On the 27th, the Massachusetts House of Representatives approved an increase in the sales tax from 5% to 6.25%. Strangely, my own legislators in Somerville, who are viewed as very progressive and who I know and like, voted for it.
I understand that our Massachusetts' government is facing a very large deficit and that vital programs will be cut to balance the budget. If we don't raise taxes then vital programs that help our cities and towns, children and provide the little safety net we have, will be axed.
However, increasing the sales tax is not the way to do it!
The sales tax is incredibly regressive. Page 58 of The Institute on Taxation & Economic Policy's Who Pays: A distributional analysis of the Tax Systems in All 50 States lists a break down for the total tax burden faced by people at different levels of income in Massachusetts.
Those in the lowest 20% by income, pay 9.3% of their income in taxes. The poorest 20% pay 5.4% of their income in sales and excise taxes.
Those in the top 1% by income, pay 4.6% of their income (6.8% before they get a kick back from the federal government because of our state income tax) in taxes. The richest 1% pay 0.6% of their income in sales taxes.
Basically the Massachusetts House has decided to fund services used by the poor and middle class (as well as corporate welfare) on the back of the poor.
There are alternatives to a blanket increase in the sales tax.
Short term, we could raise corporate taxes and eliminate the Fidelity and Raytheon tax breaks. We could also raise the income tax rate while also increasing the value of deductions and exemptions so the higher rates don't hit the poor and middle class. If need be, it would be more preferable to change the sales tax to cover services, or items bought over the internet. While not perfect, both changes in the sales tax are more likely to effect the well off.
Longer term we could make the income tax progressive, or impose a wealth tax. Yes, I know "that's not possible" because the rich and the corporations own our government. Still, we have to fight for a just tax system.
The financial corporations and rich are getting a bailout, but the poor and middle class are getting the shaft. Please urge your State Senator to vote against this increase in the sales tax and to seek fairer taxes.