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1 Timothy Vermeer, Massachusetts' Graduated Income Tax Amendment Threatens the Commonwealth's Economic Transformation 1 (2022)

handle is hein.taxfoundation/massgrad0001 and id is 1 raw text is: Massachusetts' Graduated Income Tax AmendmentThreatens the Commonwealth's Economic Transformation FISCAL FACT No. 799 Sept. 2022 Timothy Vermeer Senior Policy Analyst The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonproft organization. ©2022 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Key Findings • Massachusetts' tax advantage in New England is primarily driven by its competitive individual income tax rate and its sales and use tax structure. • The graduated income tax amendment would be paid by many small businesses, in addition to wealthy individuals. • The proposed surtax is likely to have negative economic effects that will impact low- and middle-income earners. • If approved, the graduated income tax could contract the Massachusetts economy by $6 billion by end of 2025. • Massachusetts has seen net outmigration of adjusted gross income (AGI) since 1993, resulting in $23 billion of AGI flowing to other states. • Florida and New Hampshire, two states with no individual income tax, are consistently the top destinations for net outmigration of AGI from Massachusetts. • The graduated income tax amendment is likely to exacerbate the net outmigration of AGI from Massachusetts as taxpayers adjust their behaviors to the tax increase. • Responding to potential negative economic effects of the surtax by repealing or adjusting the rate would require another constitutional amendment, which would take years to accomplish.

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