FACT CHECK: Tax Cut Would Have Broad Benefits

No matter if you’re rooting for the Patriots in the Super Bowl or just in it for the commercials, one thing most Bay Staters seem to be cheering on is a tax cut. In two recent analyses, critics of a proposal to cut the state’s income tax from 5% to 4% over three years have decried it as an unaffordable policy that primarily benefits wealthy individuals. The claims are wrong on multiple fronts, and contradicted by the vast majority of voters across income brackets who support this tax cut. 

Fact: Massachusetts Can Afford a Phased-in Tax Cut

A phased-in tax reduction is well within Massachusetts’ fiscal capacity. MOA’s revenue model shows a modest three-year decline in collections totaling $680 million per year, followed by revenue growth as the economy adjusts to the lower rate. In fact, we estimate that revenue would start to grow twice as fast after the tax cut than it did before.

The more relevant question is whether Massachusetts can afford not to cut taxes. The state continues to lose residents to other states, including founders, investors, and other job creators who anchor key local industries. That outmigration signals rising affordability pressures and growing competitiveness challenges, suggesting the long-term fiscal risk of inaction may be greater than the cost of reform.

Fact: An Income Tax Cut Would Help The Majority of Taxpayers 

Instead of focusing on how this tax cut would help everyone who pays income tax in Massachusetts (millions of residents and small business owners), opponents have focused on long-term capital gains – a narrow slice of the income tax base tied to asset sales by a small share of filers. Even these opponents admit long term capital gains revenue is a minimal share of the tax cut’s impact. The overwhelming majority comes from regular income – and that’s where this tax cut delivers the greatest impact.

A lower income tax rate applies across nearly all forms of taxable income, including wages and small business earnings – the income sources relied on by the vast majority of taxpayers. In fact, MOA research finds the average Massachusetts filer would see roughly $1,300 back in their pocket under the proposed tax cut. This is money that can help offset rising housing, energy, and everyday costs in an increasingly expensive state.

Fact: Voters Across Income Brackets Support a Tax Cut

Support for cutting the state income tax is strong and consistent across income levels. In fact, seven out of ten voters earning less than $50,000 per year support the proposed rate reduction. This support rises slightly in higher income brackets. The consistency of these numbers reflects broad agreement among voters facing the same affordability pressures, regardless of income. 

Conclusion 

The real divide in this debate is not between income groups. It is between those who recognize the economic benefits of broad-based tax relief and those who are opposed to tax relief under any circumstances.

Support for a lower income tax rate reflects economic common sense and the lived experience of residents facing rising costs. Arguments against it often rely on narrow, misleading framings that overlook the overarching benefits of lower rates for households and small business alike.

Income tax relief is not a giveaway – it is a practical response to affordability pressures and a step toward keeping Massachusetts competitive.