Why We All Pay the Same State Income Tax

Rates may be going up … on all of us.

Governor Deval Patrick’s proposed state income tax increase would raise everybody’s income tax from 5.25 percent to 5.66 percent, enough to generate an extra $1 billion in revenue annually and send the Herald into an apocalyptic fit. Considering that we just had a huge national drama over whether President Barack Obama and his Democratic allies in Congress would get to raise the federal income tax on just the top 1 or 2 percent of income earners in the country, you may be wondering, why doesn’t the governor try something like that?

The answer is, he can’t. “It’s in the constitution,” says Mike Widmer, the President of the Massachusetts Taxpayer Foundation. Indeed it is. Article XLIV of the Constitution of the Commonwealth of Massachusetts states that taxes “shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property.” That’s why we don’t have different income brackets here—just a single tax rate for everybody. There have been five past efforts to amend the constitution to allow for a graduated income tax, but each time—in 1962, ’68, ,’72, ’76, and ’94—ballot referendums to confirm the amendments went down to defeat. All the referendum votes “have failed by wide margins,” Widmer says, “so there haven’t been any attempts in close to 20 years.” Opponents of the referendum argued, he says, that allowing for a graduated income tax would enable legislators to index tax increases to inflation, giving lawmakers an easy lever to constantly ratchet up dues. (It’s unclear whether an amendment could allow for different income levels while also restricting lawmakers’ ability to automatically increase rates. Also, the federal government has managed to have a graduated income tax without indexing rates to inflation.)

For what it’s worth, there are some progressive provisions in the state tax code, Widmer points out, most notably the income exemptions of $4,400 for individuals and $8,800 for families, which helps lower income earners proportionally more than higher ones. Still, that’s not nearly as progressive as the federal tax code, where rates range from 10 to 39.6 percent. Widmer reckons that, were Patrick able to tax different incomes at different levels, “it probably would be easier, politically,”  even if it might not raise the same amount of revenue. In any case, it’s a moot point. And for that, Patrick can thank the framers of our state constitution.