Massachusetts income tax to be slightly cut
Economic triggers have been met to force a reduction in the state income tax in 2014 from 5.25 percent to 5.2 percent.
“We’ll be reduced to 5.2 percent as of Jan. 1,” Administration and Finance Secretary Glen Shor told the News Service.
Asked about the tax cut’s impact on the state budget, Shor said, “There’s lot of moving parts to the budget in any given year.”
The Department of Revenue estimates the tax cut will reduce state revenues by about $65 million in fiscal 2014. The tax cut will take between $125 million and $140 million off the table for the fiscal 2015 budget, with Gov. Deval Patrick set to outline his fiscal 2015 spending plan next month.
Tax receipts are running $359 million above the fiscal 2014 benchmark through November. The Department of Revenue reported Wednesday that November tax collections surged 10.6 percent, or $151 million above collections in November 2012. Tax collections are up 9.7 percent over the first five months of fiscal 2014, compared to the same period in fiscal 2013.
Patrick administration officials this fall predicted non-tax revenue in fiscal 2014 may fall short of estimates by $150 million.
Administration officials have repeatedly ignored requests for the reasons behind that revised forecast for non-tax revenue, and Shor on Wednesday declined to specify reasons for the revision, offering only the observation that there are many different non-tax revenue sources.
Massachusetts voters in 2000 approved an initiative petition calling to reduce the income tax rate from 5.95 percent to 5 percent by 2003. In 2002, in order to raise $215 million as part of a larger tax package, the state Legislature froze the income tax rate at 5.3 percent and conditioned further reductions on economic growth triggers.
Tax collections had been running above benchmark in early fiscal 2013, but fell just short of meeting the triggers for an income tax reduction this past January.
Calls for increased state spending are beginning ahead of Patrick’s budget filing.
UMass President Robert Caret on Wednesday called for a $40 million increase in state funding for the university, saying a $519 million appropriation would allow tuition and mandatory fees for in-state undergraduate students to be frozen for a second straight year.