A Really Bad Idea
Having lived in a state with no income tax (Washington) and understanding the basics of budgeting, I can assure you that the only folks who will come out ahead on this asinine proposal
are the top 5% of all wage earners:
It’s the kind of ballot question that would seem irresistible to most voters — whether or not to eliminate the Massachusetts state income tax.
The radical change in tax law would put thousands of dollars back in the pockets of families, but critics say it would deal a dire blow to key services, from education to transportation, wiping out 40 percent of state revenues.
While some state spending will certainly be cut, other taxes (or "fees", as our former Governor used say, to hide his tax increases from Republicans in Iowa and New Hampshire) will most certainly go up to avoid draconian cuts in education, etc....
What's the problem with the idea of forcing gov't to spend less by cutting off almost half of all state income?
Well, for starters, no one on Beacon Hill is going to slash 40% of state spending so let's look at the more likely alternatives. How about raising the sales tax? (Or consumption tax some like to frame it.) Those of us who earn near the state average household income, or less, *spend* the vast majority of our paychecks on taxable items. Aside from food, you get dinged by the tax man on almost every penny in your take home pay. However, if I earned $200K/year I would probably be "saving" more and spending a much larger percentage out of state. Hence, lower tax rates.
Perhaps we could raise property taxes. Again, a horrible idea given that the average homestead in Massachusetts is already overvalued and being taxed way too much because of the recent housing bubble. And creating more disincentives to home ownership is the last thing you want to do in a bear-market like the current one.
The income tax hits most people pretty fairly. It can be argued that it is too high, or too low, but the idea that it should be replaced by other revenue streams is short-sighted and designed to play upon the passions and ignorance of a typical voter while only actually benefiting a tiny sliver of the wealthiest residents.
"Hey Bob! Do you want to stop paying state income taxes?!?!"