The big bucks Massachusetts workers earn
come with a heavy burden -- the second highest amount of taxes paid of any state with much
of the blame going to the federal government, according to a study set to be released
today.
While Massachusetts has among the
highest per capita income in the country, the Bay State's wage-earners dole out 49 percent
more in federal, state and local taxes than residents of every other state except for
Connecticut, according to the report
jointly published by the Teresa and H. John Heinz III Foundation and MassINC, a
Boston-based nonpartisan think tank.
According to the study, single taxpayers
who earn more than $26,000 and joint filers who earn more than $42,000 pay a whopping 42
percent in state and federal taxes, including 36 percent in federal taxes.
When property taxes and state and local
fees and fines are added in, the average Massachusetts tax bill for every man, woman and
child is $4,982 compared to a national average of $3,339.
"The vast majority of the burden,
obviously, is the hit by the federal government," said Tripp Jones, executive
director of MassInc. "It just so happens those taxes are higher because we earn more
money."
While the study found that more and more
younger, middle class, college-educated workers are fleeing the state because of high
housing prices, the escalating tax burden appears to be an emerging threat as well,
according to the principal author.
"There is no cost of living
adjustment in the federal income tax," said Andrew Sum, director of the Center for
Labor Market Studies at Northeastern University. "They assume you earn a dollar in
Boston, it's the same as Biloxi, Miss.
"For many, particularly younger,
people, you're better off living elsewhere and that is the biggest threat to the
state," he said.
"Will we be able to attract and
retain good, educated young people when they see, under other good cost of living and tax
structures, they can do better elsewhere in the country?"
The study also found that declining
power in the state's all-Democrat delegation has resulted in less money coming back to the
state from the Republican-controlled Congress in Washington.
For every dollar that goes to
Washington, only about 90 cents comes back, much of it in earned income tax credits for
lower-income workers, Medicaid and Medicare.
"We pay more and receive back
less," said Sum. "The Northeast is continuing to subsidize other growing parts
of the country."
Jeffrey Lewis, executive director of the
Heinz Foundation, said similar studies are now under way around the country in an effort
to get lawmakers to address the growing problem.
While Massachusetts may get little
sympathy from southern and midwestern congressman, Lewis said other populated states will
soon feel a similar pinch.
"We have to make sure we look at
other states and say, 'We are not here by ourselves,' " said Lewis. "There has
to be tax reform, no question about it. You have to do tax reform."
Michael Gritton, MassINC's policy
director, said the study shows while Massachusetts officials have made "great
strides" in making the state more business-friendly, Washington has to lend a hand as
well.