FOR IMMEDIATE RELEASE: Wednesday, February 21, 1996

Contact: Frank Conte, Communications 617-573-8050; 8750 fconte@beaconhill.org

Mass. income tax cut would mean 65,600 new jobs

Boston, MA -- A Weld administration proposal to reduce the Massachusetts personal income tax rate from 5.95% to 5.45% would create 65,600 new jobs. It would increase capital spending by about $4.8 billion and increase annual wages of Massachusetts workers by an amount ranging from $2.2 to $3.2 billion. This is the finding of the Beacon Hill Institute at Suffolk University.

The tax cut is part of a proposal to downsize state government. The proposal calls for the tax rate to go down to 5.70% on January 1, 1997 and to 5.45% on January 1, 1998.

Claims by critics that the state would lose at least $500 million in tax revenue as a result of the tax cut are unjustified. The Beacon Hill Institute projects that the lower tax rate would cause employment and wages, and thus the tax base, to expand. The actual tax revenue loss would be substantially less, ranging from $328 to $382 million.

The Beacon Hill Institute used its dynamic, econometric state tax-analysis model to estimate the effects of the proposal.

The Beacon Hill Institute conducts economic research on public policy issues affecting Massachusetts citizens and businesses.

 

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