This omission is of particular significance because the surtax on November’s ballot is different than most tax legislation in that, if it is approved, any revision to the new 9 percent top marginal rate will require another constitutional amendment-a process that can take years to accomplish. However, less discussion focuses on the potential economic ramifications of the surtax. So far, attention has largely been focused on the approximately $2 billion in revenue the sur tax is estimated to generate. The question before voters is a significant one, with meaningful implications for Massachusetts’ economy. This November, Massachusetts voters will decide whether the state’s constitution should be amended to transition the Bay State from a flat rate individual income tax to a graduated rate system through the imposition of a 4 percent surtax on income over $1 million. Subscribe to get insights from our trusted experts delivered straight to your inbox. Stay informed on the tax policies impacting you. Cuts to marginal tax rates are highly correlated with decreases in the unemployment rate.Measures of the magnitude of the investment and consumption changes vary, but the relationship between the variables is consistently negative: as tax levels or rates decrease, investment and/or consumption increases and vice versa. Changes in rates of private investment and private consumption are highly correlated with tax changes.A decrease in a tax system’s progressivity is associated with an increase in the real growth rate of wages.The likelihood of an employed head of household obtaining a better job within a year is higher when a tax system’s progressivity is reduced.The mobility of higher-skilled and higher income earners in an open economy works against the effort of progressive state and local tax systems to achieve long-term redistribution of income.Research almost invariably shows a negative relationship between income tax rates and gross domestic product (GDP).
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