The History of the Income Tax in Massachusetts

By Jim on November 2nd, 2008

Some great information here that clearly illustrates why an income or sales tax in New Hampshire would do absolutely nothing to lower property taxes. Income and sales taxes NEVER lower property taxes, they just add to the existing tax burden.

Are you paying attention New Hampshire voters? Don’t be fooled by the pro-income tax crowd.

For one weekend this summer, Massachusetts enjoyed a sales-tax holiday. Instead of driving across the border to sales-tax-free New Hampshire, residents could shop at home without paying sales tax, if only temporarily. But the sales-tax holiday was just a precursor to what could be a much more hopeful development: the potential repeal of the state’s income tax this November.

Thanks to the tenacity of Carla Howell of the Committee for Small Government, voters may be able to eliminate Massachusetts’s income levy through Question 1 of a ballot referendum. In 2002, a similar ballot question asking for the repeal of the income tax earned 45 percent support. Today, with jobs and residents fleeing the economically limping Bay State, the political climate for eliminating the income tax is even more hospitable. Backers also hope that the repeal would force Massachusetts to practice tough fiscal discipline—the income tax constitutes more than 40 percent of state revenue.

The history of taxation in Massachusetts over the last century is one of legislators forever indulging the state’s appetite and never prescribing a diet. The state’s first income tax, enacted in 1915, was initially presented as “a substitute, complete or partial, for the existing tax on personal property,” observed the Harvard economist Charles Bullock. But the income tax neither eliminated nor alleviated the property-tax burden, and it soon became a permanent levy, with the rate rising from 1.5 percent in 1950 to 5.3 percent today. During the mid-sixties, something similar happened when Republican governor John Volpe—in the strange world of Massachusetts politics, party labels confuse as much as instruct—crusaded for a sales tax while mainly Democrat antagonists in the state legislature battled against it. The sales-tax foes won the first six battles, but in winning the seventh vote, Volpe proved the old maxim that if at first you don’t succeed, try, try, try, try, try, try again. The sales tax was to last from April 1, 1966, to December 31, 1967, but over 40 years later, a mere two-day respite from it is cause for celebration.