Bill Vernon: NFIB Re-Affirms its support for the 5 percent state income tax.
The Senate recently passed as part of their version of the FY 16 state budget a change in tax law. The proposal included freezing the Massachusetts income tax rate at 5.15 percent. Without this action, the state income tax rate would eventually fall back to five percent, according to a formula tied to state revenue increases, as promised by political leaders when the income tax rate was “temporarily” increased in 1989. With revenues increasing, state budget writers should reject broad-based tax increases at this time.
NFIB has consistently supported returning the income tax rate to 5 percent for more than two decades. Most small businesses are ‘pass through’ entities and small business owners pay their taxes just as their employees do, as individual income taxpayers. The state income tax is a business tax and the state should finally keep its promise to return the tax rate to 5 percent as soon as possible. Keeping this promise will also help improve voters’ confidence in government doing the right thing.
The state’s constitutionally mandated flat income tax, as opposed to a graduated income tax with steep rate increases as incomes climb, is also an economic development law that is at least partially responsible for Massachusetts’ relative economic strength through the years. Imposing a graduated income tax, whether by rate increases or by increasing personal exemptions, would harm economic growth and job creation in small businesses. The flat 5 percent tax is Massachusetts’ most important pro-economic growth policy.
Bill Vernon
State Director
NFIB/Massachusetts
