I expect to hear on the basis of the Tax Foundation’s latest report that shows how Massachusetts’ ranking on level of state and local tax burden has fallen from 6th (the higher the number the larger the burden) in 1977 to a seemingly reasonable 23rd in 2008.

But I urge my policy-minded friends to dig a little deeper into the data (particularly Table 6) — on the measure of taxes collected per capita, we are seventh in the country — nothing to be proud of. And three of the states ahead of us on taxes collected per capita — Alaska, Wyoming, and Delaware — are doing it largely on the backs of out-of-state residents and corporations (and natural resources), while Massachusetts is more heavily reliant on residents.

What’s causing our improvement in tax burden is really growth in the denominator, largely driven by increases in personal income (source data here) — Massachusetts has the highest growth rate in personal income over the same 1977 to 2008 period.

Now, there’s a school of thought out there that every increase in income deserves a matching increase in taxes, but I don’t go to that school.