our state budget: building a better future together massachusetts budget and policy center 15 court...
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Our State Budget: Building a Better Future Together
Massachusetts Budget and Policy Center15 Court Square, Suite 700, Boston, MA 02108
617.426.1228www.massbudget.org
Education
Transportation
Libraries, Parks and Recreation
Public Safety
Clean Air and Safe Drinking Water
Prisons and the Courts
Health Care and Public Health
Human Services
Total Personal Income in
Massachusetts
What Percent of our Income Funds these Programs?
Taxes as Percent of Personal Income, 2011
State and Local Taxes
10.4%
Mass. Taxes are About Average, 2011
AK
ND NY WY VT M
E NJ WI
WV
CA
MN HI
RI CT
DE IL OH
U.S. PA IA
NM MA NE NV KS
AR
M
I IN
MD KY
O
R NC CO
MS UT MT
WA
AZ
LA
ID
GA
SC NH TX VA MO
FL
O
KAL
TN SD
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
State and local taxes as % of state personal income
US 10.6% MA 10.4%
Why We are Called “Taxachusetts”AK NY M
A VT CA WY
MN AZ WI
MT HI NE NJ RI DC ND US CO MI
MD
ME
OR SD WA IA CT LA DE PA WV
NMIL UT KS NV MS KY GA ID NC VA SC OK TN IN NH TX MO FL AR OH AL
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%State and local taxes as % of state personal income
US 11.4%
MA 13.8%
Fiscal Year 1977
MA Taxes Among Largest Declines: 1977- 2011
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Percent change in state and local taxes as % of state personal incomeNote: North Dakota (35.5%) and Alaska (21.6%) exceed the scale of this graph.
US 7.3% Decrease
MA 25.0%Decrease
Tax Cuts Have Affected Services
Chapter 70 Education Aid
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
Billions, Inflation Adjusted
Includes ARRA funding; Adjusted using the inflation factor identified in Chapter 70
4.4% decrease since FY01
Local Aid
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.844% decrease since FY01
Billions, Inflation Adjusted
Early Education and Care
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0
$100
$200
$300
$400
$500
$600
$700
$80029% decrease since
FY01
Millions, Inflation Adjusted
Higher Education
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.625% decrease since
FY01
Billions, Inflation Adjusted
Public Health
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0
$100
$200
$300
$400
$500
$600
$700
$80022% decrease since
FY01
Millions, Inflation Adjusted
Human Services
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5 Essentially level since FY01Billions, Inflation Adjusted
Mental Health
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0
$100
$200
$300
$400
$500
$600
$700
$800
Millions, Inflation Adjusted 12% decrease since FY01 Some costs shifted
Environment and Recreation
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14$0
$50
$100
$150
$200
$250
$300
$350
Millions, Inflation Adjusted
35% decrease since FY01
A Tax System Should Be . . .
Adequate
Stable
Simple/Efficient
Fair
The Sales Tax is Regressive
Less than $21,000
$21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more
0%
1%
2%
% personal income paid in sales tax, 2012
Source: Institute for Taxation and Economic Policy.
IncomeRange:
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Next 15%
Next 4%
Top 1%
Top 20%
Why the Sales Tax is Regressive
Lowest 20% Second 20% Third 20% Fourth 20% Highest 20%$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Average income before taxes
Average annual spending
Average Income & Average Spending, U.S. 2008
Income Group:
Source: Bureau of Labor Statistics, Consumer Expenditures Survey, 2008
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Top20%
The Property Tax is Regressive
Less than $21,000
$21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more
0%
2%
4%
6%
% personal income paid in property tax, 2012
Source: Institute for Taxation and Economic Policy.
IncomeRange:
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Next 15%
Next 4%
Top 1%
Top 20%
The Income Tax is Progressive
Less than $21,000
$21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more
0%
1%
2%
3%
4%
5%
% personal income paid in income tax, 2012
Source: Institute for Taxation and Economic Policy.
IncomeRange:
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Next 15%
Next 4%
Top 1%
Top 20%
State and Local Taxes are Regressive
Less than $21,000
$21-$43,000 $43-$69,000 $69-$114,000 $114-$246,000 $246-$708,000 $708,000 or more
0%
2%
4%
6%
8%
10%
% personal income paid in state and local taxes, 2012
Source: Institute for Taxation and Economic Policy.
IncomeRange:
Lowest 20%
Second 20%
Middle 20%
Fourth 20%
Next 15%
Next 4%
Top 1%
Top 20%
Investing in a strong state economy
8% 9% 10% 11% 12% 13% 14% 15% $13
$14
$15
$16
$17
$18
$19
$20
$21
$15
$14
$15
$17
$18
$20
$17
$16 $16
$17
$16
$15
$17
$15
$16
$15 $15
$19 $19
$16 $16
$18
$16
$15 $14
$15 $15
$18
$20
$15 $15
$17
$16 $15
$17 $17
$17
$15 $15
$15
$16
$18
$16
$18
$16
$15
$17
State & Local Taxes as a Share of State Personal Income
Med
ian
Hou
rly
Wag
e
No Clear Relationship Between Tax Levels & Wages, 2012
20% 25% 30% 35% 40% 45% $13
$14
$15
$16
$17
$18
$19
$20
$21
$15
$19
$15
$14
$17
$18
$20
$17
$16 $16
$17
$15
$17
$15 $16 $16
$15 $15
$16
$19
$19
$16
$18
$15
$16
$14
$15 $15
$18
$20
$15
$17
$15
$16
$16 $15
$17 $17
$17
$15 $15
$15
$15
$16
$16
$18 $18
$15
$16
$17
Percent of Workforce with Bachelor's De-gree
Med
ian
Hou
rly
Wag
e
Strong Relationship Between Education and Wages, 2012
Individual Wages Increase with Level of Education
High school Some college Bachelor's or higher$0
$5
$10
$15
$20
$25
$30
$14.81$15.86
$27.16
Median hourly wage in Massachusetts by educational level, 2010
8% 10% 12% 14% 16% 18% 20% 22% 24%$12
$14
$16
$18
$20
$22
$24
$26
$28
$15
$26
$16
$13
$19$18
$17$17
$14$15
$17$16
$19
$17 $16 $16$16$16
$14
$18
$16
$19
$17
$13
$16 $17
$15
$17
$15
$18
$16
$17
$14
$15
$18
$16
$19
$17
$16
$13$13
$15
$16
$17
$14
$16
$20
$18 $17
$19
Percent of Workforce with Bachelor's Degree
Med
ian
Hou
rly
Wag
e(in
flatio
n ad
just
ed, 2
012
$)
Weak Relationship Between Education and Wages 30 Years Ago, 1979
Tools to Learn More
Massachusetts Budget and Policy Center: www.massbudget.org
MassBudget Online Budget Browser:http://browser.massbudget.org
Commonwealth of Massachusetts Budget: www.mass.gov/budget
browser.massbudget.org
MassBudget’s
Children’sBudget
children.massbudget.org