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Senator Moore says New Year means more state tax cuts |
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2006 should be a bit happier for Massachusetts taxpayers |
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December 21, 2005 – Senator Richard T. Moore (D-Uxbridge) announced that, effective New Year’s Day, Massachusetts taxpayers will share the benefit of yet another income tax cut approved by the Legislature. “It’s not a lot of money, to be sure, but it’s going in the right direction along with several other tax cuts approved in this year’s session,” the senator stated. “When we were forced to freeze the income tax cut and cut budgets because of the recession in 2002-2004, my colleagues and I agreed that as revenues improved, the taxpayers should again share in that good news,” Senator Moore explained, adding “It’s another small step toward keeping a promise to the voters for tax relief in a sound fiscal manner.” Under a 2002 law that raised taxes by more than $1 billion, the Democrat-controlled Legislature established a schedule of annual tax cuts to be triggered if economic growth benchmarks are met. Under that schedule, personal exemptions would be restored to their pre-tax hike levels of $4,400 for individuals and $8,800 for married couples on Jan. 1, 2008. Department of Revenue officials confirmed recently that economic growth targets for 2005 have been met and personal income tax exemptions will rise to $3,850 from $3,575 for individuals and to $7,700 from $7,150 for couples filing jointly when they file their 2005 tax returns. The deduction increase is worth $15 for a single filer and $29 for joint filers, but collectively it returns $60 million to the state’s taxpayers. The exemptions stood at $3,300 and $6,600 on Jan. 1, 2004, but were raised at the start of this year because growth in tax revenues, after accounting for other factors like inflation, exceeded 2.5 percent. If revenues continue to improve as they have, the senator expects the exemptions will be increased further on Jan. 1, 2007. As state revenues continue to exceed benchmarks, the 5.3 percent income tax rate would then begin falling in six increments, culminating in a 5 percent income tax rate being established on Jan. 1, 2014. On Jan. 1, 2015, a tax deduction for charitable donations, which was also approved by voters statewide, would be restored. “Reducing the income tax rate from 5.3 percent to 5 percent, to honor a ballot law approved in 2000, continues to be a goal for the Legislature, however to do so in one budget year would result in a harmful impact on critical state programs and local aid,” Moore explained. “A drastic cut of this nature in one budget year, as the Governor has favored, would require cuts in state and local services of up to $610 million,” he added. The Legislature has preferred to restore essential government services first and to make gradual cuts in income taxes rather than shift the burden of government services to local property taxes. Senator Moore noted that this latest tax cut resulting from an increase in personal exemptions is the latest of several to pass muster on Beacon Hill. In recent months, tax cuts have been approved to help the elderly afford rising property taxes, to attract film companies to shoot movies in Massachusetts, to assist military veterans, and to aid residents with rising home heating bills. The Legislature and Governor Romney also agreed earlier this month to change the implementation date of a 2002 capital gains tax increase, which will require rebates of $56 million and $69 million per year for the next four years. |
