Newburyport Daily News
---- — Massachusetts taxpayers received some good news yesterday -- the state is in great financial shape, triggering an automatic, though slight, reduction in the income tax rate.
That’s good, but we can think of something that would be much better -- lowering the sales tax.
Taxpayers may recall that in the dire days of 2009, when the economy was in recession, the real estate boom had gone bust and thousands of people were laid off, the Legislature deemed fit to enact tax hikes to make up for lost revenue. Among them was a 25 percent increase in the sales tax, boosting it from 5 percent to 6.25 percent. There was some talk at the time that this was a temporary measure, but that was quickly dismissed as idle talk.
Today it’s a different world. The state is rolling in the dough. It’s collected $359 million more than it anticipated from July through November, and the trend just keeps surging upward. Indeed November was the tax-fattest month of all, with collections exceeding expectations by 10.6 percent.
There’s so much money rolling in, the state is forced to automatically reduce the income tax from its current 5.25 percent rate, down to 5.2 percent. Happy days are here again.
But not so much if you are elderly and living on a tight budget, or if you are struggling on a low income. The sales tax remains at 6.25 percent, one of the higher rates in the nation (there are 12 states with rates higher than 6.25 percent).
It’s well known and well documented that the sales tax is one of the most regressive taxes imposed on people. It hits the poor and low income workers the hardest. Most necessary commodities, with the exception of food and clothing, are subject to sales tax. It is an enormous and unfair burden on the poor and those struggling with low incomes. Republicans have tried, unsuccessfully, to pare back the rate. Where are our Democratic leaders, the ones who tell us that they’re for the working families?
We have no doubt that once the real estate market catches fire again, the same handwringing over “affordability” for lower income people will occur as it did in the boom times of the mid 2000s. Here’s an opportunity for someone, right now, to show that they can do something more than wring their hands for the poor.
The sales tax is also a burden for hundreds of small businesses in our region that are trying to compete with “tax free” New Hampshire. It’s one more impediment to their efforts to succeed. We should be helping them to succeed. A strong local economy is the foundation of a healthy and financially-robust community.
We don’t see anyone rushing forward to reduce the sales tax. Someone should. Hopefully, it will be some of our local representatives and senators, who have a front row seat on the sales tax issue.