There is a ballot question in the upcoming state election to eliminate the state income tax. I did some research into the arguments for and against this question, and found that they all make the same incorrect assumption — that the budget would have to take the loss of the income tax and not make up for it in any other way. In fact, the full text of the question only specifies the elimination of the income tax as a binding measure, not any sort of reduction of the budget. I can think of several reasons why it would be a good idea to eliminate the state income tax and replace its portion of the state budget with increases in property taxes, something New Hampshire and several other states have been doing for years.
1. It would be more efficient for the state government.
We already have a system in place for collecting property taxes. Increasing the property tax rate would not require any more infrastructure than we already have. Eliminating the income tax would allow us to shed an entire department of the state government, saving the taxpayers money.
2. It would be cheaper and easier for taxpayers.
Every year I pay H&R Block something like 30 bucks to process my state income tax form. The fact that there’s an entire private industry that revolves around a specific type of tax should be a warning sign that said tax is too complicated. Nobody has to pay a 3rd party company anything to handle their property or sales taxes. Eliminating the income tax would save time and money for anyone who works in Massachusetts.
3. Taxes are a disincentive.
Taxes, while bringing in revenue, also dissuade certain behaviors. Cigarettes, for example, are heavily taxed. Sales taxes dissuade consumption and encourage saving. Property taxes encourage living efficiently. With the income tax, we should be asking ourselves: what are we trying to disincentivize? Productivity? Making a living? Eliminating the income tax would eliminate an undesirable disincentive.
For these reasons, I will be voting Yes on 1 in November, and I hope you do the same.