Massachusetts Budget and Policy Center: Effects of Raising Rates and Exemptions on the State Income Tax
ITEP Work in ActionThis Facts At A Glance updates MassBudget’s analysis of a reform option that would make changes to the way the Commonwealth taxes wage and salary income as well as investment income. The Department of Revenue (DOR) recently examined this reform option and estimated that the proposal’s combined changes would generate between $1.99 billion and $2.11 billion (middle of range = $2.05 billion) in new revenues in its first full year after implementation.1 This Facts At A Glance describes DOR’s revenue estimates and also provides an analysis from the Institute on Taxation and Economic Policy showing how people at different income levels would be affected by the changes. Additionally, it looks at the proposed changes in the broader context of our state’s current tax system and recent federal tax policy choices.