Gov. Patrick: Let's hike income taxes, drop sales taxes in MA

All of these State of the State addresses going down this past week have certainly yielded an interesting range of proposals, including on the tax front — and while the governors of Louisiana and Nebraska are proposing to eliminate their income and corporate taxes in an effort to make their states more competitively pro-growth and business-friendly, Massachusetts’ Democratic Gov. Deval Patrick unveiled some proposals for fairly aggressive changes to his state’s tax code that would take the opposite track.

Hoping to raise new revenue for transportation and education funding, Patrick is proposing to raise Massachusetts’ income tax rate and drop the sales tax instead:

Governor Deval Patrick unveiled more elements of his tax plans Thursday, including proposals to gradually raise the gas tax, MBTA fares, turnpike tolls, and Registry fees, plans he says will stabilize the transportation system long into the future.

Patrick’s blueprints would also eliminate 45 personal tax deductions worth $1.3 billion annually, including deductions for T passes, college scholarships, and dependents under 12.

The new elements follow Patrick’s announcement Wednesday of what is the core of his tax plan: raising the ­income tax from 5.25 percent to 6.25 percent while cutting the sales tax from 6.25 percent to 4.5 percent. The changes, if approved, would take effect in 2014 and would result in higher taxes for about 50 percent of residents, with the biggest burden on higher-income earners. …

All told, Patrick’s changes, which also call for the elimination of some corporate tax benefits, would raise taxes by $1.9 billion annually, money the governor wants to use to shore up and expand transportation systems and broaden education programs.

It sounds like plenty in the business community are skeptical that such a change would make Massachusetts more competitive in New England, especially with neighboring New Hampshire having a relatively attractive and inexpensive system, and it feels like Patrick is taking up the mantle of “asking the wealthy to pay a little more” to fund extra spending, a message President Obama touted so heartily in his campaign. And then, of course, it’s not quite in keeping with Deval’s own campaign, you know:

In the heat of his 2010 campaign for re-election Gov. Deval Patrick — whose record at the time included signing a 25 percent sales tax hike into law, OK’ing tax increases on restaurant meals, proposing a gas tax increase, and routinely pitching new taxes on candy and soda — denied any interest in raising the state’s income tax. In fact, Patrick’s spokesman at the time accused Baker of resorting to “distortion and demagoguery” by even suggesting Patrick would raise income taxes in a second term. …

The lame duck governor has stopped pretending that he could be satisfied with baby tax increases and has embraced a $2 billion raid on taxpayer earnings — part of yet another campaign to cement his legacy. …

Patrick wants a “fact-based” debate, so here are a few facts taxpayers should know. At $32.5 billion the state budget today is nearly 30 percent larger than the final budget signed by Mitt Romney. The state expects to collect nearly $13 billion in revenue from income taxes alone this year, $1.1 billion more than when Patrick took over in 2007, even after the huge drop that came in the recession years and with a state unemployment rate that is climbing.

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