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CLT&G Update
Monday, December 7, 1998

The Boston Herald
Monday, December 7, 1998

Tax-achusetts is No Misnomer
by Jack Sullivan

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.

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