January 31, 2020

Massachusetts Budget and Policy Center: The Gas Tax: What it is and Who Pays

ITEP Work in Action

Data from the Institute on Taxation and Economic Policy (ITEP) detail how the current system of state and local taxes in Massachusetts is regressive, largely because the state uses a flat income tax rate and relies heavily on sales taxes.

The chart above shows how an increase in the gas tax would make Massachusetts taxes more regressive. If a 10-cent increase to the state gas tax was in place in 2019, it would have raised approximately $328 million in additional revenue. Households with low and moderate incomes would have paid significantly larger shares of their income toward this increase than the highest-income households would have. The additional tax would have represented almost 0.20 percent of income for the lowest-income households; about 0.10 percent of income for middle-income households; and about 0.01 percent for the highest 1 percent of income earners (who on average purchase more gas than other income groups).

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