7th highest top individual tax rate, 12th highest corporate tax rate
The Massachusetts Fiscal Alliance (MassFiscal) made the following statement in response to President Joe Biden’s budget proposal, which is seeking to dramatically raise taxes on many struggling Massachusetts small businesses and on some high-income earners.
“If President Biden’s budget were passed, it would create economic harm, and tighten the squeeze on many businesses in Massachusetts. Massachusetts is already among the highest taxed states in the country. We also have to contend with some of the highest energy costs. Adding more of a tax burden will make it nearly impossible for Massachusetts businesses to remain competitive with states that have significantly lower taxes, lower costs of doing business, fewer regulations, and lower energy costs,” noted MassFiscal Spokesperson/Board Member Paul D. Craney.
Prior to last November’s narrow passage of ballot Question 1, the top combined marginal rate on individual income in Massachusetts was 42 percent. However, after the narrow passage of Question 1, the rate increased to 46 percent. President Biden’s budget seeks a further increase, resulting in a 48.6 percent top combined marginal rate on individual income in Massachusetts. Under these two scenarios, this would represent a 16 percent increase for some Massachusetts taxpayers – all in the span of a year. Massachusetts would have the highest rate in New England and the seventh highest in the country.
Additionally, President Biden’s budget proposal would dramatically increase the top combined marginal rate on corporate income. Currently, the federal corporate tax rate is 21 percent, and President Biden’s proposal would increase it to 28 percent. The Massachusetts state corporate income tax rate would add an additional 8 percent, bringing the rate to 36 percent. Massachusetts already has the 12th highest state corporate income tax rate in the country.
The Tax Foundation, a nonpartisan, nonprofit organization based in Washington, D.C., released this data, which you can find at https://taxfoundation.org/biden-budget-taxes/ and at https://taxfoundation.org/publications/state-corporate-income-tax-rates-and-brackets/
“With the narrow passage of Question 1 combined with President Biden’s budget tax hike proposal, our state’s highest income earners and some small businesses would see their tax rate jump by 16 percent. That dramatic and sudden increase would force many of our state’s most highly productive to domicile to New Hampshire and Florida if they hadn’t done so already. Massachusetts would lose their tax dollars, investments, and charitable contributions. Massachusetts high income earners and small businesses would be squeezed even more by federal tax rates increasing which would give them even less of a reason to remain in such a tough environment when there are greener pastures in other states,” concluded Craney.